The Moroccan crop landscape may benefit from a more tailor-made approach, supporting food production, social resilience, and the economic sustainability of crop re/insurance, according to a blog posted on Swiss Re's website.
Morocco has become a hot spot for extreme weather-related events. The country regularly suffers from events such as floods and concurrent heatwaves and droughts that have caused severe water crises. As Morocco suffers another drought year in 2024, the agriculture sector is being hit particularly hard.
The blog, titled “Morocco: a challenging hot spot for farmers, society and crop re/insurance”, written by Stefanos Mystakidis, risk analyst & modeller; and Delphine Uwacu, senior underwriter agriculture EMEA, CUO P&C Reinsurance; and Erik Payen, senior client manager Europe, Public Sector Solutions, explores what measures could be taken to manage and mitigate a rapidly changing risk landscape, and ensure viable insurance.
Solutions
The authors say that maintaining traditional indemnity-based scheme for stable production areas and offering a different type of crop insurance in highly vulnerable areas could be a solution for markets like Morocco. A well-structured, transparent parametric approach could also bring value. For instance, it can help to a) maintain the insurability of highly vulnerable areas, b) support the transition to crops that are well suited to local agro-ecological conditions and c) improve the loss adjustment process.
Insurance payouts during the last decade have helped to increase the resilience of the farmers by partially compensating the incurred losses.
Agricultural insurance
The agricultural insurance sector in Morocco is the second largest in Africa (by generated premium income). Farmers are mainly covered with indemnity-based multi-peril crop insurance (MPCI) programs offered via a successful public-private partnership between the Ministries of Agriculture and Finance and the Moroccan Agricultural Mutual Insurance Company (MAMDA). Agriculture insurance premiums are heavily subsided by the Moroccan government, especially for smallholder farmers. In recent years, primary crop insurance products have been adjusted to better reflect the current environment. However, the changes may have already reached the high end of the economic sustainability limits for the farmers.
The Moroccan government has already taken many positive steps, and reform of crop insurance schemes could also help maintain the insurability of highly vulnerable areas.
Representing 10% of Morocco's GDP, agriculture employs a substantial fraction of the country's labour force in rural areas. Cereal crop production dominates Morocco’s arable land, and it is heavily dependent on rainfall. More than 90% of the cultivated crops are grown under non-irrigated conditions.
Resilience strategies
Improved and efficient water sector governance can continue strengthening resilience, especially during dry seasons.
In recent years, the Moroccan government has taken encouraging measures to improve infrastructure and efficiency in water management. These measures include, for example, the construction of large dams to strengthen the country's water storage capacity, improved water basin interconnections, and installation of control valves to reduce water loss through transportation and distribution.
Modernisation and adoption of technological innovation at the field level are critical steps towards strengthening the resilience of agriculture to climate change. Adoption of new crop varieties has been slow in Morocco for example, with farmers in many cases still growing varieties that are more than 20 years old. Farmers should be supported to adopt new locally-breed varieties and whenever necessary even switch to alternative crop types that are suitable and approved for local climate and soil conditions.
Agroforestry can be an efficient management practice to limit soil degradation and partially compensate greenhouse gas emissions. Switching to direct seeding mulch-based cropping systems can improve soil fertility and drought tolerance. Although the list of strategies is non-exhaustive, farmer incentivisation and education, as well as a clear prioritisation road map would be critical elements for the transition to more resilient agriculture.
To read the full blog, please click here.