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Agriculture and Food Systems
Agricultural Finance and Insurance Feasibility
Feasibility analysis for agricultural credit, warehouse receipt financing and index insurance, testing demand, data, risk and the public cost of support.
- Sector
- Agriculture and Food Systems
- Typical timeline
- 10 to 14 weeks
- Delivery
- Onsite or virtual
- Deliverables
- 6
The problem
The Agricultural Policy, 2021 identifies the high cost of agricultural credit and inadequate insurance cover for farmers and fisherfolk as binding constraints, and commits government to appropriate financing and insurance systems. The Warehouse Receipt System Act, 2019 turns stored produce into a negotiable document of title, with county-licensed warehouses and a central registry kept by the Warehouse Receipt System Council, now operated electronically. Lenders still need evidence that receipts, collateral and repayment behave as the law intends.
Insurance faces similar tests. Sessional Paper No. 3 of 2020 on the Livestock Policy records that commercial and index-based livestock cover has reached few herders, citing drought and disease risk, low awareness, limited data and high delivery costs, and the Kenya Livestock Insurance Program has depended on public premium support. Before committing capital or subsidy, banks, insurers and governments need a sober view of demand, data and fiscal cost.
Policy anchors
- Warehouse Receipt System Act, 2019
- Agricultural Policy, 2021
- Sessional Paper No. 3 of 2020 on the Livestock Policy
- National Agricultural Value Chain Development Project
How we work
Demand and risk profile
We profile target farmers, cooperatives and agribusinesses by value chain, cash-flow cycle and exposure to drought, price and disease risk.
Instrument options
We compare credit, warehouse receipt financing, input finance and index or indemnity insurance against the needs and risks identified.
Data and index feasibility
We test whether yield, weather, satellite and registry data can support pricing, triggers and claims, and assess basis risk for index products.
Financial and fiscal model
We model costs, premiums, default and loss scenarios and the public cost of any subsidy or guarantee, with every assumption stated.
Pilot and governance design
We set out a pilot with partner roles, county duties under the Warehouse Receipt System Act, 2019 and an M&E framework to judge whether to scale.
- Demand and risk assessment
- Options appraisal for credit, warehouse receipt and insurance instruments
- Data and index feasibility note
- Financial and fiscal cost model with stated assumptions
- Pilot design with partner roles and M&E framework
- Board or cabinet briefing paper
Banks, insurers, development finance institutions, county governments and ministries weighing agricultural lending, warehouse receipt or insurance schemes.
Questions clients ask
Do you design insurance products?
We assess feasibility and set design parameters; pricing, underwriting and regulatory filing remain with the insurer and its actuaries. Our work tells insurers and funders whether a product can work and what it will cost.
What role do counties play in warehouse receipts?
Under the Warehouse Receipt System Act, 2019 the county executive member for agriculture licenses warehouse operators, and each county keeps a registry of receipt transactions. A feasibility study must therefore test county capacity alongside lender appetite.