Satellite technology protects smallholder farmers against crop losses

Article, 25.08.2017

Following a drought, 203,000 smallholders in the southern Indian state of Tamil Nadu were paid compensation by the national crop insurance scheme in July 2017. The extent of the damage was determined quickly and accurately using satellite measurement technology. Those affected were thus promptly compensated for their lost rice crops. A special project lies behind this success: RIICE.

Work in the rice fields in India.
Work in the rice fields in India. © IRRI

What connects the Swiss Agency for Development and Cooperation (SDC), with Swiss satellite data processing company sarmap, the International Rice Research Institute (IRRI), Asian governmental organisations and reinsurance company SwissRe? Together with other partners, all of them are involved in the innovative RIICE (Remote Sensing-Based Information and Insurance for Crops in Emerging Economies) project, which through its use of cutting-edge technology hopes to revolutionise the information systems on rice cultivation in Cambodia, India, Thailand, the Philippines and Vietnam. The SDC’s involvement in this project stems from the fact that it has made food security a priority and believes the long-term nature of the project points the way to the future.

Insurance against rice crop losses is the way forward

More than 3.5 billion people, so almost half the world’s population, consume rice every day. 90% of that rice is cultivated in Asia. Production of this important staple food is therefore the livelihood of millions of smallholder farmers throughout Asia. However, there are risks associated with paddy farming.  Flooding, droughts and other natural disasters may lead to devastating crop failures. These can spell financial ruin for hundreds of thousands of smallholders. When disasters of this kind occur, humanitarian organisations launch costly relief operations, but it often takes a long time for the aid to reach those affected. With the aim of providing direct support, the SDC is the main funding source for the RIICE project, which offers more efficient crop insurance for rice smallholder farmers, ensuring they receive financial compensation quickly when crops fail.

Mapping and observing rice-growing areas also helps forecast crop yields

State-of-the-art satellite and sensor technology make it possible to offer better crop insurance in developing countries. Radar waves transmitted from satellites belonging to the European Space Agency (ESA) map the Earth’s surface in the parts of Southeast Asia where rice is cultivated. These radar waves scan objects and surfaces whereupon a sensor detects and measures the radiation that is reflected from the target. The great benefit of such wave-based measurement is that, unlike an optical satellite measurement method, it works in all weather conditions. The rice-growing areas can thus not only be mapped, but also observed over an extended period. This in turn makes it easier to estimate future crop yields, providing useful information for insurers.

From aid recipient to customer thanks to crop insurance

The Agricultural Insurance Company of India and the Swiss reinsurance company SwissRe make use of the satellite data to offer such crop insurance. While the insurance guarantees swift payment when crops fail, it also offers a further advantage: in the insurance system the smallholders are not recipients of aid, but normal insurance customers. This also boosts their self-esteem. The farmers can choose to pay their insurance premiums on a weekly, monthly or annual basis, depending on their financial means and preferences.

This project is a good example of what is known as a public-private partnership (PPP, see box below). It demonstrates how cooperation between development cooperation actors, national governments and the private sector can bring about a fundamental improvement in the lives of hundreds of thousands of people. The SDC supports these crop loss insurance schemes in Asia because they pursue an innovative and integrated approach and can be implemented on a large scale. The data generated also help optimise rice yields in the future. In the light of climate change, this is also an important step towards guaranteeing food security in these regions in the years to come.

The SDC not only provides financial support for this project but also plays an active role in implementing it at the national level. It maintains important institutional and political contacts as it is in dialogue with the relevant ministries in these rice-producing countries. It also ensures that the interests of smallholders and the poor are given top priority.

Interview with Bernard Zaugg, SDC programme officer in the Global Programme Food Security Division

Portrait photo of Bernard Zaugg.
Bernhard Zaugg is a programme officer at the SDC with responsibility for the RIICE project. © SDC

What can the SDC offer its partners in the RIICE project?

The SDC plays an important part in three areas. Firstly, it finances the bulk of project costs, thus supplementing the contributions made by the other partners, namely those in the private sector. Thanks to this financial contribution, the private sector is more willing to take the risks associated with innovation. Furthermore, it is possible to lower the final costs of products destined for the market.

Public-private partnership (PPP)

A public-private partnership (PPP) is just what the name suggests – a partnership between the public sector and the private sector. The SDC enters into such a partnership when it can be expected to bring about an improvement in social, ecological and economic conditions in developing countries. These partnerships offer a variety of benefits. They enable the constructive exchange of knowledge, the number of actors involved rises, new networks can be developed and the scope of projects expanded. Finally, the financial, technical and operational risks associated with the projects can be shared among the different partners.