Author:
Asfaw Shaka Gosa, Dereje Abebe Wubie

Doi: 10.26480/fabm.02.2025.93.98

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Agricultural insurance is a vital strategy for managing on-farm risks, particularly for smallholder farmers who are highly vulnerable to climate variability, pests, and market fluctuations. This study examines the practices, opportunities, and challenges associated with implementing index-based crop insurance (IBCI) in Ethiopia. An exploratory research design was employed, using data from both primary sources, including interviews with policymakers and key stakeholders, and secondary sources, such as government reports, published literature, and project documents. Findings indicate that IBCI has been practiced in Ethiopia for over a decade, with initiatives implemented in regions including Oromia, Amhara, Tigray, and Southern Ethiopia. Opportunities for expanding IBCI include a conducive policy environment, accumulated experience with index-based insurance schemes, a large population of smallholder farmers actively engaged in agriculture, and the presence of potential insurance providers. Despite these favorable conditions and significant donor-supported efforts, uptake remains low, with participation rates in some pilot programs reaching only 25%. The study identifies key challenges hindering adoption, including the absence of a comprehensive legal and regulatory framework, weak public-private partnerships, limited farmer awareness and interest, lack of premium subsidies and tax incentives, and poor coordination among institutions and stakeholders. These findings highlight the need for integrated policy support, stronger institutional collaboration, technological innovations, and targeted capacity-building programs to improve the adoption and sustainability of IBCI in Ethiopia. Overall, this study provides evidence-based insights for policymakers, insurers, and development partners seeking to strengthen agricultural risk management, enhance smallholder resilience, and promote sustainable agricultural development through the effective implementation of index-based crop insurance.