Crop Insurance, a Frugal Innovation in Tanzania, Helps Small Maize Farmers and Contributes to an Emerging Land Market

Abstract

A land market is emerging in Tanzania, triggered by initiatives to reform land legislation and modernize agriculture through frugal innovations, combining hybrid seeds and weather-based index insurance with the use of mobile telephones. The analysis shows that agricultural modernization can be a driver for an emerging land market. Demand for land increases and because of the liberalization of land rights, land can be bought or leased, something the more successful farmers do. To assess the effects of crop insurance for maize farmers, a frugal innovation, a survey has been carried out in three regions. Two hundred farmers were interviewed using cluster sampling with the villages as sampling units and then selecting households per village. The rural transformation process, driven by innovation, started with the development of an ecosystem and land registration while allowing more private (commercial and non-commercial) initiatives. The triggers are frugal innovations. Crop insurance, combining existing hybrid seeds, with satellite images and mobile telephones, brings about a transformation process and pumps money into the land system. People noticing that hybrid maize works, if you have hybrid seeds, the complementary inputs, and an insurance policy, jump on the band wagon, which leads to more demand for land and contributes to an emerging land market.