Farmers and agro-allied investors have been urged, once again, to insure their farms and investments against unforeseen disasters to remain productive and sustainable.
Insurance mitigates against risks. Agriculture is risk-prone. And Nigeria’s agricultural risk factors are compounded by insecurity, apart from natural, biological and environmental disasters. Added to them is climate change. Amid the challenges, there is general apathy against insurance, especially among resource-poor Nigerians, among whom subsistence farmers are chief.
Hence, agricultural and insurance professionals believe that encumbrances against food security in Nigeria and Africa are many, and taking insurance policies and coverage for today’s farmers, no matter how small-scale, is inevitable.
Deepening insurance among farmers in Nigeria is a herculean task, and it requires awareness, subsidy, persuasion and partnership with various farmers’ associations, groups and the media sector operators.
An agro-allied insurance professional, Mr Ayo Fatona, gave an insight into why most farmers ignore agricultural insurance.
He explained that because most farmers are restricted by financial resources, they do not see agriculture as a business but a way of life and means to drag out a poor existence.
Hence, most small-scale farmers recycle poor planting materials, and do not use improved varieties of seeds and planting materials, or fertiliser, mechanisation and agro-chemicals that could turn the productivity around. This said, insurance policy is not considered, let alone embraced.
However, SBMIntel, a research firm focused on Africa, said in a report that nearly 80 per cent of Nigerian farmers were affected by either floods or drought in 2020.
Entitled ‘Nigerians Just Want to Eat,’ published in January, the report identified major challenges of farmers and transporters.
The data for the survey was collated from Nasarawa, Osun, Benue, Oyo, Katsina, Ogun and Lagos, and the report stated that the majority of the farmers had their farms in Lagos (36.8 per cent), Oyo (21.1 per cent) and Ogun (15.8 per cent).
According to the report, 10.5 per cent of the respondents had their farms in Benue and the remaining 15.9 per cent were equally distributed between Nasarawa, Osun and Katsina states respectively.
Extreme climatic conditions, such as flooding and drought, retarded productivity per hectare had been a trigger for high prices of foodstuffs.
Advocating insurance in agriculture, Chairman, All Farmers Association of Nigeria (AFAN), Kano State chapter, Abdulrasheed Magaji, urged farmers to be conscious of the climate change and should, therefore, adhere to advice of the experts in terms of planting considering rainfall forecast; choice of seeds to plant (early-maturing where appropriate); keeping away from riverine areas to avoid flood and above all, cultivating farms sizes equal the size of their pockets in the face of uncertain support from the government of either loans and or subsidised inputs.
Also, National President of AFAN, Ibrahim Kabir, enjoined farmers to work assiduously to make Nigeria food-sufficient to avert hunger by embracing insurance products to mitigate unforeseen disasters.
He added that insecurity in the country and the change in the rain patterns are risk factors to farmers’ productivity.
“So, extreme care should be taken by farmers to avoid planting on flood-prone areas and also avoid cultivating areas of high risks of banditry and kidnapping,” he added.
Kabir said insecurity should be viewed as everybody’s concern and “so farmers should augment government effort by deploying all legitimate means to secure their farms and produce.”
Head of Agric Unit/Micro Credit at Leadway Assurance, Ayo Fatona, explained various insurance policies that farmers could buy into to save their investments from perils.
“Agricultural insurance protects against loss or damage to crops and livestock, indemnifies policyholders for losses suffered, has great potential to provide value to low-income farmers and their communities, helps farmers to plan better for the next season.
“It helps in transition planning and better output, helps insurers reason in a strategic way to help farmers better in the agricultural value chain. It also helps the off-takers enjoy great value for their produce and bring indigenous agriculture back to its right place in Nigeria,” Fotona said.
He pointed out that in recognition of the specialised nature of agricultural risks, the Federal Government established the Nigerian Agricultural Insurance Scheme (NAIS), which was implemented and managed by the Nigerian Agricultural Insurance Corporation (NAIC).
However, NAIC insures less than two per cent of the farmers in Nigeria after almost three decades of its operations. Therefore, there remains a huge insurance market for the balance of about 98 per cent uninsured.
He itemised natural disasters common in agriculture as flood, fire, windstorm, drought, moisture stress, excessive moisture, climate change, heat, outbreak of diseases & pests, and wild animal encroachment.
Social risks, he added, include fire, burglary/theft, strike/riot, war/ terrorism, vandalism, moral hazard, socio-cultural risk, financial/market, price fluctuations, depreciations, loss of income, interest changes, and exchange rate.
Managing Director, Nigerian Agricultural Insurance Corporation (NAIC), Mrs Folashade Joseph, had explained to The Guardian that the NAIC Act Cap. N89, Laws of the Federation of Nigeria empowers NAIC to underwrite agricultural risks and subsidise the premium chargeable on some categories of crop and livestock items by as much as 50 per cent.
She, however, said when agricultural projects are financed through credit facilities from whatever sources, they must be insured with NAIC.
On what farmers could insure against at NAIC and how to go about it, the NAIC boss said the corporation insures agriculture across the value chains, covering risks associated with primary production, transportation, processing, and storage (silos), among others.
She explained that “the perils covered by crop policy are fire, lightning, windstorm, flood, drought, pests/diseases, and invasion of the farm by wild animals.
“Losses caused by negligence or willful damage are not covered. Similarly, political risks and losses resulting from social risks like riots, mutiny, revolution are not covered under the scheme.”
In addition, Joseph said the corporation’s website also contains salient information that could guide the farmers on how to access NAIC policies.
She said: “However, all a farmer needs to do is call or go to the branch office nearest to him/her and give the detailed description of his/her farm, and NAIC officials will be there in no time. The farmer will need to complete the proposal form, after which NAIC will carry out a pre-inspection visit to the farm to assess it. Once the farm is assessed, the premium payable would be communicated to the farmer. After the premium has been paid, the policy would be issued. It is as simple as that.”
Subsidy of 50 per cent applies to crops such as rice, maize, yam, cassava, sorghum, guinea corn, beans, soya beans, and indeed all food crops. Crops such as cashew and cocoa are on a commercial basis, and therefore attract no subsidy.
Subsidised livestock includes poultry, cattle, goats and sheep, rabbits, and fishery, among others, but dogs, camels, donkeys, and horses are categorised as commercial with no subsidy, she disclosed.
For a farmer to get compensated for farm losses, NAIC said it takes a maximum of 14 days to pay genuine claims if complete documents are made available to the corporation by the farmers or their agents. Some claims take less.