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Addressing Food Insecurity Via Agric Insurance

May 18, 2022

Economic Losses as a result of natural perils like flood and insecurity in the country due to activities of Fulani herdsmen on farm crops have spelt the need for federal government to intensify efforts on Agric insurance premium financing for farmers, writes Ebere Nwoji

Recent development in one of the rice farm settlements in Badagry area of Lagos in which a young Agricultural engineer and NYSC member suffered total loss of his rice farm in the hands of Fulani herds men without any form of compensation or aid from anywhere has raised a question on what has become of National Crop Insurance scheme instituted by the federal government for the purpose of ameliorating losses among farmers.

The NYSC rice farmer by name Ugochukwu Nwokoma, a young agric engineer from Federal University of Technology Owerri (FUTO) was attached to a private secondary school in Iba area Ojo, Lagos for his NYSC primary assignment.

According to him, in addition to his teaching primary assignment, he decided to experiment on his agric profession by renting an acre of land in Badagry where he planted rice.

His farm was said to be doing very well and was almost ripe for harvest when one morning he visited only to see that the entire crops have been eaten up by cows while the herders littered every corner of the farm with human feces.

He lamented that he borrowed money to add up to his savings from the NYSC monthly allowance to start the rice farming.

According to the NYSC rice farmer, he invested not less than N700,000 in the farm with the hope that when he sells the proceed, he would pay back the borrowed fund and use the balance to invest in the farm as a way of preparing himself for self employment after his youth service exercise since there is little or no hope of employment in Nigeria after university education.

Lamenting that the activities of the herdsmen have kept him stranded, the young agric engineer said he felt discouraged he has determined never to give up hope in agriculture but would be more determined to practice his agric profession if he can gather another money to start off his rice-farming dream.

Merits of Crop Insurance Scheme

The young corper’s experience is just an example of what farmers currently suffer in Nigeria and why prices of food stuff have hit the roof top, exposing the entire country to food insecurity. As stated earlier, this has raised question on the status of national crop insurance scheme instituted by the Goodluck Jonathan’s administration .

The national crop insurance scheme which registered over 10 million farmers for the purpose of assisting them to secure government assisted insurance coverage premium financing was meant to assist farmers that might suffer economic losses due to floods and other related perils.

The former Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, while talking about the scheme at a seminar in Abuja, said the programme was intended to insure farmers against shocks and losses from weather related events. Insurers said the scheme could be extended to cover other forms of losses farmers were prone to.

The former agric minister assured that with the scheme in place, farmers could farm with peace noting that farmers and communities must be protected from economic losses due to floods and other related mishaps.

“Our goal is to insure no less than 10 million farmers. We will also design and implement a flood disaster payment policy that will protect farmers, communities and states from economic losses due to floods, “he said.

Despite the scheme, farmers currently have a lot of pathetic loss stories to tell spelling the need for federal government and its agric insurance institution, the Nigerian Agricultural Insurance corporation (NAIC), to act fast and prevent such occurrence from repeating itself.

It also spells the need for government to encourage young graduates especially professional agric engineers among them like the now devastated Ugochukwu Nwokoma to invest their little earned allowances and energy in agricultural production with enough guarantee that such efforts will not be wasted by insecurity situation in the country. The fact remains that after the exit from power by the regime that instituted the FG’s assisted agric insurance scheme, not much is heard about it as campaigns and promotion of the scheme for awareness creation waned.

Relevance of Agric Insurance

Experts believe farmers need to be protected from the negative impacts of climate change with appropriate institutional risk management policies, especially crop insurance and strategic grain reserves, which reduce risk exposure and vulnerability to food security shocks.

According to them, in the year 2012, the experience of many Nigerians on the menace of flood has left indelible mark on many families as houses and farmlands were washed away by flood. The effect on food production and food pricing in the country has left many families under the threat of hunger and starvation as prices of food especially staple food like garri, yam and beans have hit the roof top.

They noted that currently, the situation has been worsened by incessant attacks on farm lands by the herders to the extend that in some parts of the north, farmers were said to pay ransoms to herds men before they could be allowed to farm otherwise they will either be killed or have their farmlands destroyed by cows.

The result of this is on high cost of food especially staple food.

For instance, a paint cup of garri hitherto sold for N320 now sells between N900 and N1000.A tuber of yam sold between N180 , N200 before the2012 flood and mergence of the herders’ activities now sells between N1,200 and N1, 500

This is because farmers suffered great losses without any form of compensation because many of them did not insure their farms.

At one of the Economic summits held in Abuja, Economists have viewed that the promotion of agricultural insurance among farmers was a major factor that would enhance large-scale food production worldwide.

The summit, observed that agricultural insurance all over the world has become as prominent in public discourse as conventional insurance, adding that this was due to the adverse effects of global climatic change on food production in different countries which is costing the world several billions of dollars annually excluding loss of lives.

Poor Attitude Towards Insurance

This situation is worsened by lack of insurance cover by the farmers, which would have helped to cushion the effects of such losses on the farmers and reposition them to remain in business.

Here in Nigeria, many farmers are still far from understanding and making use of insurance services in their agric business. This has been attributed to factors such as lack of funds to carry out the business and at the same time pay for insurance services.

This aside, many farmers have failed to see their farming activities as a profession or a business. They still see it as leisure or hobby; they therefore find it difficult accepting innovations that would improve on what they already know.

These reasons and more explain why despite campaigns in different parts of the country on agric insurance some farmers are still not responding to it.

In different parts of Nigeria, agric insurance is still not too popular. Indeed farmers see losses from natural disaster like flood or influenza like bird flu as a seasonal occurrence that must come at its due time. They also believe that such losses are unpreventable natural phenomenon, therefore they do not need preventive measures, but must take their natural course.


In recent times, NAICOM, through its micro insurance programmes has been making efforts to familiarise Nigerian farmers with agric insurance. NAICOM has also collaborated with foreign agencies in doing this as part of effort to ensure insurance penetration in the rural parts of the country.

Also, the federal government has in the years past been contributing its quota in this regard by bearing part of farmers’ insurance cost through subsidised agric insurance scheme, which is provided by the Nigerian Agricultural Insurance Corporation (NAIC).

Currently, NAICOM had expanded the scope of agric insurance in the country by liberalising the subsector and encouraging the private sector insurers to participate in non-subsidised agric insurance underwriting. This is due to increasing need for agric insurance occasioned by adverse effect of climatic change and other forms of emerging risks in the country.

Although private sector insurers have argued that agric insurance is such a high-risk business that many insurers will not want to delve into without government support, companies like Industrial and General Insurance, Leadway and few others have recently ventured into it .

Their experience so far shows that many Nigerian farmers have not seen the need for insurance services and this has continued to expose them to various forms of risks.

The all-important nature of agric insurance has in recent times continued to attract public attention and solution as economists believe that lack of agric insurance has impaired large-scale production among Nigerian farmers.

Agric Insurance risks:

They identified risks associated with agriculture as floods as witnessed in different parts of the country during the 2012 nationwide flood, national vagaries in weather conditions, fire disasters, communal clashes, market failure, price changes, unsteady rainfall pattern, policy changes, land losses as well as pest and disease attacks.

But a Lagos-based farmer and president Satin Farms and Agricultural Services, Mr Kola Oyedeji, said aside the above risks, poultry farmers in the country often face risk of glut especially in egg and birds supply in certain periods of the year.

According to him, the losses incurred by farmers from this are often as high as that caused by natural disaster risk.

He said when there was glut in egg supply any year due to market lull, farmers could sell their eggs and birds at give-away price even below their cost price to avoid damage since there was no preservative method for eggs.

On patronising agric insurance he said through improved technology, he as an educated farmer has learnt to prevent risk of influenza among his birds and has reduced his loss ratio to zero level to the extent that for some years now, he has stopped taking insurance cover for his farm.

But agricultural risk analysts have questioned whether vaccination and other forms of disease preventive measures can act as substitute to insurance and the answer is no.

According to the analysts, this is because death by epidemic is not the only risk livestocks are prone to. Apart from this, they can be prone to fire outbreak and other forms of misfortune which vaccination cannot provide solution to.

The analysts said it is apparent that the use of mere vaccination to replace insurance goes to show the level of ignorance of farmers and Nigerians at large to insurance even the educated ones.

This is because the farmer in question is a BSc degree holder in Biochemistry. But he still assumes that vaccinating his birds against livestock diseases was enough substitute to insurance cover.

Although the farmer in an interview told THISDAY that he decided to stop paying insurance premium because of lack of enough funds to do his business, this no doubt spells the need for sensitisation programmes to the farmers as well as financial assistance to the farmers especially in the area of insurance premium financing.

Insurers’ desperate call

Reacting, the past Presidents of the Chartered Insurance Institute of Nigeria (CIIN), Mr Fatai Lawal called for extension of agric insurance financing to conventional insurers to encourage more farmers to take the cover and encourage insurance companies to design products that would cater for emerging needs of farmers.

Also, insurance sector observers said insurance managers should find ways of sweeping these ignorant farmers under insurance cover through either retail or micro insurance scheme being campaigned for by NAICOM.

According to the observers, insurers should through their various agency system discover various farm settlements in the country, find out risks different farmers are prone to and design products that will address such needs.

They also said the insurers should also study other problems facing the farmers and design investment-related products that will solve those problems and attract them to test what insurance cover looks like and the benefits they stand to gain from there.

Obviously, one of the common problems of farmers in the country is lack of finance and inability to secure credits from finance institutions to rent farm lands, buy fertilisers, seedlings and hire labourers.

One of the farmers in the Ojo Farm Settlement told THISDAY that despite the noise banks are making concerning agric credit scheme, none was real as he and his colleagues in the farm settlement had made all efforts possible to benefit from the credit scheme of the banks but none worked.

He said if government really wants to help farmers, it should no longer channel the loans through the banks so that the credit would be equitably distributed to farmers who need it.

However, government has through the various federal government assisted agric borrowers scheme like the Anchor Borrower scheme, assisted farmers to get loans from the affiliated banks and agric insurance is often attached to these loans.