Tomato Ebola: Need for Agric Insurance
The astronomical rise in the prices of food crops such as tomatoes, pepper, garlic and ginger among others, which cause has been attributed to outbreak of farm pests known as tomato Ebola has prompted the need for intensive campaign for full embrace of agriculture insurance, writes Ebere Nwoji
Recent report by the National Bureau of Statistics (NBS) indicated that food inflation in the country rose to 40.66 per cent in May 2024; a fact that is very worrisome and raises question on the possibility of an average household in Nigeria being able to feed itself in the nearest future.
The report is contained in the latest Consumer Price Index and Inflation report released by the agency recently.
The NBS in the report disclosed that headline inflation moved by 0.26 per cent to 33.95 per cent from 33.69 per cent recorded in April.
It noted that major contributing items to headline inflation in May 2024 including food & non-alcoholic beverages contributing 17.59 per cent, in addition to housing, water, and electricity, gas & other fuel which contributed 5.68 per cent .
A breakdown of the data showed that all through last year, the price of food commodities increased steadily from 25.25 per cent in June, to 26.98 per cent in July, 29.34 per cent, 30.64 per cent in August, 31.52 per cent in September, 31.52 per cent October, 32.84 per cent in November and 33.93 per cent as the end of December 2023.
Rising Food Prices
In various local food markets in Lagos, prices of essential food items like fresh tomatoes, pepper, ginger and garlic have witnessed astronomical rise.
Enquiries into the cause of this by THISDAY showed that the development was mainly caused by the outbreak of tomato pest known as tomato Ebola and other related diseases.
In a recent interview he granted a local TV station, the Chairman of Mile12 market in Lagos, Shehu Jibrin said aside the outbreak of tomato and pepper disease, insecurity situation in the country was another major reason why there is shortage of tomato, pepper supply in different parts of the country.
According to him, “Let’s assume that we have 5,000 farmers in the country, less than 1500 of them are working while the rest are in the internally displaced camps. He warned that if government do not tackle the issue of insecurity, the prices of tomatoes, peppers and other perishables would continue to go up.
One of the tomato sellers in the popular Iyana-Iba market along Lagos-Badagry Express way told THISDAY that mass export of tomatoes and pepper to neighbouring country like Niger also contributed to the scarcity.
But the Minister of Agriculture, Abubakar Kyari, blamed the infestation of tomato farms by the tomato Ebola for the scarcity and high price. Today, a small bucket of tomatoes hitherto sold for N2,000 now sells for N14,000 while a hand full of pepper hitherto sold for N100 now sells for N500. Similarly, small quantity of ginger and garlic sold for N100 now sells for N600.
Analysts have predicted that the scarcity might worsen next year, as farmers who suffered losses of their tomato, pepper, ginger and garlic to these farm pests may not have the money to purchase seedlings next year to continue their farming just as insecurity in farm areas has scared the remaining farmers away.
Agric insurance
Meanwhile. tomato Ebola, the major cause of the current scarcity has raised the question on the place of agricultural insurance in agric activities in Nigeria. It has also raised question on the number of Nigerian farmers that have embraced agric insurance and its loss cushioning effects.
Agricultural insurance is an insurance policy which involves the insured (farmer) paying a little sum called premium usually in percentage to an insurance company to guarantee against loss due to any of the perils (death, flood, drought, crop diseases) covered for a particular period of time usually not more than one year.
Agric insurance experts said the role of insurance in enhancing agricultural productivity is that it protects farmers against financial disaster after suffering any of the insured risks for which indemnity (compensation) is paid. “With the insurance coverage, the farmer is not only able to continue in business but also the stability of his income is enhanced. Aside this, agricultural insurance empowers the farmers to obtain farm credits. But as beneficial as agricultural insurance is Nigerian farmers are yet to embrace it. The result of this is what Nigerians are witnessing in tomato market today, “said an expert.
According to to the expert, had the farmers secured adequate insurance coverage, what they would have done in the face of the current outbreak of tomato Ebola is to approach their insurance underwriter for indemnity, “and this would return each farmer who suffered the loss to his former financial position.”
Agric Insurance in Nigeria
The Nigerian Agricultural Insurance scheme (NAIS) was established in 1987 with the goals of encouraging financial institutions to offer rural credits lowering the need for government post- disaster assistance and encouraging investment in the agric sector.
At the beginning of the scheme, only the Nigerian Agricultural Insurance Corporation was licensed to offer agric insurance services to farmers at subsidised rate. Later the Agric line of business was liberalised during the era of Fola Daniel as the commissioner for insurance as he licensed more operating firms to underwrite agric insurance .
Some of the later licensed underwriting firms are Leadway Assurance, Industrial and General Insurance plc , NEM Insurance, Royal Exchange Assurance, Universal Insurance plc.
Since their entrance into agric insurance underwriting, they have been doing a lot to popularise agric insurance among Nigerian farmers, however, despite various risks farmers faced, many of them have remained adamant towards embracing Agric insurance.
Agric Risks faced by farmers
Generally, farmers face various risks such as adverse weather conditions, pests and diseases, market fluctuations, fire outbreak and other unpredictable events. Agricultural insurance serves as a crucial risk management tool, providing financial protection and stability to farmers and traders in the face of uncertainties.
Initially one of the challenges faced by insurance underwriters from farmers is ignorance. For instance, a farmer takes one insurance cover without extension and faces a different risks that made him incur losses, he will expect the insurer to compensate him for the losses whereas he did not secure cover for the particular risk that occurred, when the insurer refuses to pay on the ground that the particular risk that occurred was not insured against, the farmer will go about saying insurers don’t pay claims and others will believe.
But as years go by with awareness creation and sensitisation, the farmers are beginning to understand and some are keying into insurance coverage.
What the agric insurance underwriters are now fighting for is to ensure mass patronage of insurance by farmers.
Agric Insurance policies for farmers
Agric insurance experts said some of the agric insurance options available to Nigerian farmers are Crop Insurance, designed to protect farmers against losses resulting from crop failures caused by adverse weather events, pests, diseases, or other perils. According to the experts, key crop insurance options in Nigeria include Yield-Based Insurance: Yield-based insurance covers farmers for losses in crop yield due to perils such as drought, flood, pests, and diseases just as we have in the current case of tomatoe, pepper, ginger and garlic.
Another is Area-Based Insurance also known as index-based insurance, which the experts said compensates farmers based on predefined weather or yield indices that represent the overall agricultural performance of a specific area.
There is also the Multi-Peril Crop Insurance which provides coverage for a range of perils, including weather events, pests, diseases, and fire. It offers comprehensive protection against multiple risks that could affect crop production. This type of insurance provides farmers with more extensive coverage but may involve higher premiums.
According to the experts, Livestock insurance is designed to protect farmers and livestock owners against losses resulting from disease outbreaks, accidents, or natural disasters. In Nigeria, livestock insurance options include: Mortality Insurance which covers the loss of livestock due to accidental death, disease, or theft. Health Insurance for livestock which covers veterinary expenses incurred for the treatment of diseases and medical conditions. It ensures that farmers can afford necessary healthcare for their animals.
There is also Feed Insurance, which covers losses incurred due to the failure of purchased or produced feed. This type of insurance helps livestock farmers manage risks associated with feed shortages, poor quality feed, or feed-related health issues.
Agricultural asset insurance protects farmers and traders against losses or damage to their agricultural assets, including farm buildings, machinery, and equipment.
Agricultural Value Chain Insurance which covers risks associated with the entire agricultural value chain, including production, processing, storage, transportation, and marketing. This type of insurance protects farmers, traders, and other stakeholders against risks throughout the entire agricultural supply chain.
Benefits of Agricultural Insurance
According to insurance experts, Agricultural Insurance offers several benefits to farmers and traders in Nigeria in the area of Risk Management. Agricultural insurance provides a safety net against unpredictable events, helping farmers and traders manage risks associated with production losses, price volatility, and asset damages. It ensures financial stability and reduces the vulnerability of agricultural stakeholders.
Access to Credit
Agricultural insurance enhances farmers’ creditworthiness by providing collateral for loans. Lenders are more willing to provide credit to insured farmers, knowing that their investments are protected against risks. This promotes access to finance and enables farmers to invest in improved agricultural practices and technologies.
Improved Productivity: With the security provided by insurance coverage, farmers can adopt more efficient and advanced farming techniques, knowing they have a financial safety net in case of losses. This can lead to increased productivity, better resource management, and improved agricultural practices.
Challenges
Despite the benefits, agriculture insurance in Nigeria faces certain challenges which include limited awareness. Many farmers and traders in Nigeria are unaware of the existence and benefits of agricultural insurance. Raising awareness about the importance of insurance and its role in mitigating risks is crucial for increasing insurance penetration in the agricultural sector.
Another challenge is affordability. The affordability of insurance premiums is a significant challenge for small-scale farmers who often struggle with limited financial resources. Developing innovative and flexible insurance products that cater for the specific needs and financial capacities of small-scale farmers can help address this challenge.
Data Availability and Quality is also another challenge. Reliable and accurate data on agricultural production, weather patterns, and market information is essential for effective insurance coverage. However, data collection and management systems in Nigeria are often inadequate, limiting the availability of data necessary for assessing risks and determining insurance premiums.
In the mist of the benefits and challenges, there is need for both government and insurers to join force in bringing farmers into the main stream of Agric insurance so that in case of acute shortage of farm produce as a result of any of the above risks, farmers will bounce back to business due to insurance claims received and gap in such food production will be easily covered.
Also with insurance coverage, farmers will be educated on how to guard against attack of their farms by disease outbreak and as such prevent any of such disease that cause food shortage from attacking their farms.
