Food Insecurity: Enhancing Farmers’ Productivity with Agric Insurance

Food crisis in Nigeria and its consequences such as the ongoing protest against hunger and bad governance as well as  predictions of severe hunger hitting Nigeria in the nearest future, have fuelled the call for government to promote agric insurance among Nigerian farmers, writes Ebere Nwoji

Recently, the United Nations (UN) predicted that 82 million Nigerians may go hungry by 2030, calling on the government to tackle climate change, pest infestations, and other threats to agricultural productivity.

The  UN prediction comes in the wake of persistent hike in food prices in the country leading to on going endbadgovernance and hunger protest in different parts of the country.

The prediction has fulled the growing call for government to look critically and evolve ways of encouraging farmers and improve agricultural productivity through promotion of agric insurance in Nigeria.

According to the National Bureau of Statistics (NBS), Nigeria’s food inflation rate hit a record high of 40.66 per cent in May 2024, surpassing the previous month’s 40.53 increase.

This surge represents the largest year-on-year increase in food prices since records began in 1996.

Food inflation in Nigeria      

Historically, food inflation in Nigeria has averaged 13.42 per cent, with the lowest point of -17.50 per cent in January 2000.

In 2023, the Food and Agriculture Organisation (FAO) predicted that no fewer than 2.6 million Nigerians in Borno, Sokoto, Zamfara states, and the FCT may face a food crisis between June and August 2024.

Although  the current food crisis in the country has often been attributed to activities of kidnappers and bandits in various bushes in Nigeria, the recent report and prediction by the UN said  effects of other negative factors such as climate change, pest infestations, and other threats to agricultural productivity cannot be ruled out. The UN authorities therefore advised government to rise up to the challenge and restore food security in the country.

Agric Insurance Experts’ demand

Agric insurance experts want the present administration to look inwards and consolidate on the plans laid down by the past administrations on agric insurance and protect the remaining few farmers in the country from losses ravaging their efforts.

The insurers recalled that in the days of former president GoodLuck Jonathan and Akinwunmi Adesina as the Minister for Agric, the Federal Government had registered about 10 million farmers under its Growth Enhancement Scheme, an aspect of its Agricultural Transformation Agenda of the administration.

The farmers’  registeration was geared towards   boosting food production in the country.

A former director at the Federal Ministry of Agriculture, Dr. Talabi Odeyemi, at the regional mechanisation stakeholders’ sensitisation workshop in Kaduna, noted that the government intended to continue with the registration of more farmers in to the agric insurance scheme.

Odeyemi said the Agricultural Transformation Agenda of the President Goodluck Jonathan administration was geared towards moving agriculture from a development project to a profitable business venture.

He  disclosed that the government had put in place a bush clearing intervention with about 6,000 hectares of farm land earmarked to be cleared across the country as a way of assisting farmers who had difficulties in that area.

These efforts were geared towards boosting agric production in the country.

Unfortunately, in all these, mention was not made of effort towards boosting agric insurance to secure agric produce from the above effort.

Indeed, Agric insurance among Nigerian farmers has been very unpopular despite the menace of climatic change in Nigeria in recent times.

Flooding and food prices

It will not be a surprise to hear that some farmers who were affected by 2012 flood are still under the effect of the huge losses they incurred because there was no form of compensation from anybody. Indeed, in 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. 

The problem is now worse as food stuff prices continue to skyrocket.

For instance, a paint cup of garri hitherto sold for N450 during Jonathan’s regime now sells for N3,500. A tuber of yam sold  between N180 , N200 then, now sells between N3, 500 and N5000.

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 summit held in Abuja, Economists have viewed that the promotion of agricultural insurance among farmers is a major factor that will enhance large scale food production worldwide.

Agricultural insurance all over the world has become as prominent in public discourse as conventional insurance. This is 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 .The development is also fast retrogressing progress in the global struggle for food security and individual country’s sufficiency in food production including Nigeria.

At micro level, periodic losses by farmers on account of natural disaster like flood has left them at various stages of poverty that some lacked the least capital to continue farming even at domestic scale after each year’s natural disaster.

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.

Farmers’ attitude to Agric insurance 

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.

Bearing this in mind, effort to make them see the need for agric insurance has not yielded the  desired result. This is despite mass sensitisation programmes of the National Insurance Commission (NAICOM), which through its micro insurance programmes has been doing a lot 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.

NAICOM’S Effort 

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).

But in the past few years, 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 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, company like Industrial and General Insurance 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.

In one of education conference of the Chartered Insurance Institute of Nigeria (CIIN) held in Lagos, a past President of the institute, Dr Wole Adetimehin, had challenged the insurers to key to the Federal Government’s transformation agenda in various sectors of the economy including insurance, to expand their coast in insurance services provisions.

They viewed that farmers in the country need reorientation and rehabilitation in their modus operandi to make them be in tune with global standard in food production and migrate from domestic to commercial farming scale.

They viewed that to achieve this, farmers need to block leakages in their system especially in the area of annual loss of farm produce to natural disasters like flood and influenza among livestock farmers.

According to them, where it occurs, farmers need some cushioning effects to make them  enjoy some level of financial stability and remain in business.

According to them, agricultural insurance and other related services will go a long way to cushion the effects of any form of loss by  the farmers.  

They identified risks associated with agriculture as floods as witnessed in different parts of the country in 2012, 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.

Attitude towards insurance 

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 are now facing 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 is 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 is no preservative method for eggs. He said currently, there is egg deficit because of high cost of feeds .

According to him, through improved technology, he as an educated farmer has learnt to prevent risk of influenza among his birds. This, he said, 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. 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.

Apparently 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 is enough substitute to insurance cover.

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

Insurance premium financing for farmers is important in the country as recent development has shown that Nigeria has now been included in the list of natural disaster-prone countries.

This being the case, government at all levels may have to listen to recent call by insurers 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 will cater for emerging needs of farmers.

Climatically, Nigerian farmers are prone to risks from natural disaster  such as flood, draught as well as different crop and livestock diseases. They are so prone to these diseases that on yearly basis, the farmers especially those in the rural areas are exposed to huge losses emanating from farm crops and livestock epidemics. Farmers in the city are not immune to the problem to the problem.