Agricultural insurance, a security to farmers
By Olaoluwa Omolafe, Evelyn Ejibunu, Success Nlemchukwu & Comfort Ordia
Agriculture is generally known to be the greatest and fundamentally the most important aspect of any nation’s economy for human sustainability and wildlife conservation. This sustainability effect being on the increase daily is also being faced with several farm challenges which poses future declination in food and animal production.
An agriculturist once said, that “we all flourish or decline with the farmer.” This means for any nation to flourish or decline in food or agricultural production, it all lies in the hands of the farmers or agricultural practitioners.
Research findings have shown that many farmers, be it crop farmers, poultry farmers, livestock farmers or fish farmers gives up on farming as a result of agricultural shock leading to failure in the output or productivity of his farm.
Most farmers invests their life savings on their farms but when problem ensues, they know not where to start from and therefore gives up on their farming business, leading to a level of declination in the percentage of the nation’s agricultural production. Hence, the need for farmers to embrace agricultural insurance.
Speaking on insurance, it is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness or death in return for payment of a specified premium. It is also trying to provide protection against a possible eventuality.
On what Agricultural insurance is all about, it is simply the protection against farm loss or damage to crops and livestock as it has great potential to provide value to low-income farmers and their communities, both by protecting farmers when shocks occur and by encouraging greater investment in crops.
Insurance is more or less termed as a system of saving for the future so as to safeguard your investments.
In Nigeria today, over 60% of food produced in the country are being produced by rural farmers. That is, most of our daily food consumption are being produced by rural farmers who have no or less access to insurance which can protect them against any agricultural shock or hazard.
Of recent, up to three different states in Nigeria had a devastating flooding experience. Among these, Ogbese community and Idanre metropolis of Ondo state experienced a rampageous flooding which massively eroded and destroyed several farms and properties worth a huge sum of money. In this situation, if the farms were not insured by the farmers against such shock, what kind of life will the affected farmers be facing. Hence, the need for agricultural insurance.
Agricultural risks do not only affect farmers, they also affect the whole agribusiness value-chain .
Basically, agricultural insurance has many importance which include, safeguarding of farmers’ investments so as to be on the safer side, gives farmers protection against any misfortune in the future, aids in fighting poverty, increases agricultural production, financial stability for farmers and lots more. It also reduces total reliance on government assistance during any form of farm shock. Agricultural insurance allows affected farmers to come back on track in their farming career when faced with different farm challenges.
Some insurance policies protects against crop or animal death as a result of fire, lightning, windstorm damage, flood, uncontrollable disease and accident. Agricultural Insurance policies serve as securities for banks as indemnification for financial losses suffered by farmers and those in the agricultural value-chain resulting from damages to their products, and also provides funds for servicing such loans.
On ensuring proper agricultural insurance, farmers walks to agricultural insurance companies, meet insurers, agrees to pay certain amount of money (premium) for specific years and gets insured so as to be indemnified during shock on their farms or organisations.
Kudos to the government of Ondo state under the leadership of Arakunrin Oluwarotimi Akeredolu who have been taking steps towards ensuring that all sectors and all people of the state gets insured properly, agricultural sector not excluded. All these are aimed at saving people and organisations when shock or hazard arises.
For farmers and agricultural organisations, when any challenge occur, this opportunity will help them to continue from where they paused as at the time of any challenge.
Agriculture is among the most profitable investment since it has huge return gained within a very short time with a million of naira as an investment for animal and crops. But imagine investing a multi-million naira on a farm project without insuring it as at the time of any form of shock. Hence, the need to insure agriculture in the economy.
To corroborate this, some insurers in an interview with The Hope, explained what insurance is all about and what agricultural insurance entails.
According to Oni Blessing, an agricultural insurer, said, “Insurance is a risk transfer mechanism which is a means of protecting capital assets for individuals and businesses. It can be seen as a system put in place for replacement of value (indemnification). For every farmer, there is an emotional value on their practice.”
“Insurance aims at putting farmers and other agric practitioners together when there are many risks to agricultural practice such as animals, pets among others. What insurance do is that when these risks occur, insurance is going to cover for that particular damage.”
“So, if a farmer has a cassava farm and he decides to insure it, insurance is going to help that farmer. If there is any risk that occur, the monetary or financial value of that insured entity (farmland) will be replaced.”
On several ways insurance is of use to agricultural practitioners or farmers, she said, “Agricultural insurance helps farmers in many ways: it protects against loss or damage to crops or livestock, it has a great potential to provide value to low-income farmers and their communities by protecting the farmer when shock occurs and encourage greater investment in crops.”
“So, when the damage occur, there is a claim in which the insurance company will replace whatsoever that is lost. Majorly, it helps farmers to get back on track during loss.”
“For farmers, it is a better practice for them to insure their farms for their products.”
Speaking on people’s perspective on insurance, Blessing said, “normally, Nigeria farmers and organisations believe that people don’t really trust insurance because they believe they won’t get their claim (money) at the end.”
“Their responses is generally poor because they don’t really know how the policy works. Maybe when there is a claim during loss, insurance has to go through processes to be sure that the loss really happened and the insured is really worthy of the claim.”
Finally, “farmers and agricultural businesses don’t know about this policies and how agricultural insurance can be a better way of managing their practices if there is a loss. It is those practising large scale agriculture that really knows what it means to lose or start over.”
So, those ones have taken out time to do insurance but the rural farmers are not really doing insurance. So, I think if there is a way that ‘extension’ could make it known to them that their is a practice, a policy of insurance that can help them get back on track because that is what insurance is all about.”
Meanwhile, a life assurer, one Mrs Favour, also explains what insurance is all about and people’s perspective about insurance generally.
She said insurance is like a savings for a rainy day. “It can be like taking care of some of your properties so that at the end of the day if anything happens to it, you will have something you can rely on.”
On the other hand, she explains people’s feelings about insurance. According to her, “Insurance is very good. I notice in places like Lagos, Abuja and Port-harcourt, people will walk in to insurance company to file form but here in Akure you will have to beg them. They feel you are just taking their money for taking sake.
“This is due to poor orientation because the orientation here is not that much. I will also say it is the way they think. They just think this things are not important and prefers to put their money in the bank than to be insured. They think that bank is more safer than insurance company.”
“There are insurance policies with at least 3 years and up to 16years, depending on the kind of policy you prefer.”