Insurance

Insurers eye resuscitation of agricultural insurance working group

Sir. Oyegunle

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Chuks Udo Okonta

Participants at the Chartered Insurance Institute of Nigeria (CIIN) 2020 Education Seminar have called for the resuscitation of the Agricultural Insurance Working Group (AIWG) under the auspices of the National Insurance Commission (NAICOM) to involve all industry stakeholders and smallholder farmers along with other agricultural industry players.

The resolution was part of the communique issued at the end of deliberations at the just concluded CIIN 2020 Education Seminar held virtually in compliance with government’s directives on COVID-19 pandemic.

The participants also implored Insurance industry operators to improve on consumer education to all smallholder farmers in order to release the untapped potentials in that sector, whilst canvassing the need for education on the supply side of the chain (i.e with insurance practitioners) should continually be improved upon to provide the required support in the sector.

It was also agreed that there should be greater collaboration between industry practitioners (i.e, the Regulator, NAICOM, CIIN, NIA, NCRIB, ILAN) with relevant agencies such as NIRSAL, NAIC in order to reduce the gap in information sharing on Agricultural insurance.

Data integration and synchronization, they said should be improved upon in order to foster a better understanding of the needs, aspirations and yearnings of the smallholder farmers in order to produce effective service by the insurers.

They noted that customer profiling in indigenous language should be emphasized to mitigate unwanted risk in agriculture insurance and that technological collaboration with Nigerian Meteorological Agency (NIMET) should be embarked upon by the industry on forecasting for the effects of weather in the Agricultural sector.

The President of the CIIN, Sir, Muftau Oyegunle, in his address at the opening of the seminar with theme: “Managing Small Holder Farmers; The Insurance Perspective” said smallholder farmers are the drivers of many economies in Africa even though their potential is often not brought forward, stressing that often, the term ‘smallholder’ is interchangeably used with ‘small-scale’ and sometimes ‘peasant farmer’ and that in general terms smallholder only refers to their limited resource endowment relative to other farmers in the sector.

“One of the main characteristics of production systems of smallholder farmers are of simple outdated technologies, low returns and high seasonal labour fluctuations which is a reflection of the disjointed and uncoordinated agricultural value chain. The term ‘’value chain’’ describes the full range of value adding activities required to bring a product or service through the different phases of production, including procurement of raw materials and other inputs,” he said.

He posited that this form of Agricultural production faces a lot of risks, adding that some of these risks include risks caused by potential volatility in prices, damage to crops or livestock, production risk resulting from uncertainty about the levels of production that primary producers can achieve from their current activities amongst others.

Mrs. Joseph

The Managing Director/CEO, Nigeria Agricultural Insurance Corporation (NAIC) Mrs. Folashade Joseph, delivering the theme paper entitled: ‘Management of Smallholder Farmers: The Insurance Perspective’ noted that smallholder farmers are responsible for about 98 per cent of locally produced food consumed in Nigeria, adding that 80 per cent of the total farmers, including medium and large ones are smallholder farmers.

She posited that smallholder farmers are the backbone of Nigerian Agricultural sector and they deserve every support to enable them produce more food, grow more raw materials for the agro-industrial sector and contribute in the ending a food deficit that cost the country $20 billion in food import annually.

She maintained that it is noteworthy that smallholder farmers having been applying most of the ex-ante and ex-post methods for years without achieving desired level of income stabilization, with the advent of formal agricultural insurance system, the smallholder farmers could not only avoid devastating financial losses, but such insurance would also act as a major potential enabler of progress by limiting farmers’ downside risk from investing in their productive capacity.

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