Insurance companies seeking to deepen penetration in agricultural sector have identified smallholder farmers as important segment of the business.
They believe that the agricultural sector currently contributing N10.50 trillion to nation’s Gross Domestic Product (GDP) in 2019 in a potential market for insurers, when you consider the risks faced by dominance smallholder farmers.
Muftau Oyegunle, president of the Chartered Insurance Institute of Nigeria (CIIN) speaking at its 2020 annual education 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.
He noted 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.
Oyegunle maintained that insurance operators owe it as a duty to understand and be able to assess the risk smallholder farmers are exposed to and be able to develop relevant policies to help them.
He also noted that as risk managers, it is the lot of insurance operators to increase the tempo of campaigns for insurance awareness and professionalism in order to get more people to stand up and take notice and for more Nigerians to embrace insurance as a profession and as a service offering.
Folashade Joseph, managing director/CEO, Nigeria Agricultural Insurance Corporation (NAIC) in her presentation 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 noted 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.
Joseph 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.
She opined that the way forward into giving cheap, adequate and accessible insurance cover to smallholder farmers will entail conducting and intensifying farmers education; swift adaption of available technology for operations of insurers; insurers getting more innovative and more.
