Agriculture is the superfood of any economy. This statement is especially true in the case of underdeveloped and developing countries that are still pivoting towards economic stability and development. For these nations, committing resources to improved agricultural models will not only lead them towards sustainable economic growth but also have a ripple effect on the livelihoods and employment of their populace.
That’s not all. A working agricultural sector also portends food security and the growth of industries through food processing and distribution, amongst other add-ons, all of which cements agriculture as a formidable backbone of the economy.
Interestingly, statistical records also reveal this. For instance, research conducted by the World Bank stated that agriculture accounted for 4% of the global GDP in 2018. The World Trade Organization (WTO) also corroborates this. The WTO report shows that the agricultural sector accounts for 70-90% of employment and job creation in many developing countries.
In Nigeria, the agricultural sector is also a key contributor to the local economy, contributing 30% of the total GDP in 2021, revealing an increase of 6% from the previous quarter. There are, however, many factors that continue to afflict the Nigerian agricultural sector. These factors threaten the growth of agribusiness in the country and hinder economic diversification, resulting in a protracted over-dependence of the economy on oil.
Some factors that inhibit the sustenance of subsistent and commercial farming in Nigeria include lack of funding, unpredictable weather conditions mostly attributable to global warming and climate change, insecurity, pest infestations, cattle encroachment, and inadequate storage facilities. These hindrances have diminished agricultural investments in the country and dissuaded the participation of many otherwise interested parties in agribusiness.
Unfortunately, all these risks and farming issues played a role when over 3000 smallholder farmers in Benue and Nararawa State – considered the destinations for agriculture production – lost about N111.4 million worth of agriculture investments due to soil moisture pressure occasioned by poor weather conditions. Here is exactly what transpired:
The farmers knew this could happen.
Undoubtedly, agricultural investment in Nigeria is one of the riskiest enterprises anyone can undertake, and it is not for the risk-averse. The promoters are consistently battling unpredictable weather conditions – especially in the face of the global climate change crisis, unstable price regimes for produce, and outcomes from their investments, logistic quagmire, insecurities, and animal encroachment.
A report by SBMIntel, an Africa-focused research firm, shows that 26.3 per cent of farmers, some of whom were from Benue and Nasarawa states, had their harvests greatly affected by extreme weather conditions, especially floodings. The zone was also the hotbed of insecurities and cattle encroachment. But they were unfazed.
Read also: Heifer International boosts smallholder farmers with N100m insurance payout
They tried to take proactive actions.
In the 2021 farming season, 4,354 smallholder farmers cultivating 4,358 hectares of farmlands in Benue and Nasarawa States elected to take steps that would mitigate these well-documented agric-based risks. This is where Leadway Assurance, Nigeria’s leading insurer, came in.
Leadway Assurance, in collaboration with Heifer International, a global non-profit development; OLAM, a global agri-business company; and PULA Advisors, an Agricultural Insurance and technology company had provided an innovative insurance cover- the Area Yield Index Insurance Pay At Harvest initiative. This bespoke insurance solution which allows farmers to pay insurance premiums after their crops have been harvested and sold was designed by Leadway Assurance and Pula Advisors to mitigate climate change-induced losses among smallholder farmers in Nigeria and further deepen insurance penetration among rural households in the Country. It was also designed to enable farmers pay for insurance premiums when it is financially convenient for them to do so. The cover compensates the farmers for yield losses suffered at the end of a cropping season.
The insurance premiums of the farmers were pre-financed by Heifer International. The implication of this is that these smallholder farmers who are usually constrained for cash to buy farm inputs at the beginning of the farming season have the option of paying for their insurance premiums at the end of the season, from the proceeds when the rice paddy have been harvested and sold or from the insurance claims paid by Leadway Assurance to the farmers that have suffered a loss during the season. Olam offtakes the harvested rice paddy from the farmers thereby guaranteeing a ready market for the harvested rice paddy. Either way, it’s a win-win situation for the farmers. This joint action will be instrumental to how well the farmers were able to manage the huge N111.4 million loss on the farm investment.
Can these farmers recover from this N111.4 million loss?
With a slow GDP growth and an economy that is undulating between growth and recession, losing over N100 million is enough to change a business’ survival story. That is the reality facing these 3,110 smallholder rice farmers. It was dire.
But then Leadway and friends showed up to ensure that the 3,110 smallholder farmers would not lose their investments. On Thursday, June 9, 2022, Leadway Assurance paid a claim totalling N111,398,895 (One hundred and eleven million, three hundred and ninety-eight thousand, eight hundred and ninety-five Naira) to the farmers during a payout ceremony in Makurdi, Benue State.
With this single action, Leadway enabled recovery from enormous investment losses and boosted the farmers’ confidence ahead of a new farming season.
As a leading risk bearer and insurance service provider with unrivalled integrity, recording a year-on-year industry claims payout record in the last six years, Leadway Assurance has continuously shown our dedication and steadfastness to ensure peace of mind in every endeavour, especially for Nigeria’s agribusiness ecosystem. Irrespective of this daunting milestone, the foremost insurer is reiterating its commitment to supporting farmers in guaranteeing food security for the country.
Indeed, the Leadway Agricultural Insurance is well suited for farmers, Agri-investment promoters, and other related agribusinesses as it offers various degrees of protection, from crops to livestock and other farm properties.
With the Leadway Agric insurance plan, you can be assured of full coverage and protection on farm produce, crops, poultry, fish, livestock, machinery, and equipment against losses from financial, environmental, and societal setbacks such as fire, burglary, lightning, flood, windstorm, impacts, earthquakes, volcanic eruptions, cattle encroachments, the distant chance of a plane crashing into your farm.
For more information on the array of products you can buy, please visit www.leadway.com/agric-insurance/ or scan the QR Code at the top right or call the Leadway Assurance Financial Management Experts on 01-2800-70 or email [email protected] for professional advice. You call also request a call back by visiting www.leadway.com/call-me.
We are also within your reach on WhatsApp via our virtual assistant support on 08129997044 or any of our social media outlets – @leadwayassurance on Facebook, Instagram, and Twitter. You can also send a DM, and we will revert with all the information you require.
