THE NIGERIAN AGRICULTURAL INSURANCE SCHEME

Background Information:
Risks in Agricultural undertakings are more widely spread and far-reaching than in most other enterprises. This is because they go beyond all the well-known and researched entrepreneurial hazards and uncertainties of modern business world. Such hazards include the vagaries of nature, inclement weather conditions, of pests and diseases along with flood and fire outbreaks. All of these eventualities impact very seriously on the success or failure of any agricultural enterprise. Therefore, any nation with a clear vision for boosting its agricultural production so as to meet the food needs of its populace and industries must of necessity put in place mechanisms that would reduce these risks and uncertainties to a bearable minimum. The need therefore, for a mechanism that functions specially to keep the farmers in business cannot be over-emphasized, and hence the need for an agricultural insurance scheme in Nigeria.

THE MAIN OBJECTIVES OF THE SCHEME

The broad objectives of the Nigerian Agricultural Insurance Scheme (NAIC) is to protect the Nigerian farmer from the effects of natural hazards by introducing measures which shall ensure a prompt payment of appropriate indemnity (compensation) sufficient to keep the farmer in business after suffering a loss.


The scheme was specially designed to:

- Promote agricultural production since it would enhanced greater confidence in adopting new and improved farming practices and at the same time bring about greater investments in the agricultural sector of the Nigerian economy, thereby increasing the total agricultural production;

- Provide financial support to farmers in the event of losses arising from natural disasters;

- Increase the flow of agricultural credit from lending institutions to the farmers;

- Minimize or eliminate the need for emergency assistance provided by Government during period of agricultural disasters.

BENEFICIARIES AND BENEFITS OF THE SCHEME

 WHO SHOULD BENEFIT FROM THE SCHEME?

The scheme was established to provide security for all categories of farmers, namely: small, medium and large scale holder, either in groups or as individuals.

The scheme is especially compulsory for farmers that benefit from any form of agricultural items covered under the scheme. Most of these transactions are made by or through the lending institutions.

The scheme also provides cover for the self financed farmers, Government sponsored or assisted projects, etc in which institutional credit facilities may not be involved.
 

BENEFITS OF THE SCHEME

The scheme is immensely beneficial to the farmers and hence the Nation as a whole in so many ways. These include:

a.                 Assurance of security

The insured farmer has an added advantage in his production efforts, knowing that should a loss occur, the loss will not be total as NAIC will indemnify him. This serves as an added impetus to his efforts. 

b.                Adoption  of Technology

 The farmer now armed with the added security advantage as mentioned in (a) above is now more comfortably positioned to follow time tested laid down guidelines that will improve his yields. Adoption of new technological approach which is a major requirement for insured farmers is therefore compulsorily carried out by farmer, leading to greater yields and improved farm incomes.

 c.                 Enjoyment of Premium Subsidy

There is also the incentive that only 50% of the Premium is paid by the farmer on crops and livestock items that fall under subsidized category. The other half is paid on his behalf by the Federal and State Governments where the project is located. This is one of the attractive features of the scheme. More farmers are hereby encouraged to avail themselves of the Corporation’s policies which is the veritable ship of financial stability through which many farmers have been sailing to their shores of prosperity.

d.                Facilities Easy Access to Credits Facilities

The NAIC cover also enables easy access to greater credit facilities since the Insurance cover can serve as a form of security for loans. It works this way, if farmer X who has taken a loan of N5, 000.00 which was insured with NAIC succeeds in paying back the loan as he will, he will be entitled to a bigger loan of say N10,000.00 and above.

e.                 Generation Creation of wealth

The accessibility of greater credit facilities as mentioned in (d) above would result in an increase in the size of project under production, giving rise to increased income for the farmer, which in turn, will lead to higher farm employment level, more wealth generation and general improvement in quality of life of the citizenry.

f.                  Provision of Extension Services

Insured farmers benefits immensely from technical advisory services which are provided by staff of the Corporation in the various areas of agriculture and risk management during monitoring visits to insured farm projects and potential beneficiaries of the scheme. What is more, these extension services are provided free of charge.

Furthermore, the personnel involved are highly reliable and tested professionals in their fields which include crops scientists, veterinary surgeons, seasoned insurance Experts, soil scientist, etc. This translates to the basic fact that the farmer can save his hard-earned money which he ordinarily would have spent on consultants most of which may turn out to be fakes.

g.                Assistance in Agricultural Loans Recovery

Banks whose clients have been covered under the Nigerian Agricultural Insurance Scheme have continued to find it easy to recover loans disbursed thereby leading to more farmers enjoying credits facilities from such repayments.

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