20/06/2024
Agriculture is a significant contributor to the Niger state's economy and a primary source of livelihood for many smallholder farmers. However, smallholder farmers in Niger State may be considered to be in a high-risk environment threatening smallholder farmers livelihoods and creating a barrier to sustainable agribusiness development due to unpredictable weather patterns and climate change (Droughts, floods) which often leads to variability in yields and thus in welfare of smallholder farmers whose livelihoods are largely dependent on agricultural production
Some of the characteristic of Nigeria’s SHF is the cultivation of 0.5 -1 ha of land on average and are responsible for production of 80-90% of national agricultural outputs. They are faced with financial and technological challenges, mostly rely on rain-fed agriculture, highly vulnerable to changing climatic variations, cannot afford farm mechanization and mostly use traditional farm tools and are faced with weak agricultural extension services.
Agricultural insurance portends benefits for smallholder farmers such as: mitigates financial impacts of risks and losses, improves access to credit and investment opportunities, enhances productivity and income stability, facilitates adoption of improved agricultural practices as well as contributes to food security and poverty reduction.
It is stating the obvious that farmers adoption of agricultural insurance is still very insignificant. A recent survey conducted on farmers participation in agricultural insurance showed that only 2% of respondents had benefited from insurance coverage in the past, while 98% of respondents had not. This low participation rate highlights the importance of understanding the barriers that prevent farmers from adopting agricultural insurance. In light of this, NANTS organized a stakeholders/experts workshop on agricultural insurance to investigate in-depth the reasons for the poor adoption of agricultural insurance by smallholder farmers in other to suggest possible interventions for increased adoption in this regard. The workshop was a coalition of Niger State Government, CSOs, Development Partners, NGOs, INGOs, Insurance Companies, Farmer Reps, Agribusiness Executives and Traders.
On the issue regarding why there is low adoption rate of agricultural insurance by farmers, the feedback was categorized into Supply and Demand sides challenges as follows:
Supply Side Challenges:
1. Ambiguity in product definition
2. Weak or lack of evidence on the efficacy of insurance products
3. Non redemption of premium subsidy by government.
4. Limited deployment of technologies to support intervention
5. Insurance companies do not adopt participatory approach in product design
6. Limited capacity of EAs and CBAs to deliver on insurance products.
7. No partnership with Community Associations in the delivery of insurance products.
8. Challenge of Already Gone Risk (is it worth investing?)
9. Limited capacity for bottom-up insurance strategy
Demand Side Challenges:
1. High cost of insurance premium
2. Lack of trust in insurance companies
3. Lack of conviction on the efficacy of insurance products
4. Low level awareness of insurance products
5. Lack of willingness to pay insurance premium
6. Over reliance on government to support insurance
7. Farmers subsistence approach to agriculture rather than business development approach
On the issue regarding how to develop smallholder farmer (SHF) friendly insurance products, the following were resolutions:
1. Implement pilot insurance strategy
2. Involve Extension and Commodity Groups in the development of insurance
3. Integrate insurance as part of extension communication
4. Introduce a SMART mandatory component to upscale inclusion
5. Direct working relationship with stakeholders - aggregators, development partners, etc.
6. Put up a revolving fund to engender sustainability of insurance products
7. Deploy SMART subsidy approaches as proven to be effective in Zambia
Some suggested ways forward include
1. Use social media (Television, radio and mass text messages) to create awareness for deployment of insurance products
2. Insurance Companies should deploy evidence is showcasing the efficacy of products through adoption of insurance pilot strategy
3. Recapitalization of insurance outfits to enable wider impact
4. There is the need for workable regulations to facilitate effective implementation of insurance intervention
5. The need for Insurance companies to review technical coefficients for estimation of insurance coverage in line with best practices (Eg Crop yield Index product)
