SUNDAY PUNCH
BUSINESS
APRIL 3,2011
24
Insurance as catalyst for agricultural development A collaborative approach in which insurers will invest In agriculture and make policies available that can protect the farm produce from losses will help to develop the agriculture sector, NlKE POPOOLA reports VER the years, local farmers have continued to encounter challenges in food and production of other agricultural 路products. These difficulties militate against their ability to produce in large quantity and become more export-oriented. The peculiar problems with the local farmers include poor funding and inadequate infrastructural facilities. Other global challenges such as unfavourable climatic changes and outbreak of diseases adversely affect annual farm years and animal and poultry yields. A major effect of these problems is that when the farm ers suffer losses, they are either subjected to hardships or are sent out of the business completely. A few that may strive to absorb the shock will be forced to jack up prices to remain in the business. . However, to minimise the economic losses and reduce the impact on the farmers, insurance is often brought in to playa major role . This is because worldwide, insurance is the only institution that exists to ensure the continuity of other businesses. In most countries with developed agriculture and insurance industries, insurance is prioritised among the commercial farmers because of their high level of enlightenment. The insurers. therefore, provide affordable policies to the farmers, which they can buy to cover them against losses. For different countries, the kinds of agriculture insurance pblicies available are usually a determinant of the types of farm or poultry produce that they have. . With insurance, experts say that the farmers will be provided with financial security if any unpleasant thing happens to whatever they insure. When a farmer suffers a loss, he is required to immediately contact ,\:liS insurer, so that the claims process can commence and 'ht! can be immediately restored to his former position. Unlike countries that have embraced insurance very well , the relevance of agriculture insurance is further stressed in the African continent due to the fact that most of the farmers are poorly funded and ignorant of the benefits of insurance . During'lhe 2009 edition of the annual conference of the African Insurance Organisation that took place in Tanzania, a call was made to the insurers to device products that could
help to alleviate the losses that farmers were facing. This, it was stressed, would further alleviate poverty in Africa. In the country, the Nigerian Agricultural Insurance Corporation was established as a full fledged agriculture insurance company to provide insurance cover to local farmers. Other insurance companies in the country are also trying to be innovative by introducing micro insurance products that can cater for the needs of the peasant farmers. Last year, for instance, a statement from SD Consult said that the Grand Cereals & Oil Mills Limited, a subsidiary of UAC of Nigeria Pic and makers of Vital Feeds, in collaboration with NAIC, compensated livestock farmers that suffered losses as a result of Marek disease, a viral infection common with birds. The farmers were compensated proportionally according to the number of birds lost to the dreadful disease. The statement said that several farmers had lost their means of livelihood to related diseases; a case in point was the bird flu saga of 2006 that wiped out over 30 per cent of the bird population in the country. It stated that Marek disease usually affected birds two to five months old and caused lymphoid tumors with symptoms varying according to the position of the tumor. The Director General, Nigerian Insurers Association, Mr. Sunday Thomas, who noted that farmers had a lot to gain from insurance , worried that most of them lacked the awareness and were poorly funded. He noted that the insurers and the farmers stood to gain a lot from agriculture if they could work together to develop the sector. Thomas said , " If the insurers can invest in agriculture, it will enable the farmers to have access to fund to expand their produce, while the insurers can then provide the needed cover for them to alleviate their suffering when they suffer any loss." According to him , this kind of collaborative approach will help to boost the farmers' output, and produce a larger market for the insurers to underwrite more business. He noted that Nigeria had the opportunity to have a very vibrant agriculture industry. According to him , considering the opportunities available in the sector, it could have been the mainstream of the country's economy by providing much wealth and creating employment for the populace . According to the Chairman, Nigerian Council of Registered Insurers, Port Harcourt Area Committee, Mr. Dele Kareem, insurance is vital to every aspect of the agriculture production. He said that insurance was needed in both the production of farm and poultry output. Kareem said, " Insurance is relevant to the farmers from the stage of production, transportation and storage of the farm outputs." He also said that it was equally very important to insure all the machinery needed in the production of the products such as the barns and silos. He noted that often times, the poultry animals might be infected with diseases
capable of wiping out the entire animals, which could result in a huge loss for the farmers. "The relevance of insurance is that it will protect the farm ers against losses from unpredictable occurrences and the effect of global warming," he said. He, however, expressed worry that the Nigerian farmers were not adequately funded, which was hindering their capacity to produce in large quantity for export purposes. Kareem noted that the bulk of the farmers that were available in the country were peasant, who cultivated a hectare or half for their families to survive. However, the few doing it for commercial purposes, he noted, were quite enlightened about insurance, adding that insurance had helped to bear their losses to keep them in business. Kareem also said that when the farmers worked together with the insurers, thi s also gave them access to professional advice. He advised that the majority of farmers in the country' should be motivated to produce more by introducing incentive products that would make them buy the necessary insurance products, The Chairman of Mastel Limited, Mr. Shehu Mallam , however, lamented that the challenges being encountered by those dealing in agriculture were scaring away young people from the sector. Mallam, who also deals in agro allied products, said, "There are many areas in which insurance can be beneficial to the farmers. They are the equipment, silos, movement of crops, farms, aquatic produce and poultry, among others. " According to him , this will help to alleviate the suffering of the farmers when they incur unexpected losses.