By Rakiya A.Muhammad
For many Nigerian families, farming is not just a means of subsistence, but the very foundation of their communities. However, as climate change intensifies and market conditions become more volatile, smallholder farmers are facing unprecedented challenges that demand urgent attention.
Nigeria’s position as the 64th most vulnerable country and the 180th most ready country, according to the ND-GAIN Index, underscores the imperative for action. The initiative measures a country’s exposure, sensitivity, and capacity to adapt to the adverse effects of climate change.
The Index, a project of the University of Notre Dame Global Adaptation (ND-GAIN) , notes that Nigeria’s high vulnerability score and low readiness score place it in the upper left quadrant of the ND-GAIN Matrix, indicating a great need for investment and innovations to improve readiness and action.
Also, a new report from the World Food Programme indicates that 33 million individuals will experience acute food insecurity in Nigeria by 2025.
The WFP recognises climate change as one of the three primary contributors to food insecurity in the nation.
“Each planting season evokes optimism and trepidation for us,” states Ummu Aliyu, with a decade of experience in farming. “A single drought or flood can obliterate all our efforts.”
Unpredictable weather, pest infestations, and price fluctuation imprison smallholder farmers like Ummu Aliyu in a cycle of poverty despite their hard labour.
Architect Kabir Ibrahim, president of the All Farmers Association of Nigeria (AFAN) also points out climate change as one of the biggest risks to the country’s food security.
Flooding crises in Nigeria used to happen every ten years, but in the past four years, he notes, they have become yearly occurrences. “Addressing the threat factors is essential to improving food security,” he emphasises.
Similarly, agricultural specialist Zubairu Hassan notes: “People are exposed to unmanageable risks when they lack access to credit and insurance.”
Protection for farmer’s plight
The ramifications of climate change are extensive, impacting agriculture, water resources, and human health.
Insurers are paying attention, even in the face of the issues confronting the industry, which the Commissioner for Insurance, Mr Olusegun Omosehin/CEO, National Insurance Commission(NAICOM), emphasises must be addressed to rejuvenate it.
Some notable issues include poor insurance penetration, public mistrust, market fragmentation, regulatory reforms, digital transformation, and adaptation.
Abdul Azeez Ajibola, Head of Agricultural Business at Royal Exchange General Insurance Company, is dismayed that less than 3% of Nigeria’s agricultural activities are insured.
He argues that the agricultural insurance industry in Nigeria has the potential to generate over $600 million in premiums annually, underscoring the economic opportunities it presents.
However, addressing climate change is a challenge that requires collaborative efforts, with insurers, governments, and communities all playing a crucial role in addressing this emerging reality.
Farmers have more access to insurance products thanks to collaborations like Leadway Assurance, Pula Advisers AG, Heifer International, and AFEX Commodity Exchange on the Signature Program in Nigeria, Naija Unlock.
The initiative seeks to enhance the nation’s capacity for food self-sufficiency by boosting agricultural output to satisfy growing local demands while simultaneously addressing the income disparity faced by smallholder farmers and impoverished households.
Through improved access to premium markets, financing, insurance, and climate change adaptation strategies like climate-smart agricultural practices, it aims to empower 2 million households, mainly women and youth, to attain a sustainable living income by 2030.
“The partnership has been actively involved in ensuring climate-induced challenges in the agricultural sector are tackled ,” explains Mike Ensahoro, Country Commercial Manager , Pula Advisors AG.
“This is to ensure that smallholder farmers’ confidence is bolstered,food production is guaranteed, and systems resilience is mainstreamed in an attempt to support the government’s ongoing drive to address food security challenges.”
The actualisation of the insurance initiative represents a watershed for many farmers, empowering them to save their crops and ensure sustainable livelihoods.
Nigeria Agricultural Insurance Corporation (NAIC) claims to be ready to strengthen support for farmers through risk management solutions, having provided N1.014 trillion in insurance coverage to agricultural projects nationwide over the previous five years.
According to NAIC’s Managing Director, Mrs. Folashade Joseph, 1.25 million farmers had insurance coverage during the period, resulting in N8.56 billion in insurance premium revenue.
As part of its involvement in reducing farmer risks, the company also resolved claims amounting to N3.08 billion of the N3.88 billion incurred.
The MD highlights the organisation’s broad outreach and education initiatives, which have taught 129,000 agricultural value chain actors throughout Nigeria’s 36 states and the Federal Capital Territory and reached over 516,000 rural communities.
She asserts these initiatives have had a multiplicity of economic effects, with knowledgeable farmers sharing their expertise and increasing agricultural output.
Ummu Aliyu had her doubts at the outset but embraced them after seeing her neighbours’ prospects for getting back on their feet after setbacks, “a lifeline if you will.”
Ademola Olutosin, Chair of the Nigeria Council of Registered Insurance Brokers, Lagos Area Committee (NCRIB-LAC), underscores the need for brokers and insurers to seize the opportunities within agricultural insurance, notwithstanding the challenges, to enhance the agricultural sector and foster food security.
Steering forces to secure
Insurance can make it easier for farmers to get loans and participate in new agricultural ventures, yet many smallholder farmers are not insured.
In a recent study, researchers from the Department of Agricultural Economics at Obafemi Awolowo University (OAU) in Ile-Ife, Osun State, Nigeria, identified variables encouraging smallholder farmers to get agricultural insurance.
The list includes factors such as educational attainment, farm size, proximity to extension services, and ease of access to insurance offices.
The study consequently advocates for increased awareness of agricultural insurance via various media and extension agents, the bundling of insurance products with inputs, and the establishment of insurance desks near farmers.
“There is a need for insurance companies to create strategies and mediums of getting their insurance products to the farmers, and organisations selling the insurance policies to farmers should reduce the procedures and also compensate farmers immediately in cases of loss,” it adds.” It will help build the farmers’ confidence in purchasing the policies, thus promoting agriculture insurance.”
Also, a survey that examined the pay-at-harvest concept found that smallholder farmers are more inclined to purchase insurance when payment is due at harvest.
Farmers can enrol in the program at the beginning of the growing season and pay the premium when they earn more money from harvesting and selling their crops.
A 2024 study titled “Crop Index Insurance as a Tool for Climate Resilience: Lessons from Smallholder Farmers in Nigeria” demonstrates that farmers’ decision to purchase index insurance is influenced by their access to extension services and membership in economic associations, which provide them with social capital.
“We also find that the long-run welfare impact of index insurance policy on vulnerable households could be significant as an alternative insurance mechanism to traditional insurance,” the researchers state.
“Overall,our results suggest that index insurance policies can play a critical role in mitigating the impacts of extreme events and supporting climate resilience among agricultural communities.”
They, however, point out:”Addressing the challenges of regional variation of extreme events,type of agricultural activity,insurance uptake, affordability complementarity of insurance and credit,social capital,financial literacy, targetting vulnerable households and premium cost, is crucial to ensure the effectiveness and sustainability of these programs.”
One country that will be able to make use of the data-driven, scalable agricultural insurance solutions developed by the Pula Foundation to protect the investments made by smallholder farmers is Nigeria.
Others include Mali, Ghana, Malawi, Pakistan, Bangladesh and Kenya.
With the help of a donation from Bayer’s Crop Science Division and a grant for insurance premium support from the Bayer Foundation, 10 million farmers in these will have access to insurance coverage worth 127 million USD by 2030.
Matthias Berninger, Executive Vice President of Public Affairs, Sustainability, and Safety at Bayer and a Member of the Board of Trustees at the Bayer Foundation, articulates concern regarding the significant adverse effects of climate change on smallholder farmers and predicts further deterioration in the future.
“We must enable them to feed their communities and contribute to global food security.”
Early warning saves lives
Climate information services, however, continue to be essential since they assist farmers in comprehending climate risks and making well-informed insurance purchase selections.
“When we talk about insurance or early warnings, it’s not just about the productivity of farmers,” asserts Professor Charles Anosike, Director General and Chief Executive Officer of the Nigerian Meteorological Agency
“It’s also about saving lives. let’s keep in mind that early warnings save lives.”
He identifies the need to engage the financial sector to incorporate climate risk into their operations and risk management towards assisting them in implementing the agricultural insurance program for farmers.
Sen. Abdullahi Sabi Aliyu, Minister of State for Agriculture and Food Security, concurs that the hazards have emerged as major concerns for the state, investors, and farmers.
“We are always one or two bad harvest seasons away from losing our food supplies,” he laments.
“It is more evident than ever that we need a climate risk mitigation solution to close the many protection gaps arising from climate change risks such as floods, droughts, pests, diseases, etc capable of leading to crop failure or harvest losses.”
The minister explains that the federal government has accelerated the process of integrating the Agricultural Insurance Scheme into NAGS-AP, the National Agricultural Growth Scheme, and the Agro-Pocket Programme to enhance sustainability and food security.
Perks of Insurance
Mr. Leonard Okereafor, the Agricultural and Emerging Risk Manager of AIICO, understands how important insurance is for the viability of Nigeria’s agricultural and agribusiness sector. AllCO’s agricultural insurance solutions for Nigerian farmers and agribusiness investors include indemnity and index-based alternatives.
Okereafor highlights the benefits of insurance for farmers, which include income stability, better access to loans, stronger strategic alliances, peace of mind, and effective risk management.
Although the path to food security and economic stability is still long, advancements in agricultural insurance are opening the door to a more promising future for Nigerian agriculture.
“I feel empowered ,” Umm Aliyu declares, her voice filled with confidence as she gazes at her harvest. She is excited by the prospect of a better future for her children.
