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Our experience with agric insurance – Benue smallholder farmers

Smallholder farmers in Benue State are currently overcoming their nightmare over recurring losses experienced in their fields as they turn to invest in insurance. It’s…

Smallholder farmers in Benue State are currently overcoming their nightmare over recurring losses experienced in their fields as they turn to invest in insurance.

It’s a known fact that the smallholder farmers in Nigeria, and Benue in particular, are constantly exposed to climate change-induced shocks from destructive weather conditions including flooding and drought.

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Also, there are new pests and diseases that often cripple their farming businesses and discourage agribusiness financiers and investors from investing in smallholder farms.

To this end, most of the farmers (mostly rice) almost every season are devastated as a result of losses suffered in their fields and their inability to recover from such losses, especially because they lack the capacity to access credit.

A farmer based in Makurdi, Vitalis Tarnongu, said “Nigeria is made up of mostly smallholder farmers who are mostly not knowledgeable about the existence of credit facilities.

“Usually portfolio farmers hijacked available opportunities thus depriving real farmers. The checklist for accessing these credit facilities is also not usually friendly to smallholder farmer.

“Where a farmer is required to provide collateral in the form of landed property with C of O in a capital city to access N1 million is highly discouraging.

“Commercial banks, which are usually the disposers of these credit facilities, are not ready to deal with smallholder farmers due to fear of risk.”

But, for Uker Shiadon Linus, a smallholder farmer who has been enlightened about insurance, last year’s flood which devastated other farmers in his Guma rural area had only a little effect on his field.

Linus said he suffered minimal loss because his farm was insured, adding that same could not be said of others in his vicinity because they incurred total loss.

“I received an alert. I was paid,” he said.

Though, some of the farmers hardly understood how insurance works to help them out, there are, however, those who instead, blame insurance companies for adding to their woes by not paying them due premiums.

One of such farmers, Ado Bartholomew, of Gwer West area of the state, complained that he incurred total loss in his field but didn’t get any compensation from his insurance company.

Apart from Bartholomew, there are other farmers who, during a recent sensitisation meeting in Makurdi, bared their minds about what insurance meant to them.

Therefore, to support farmers and local food producers to strengthen local economies and build secure livelihoods that provide a living income, a global non-profit development organisation, Heifer International, Nigeria, announced the payment of over N100 million as insurance compensation payout from Leadway Assurance to 3,110 smallholder rice farmers operating in Benue and Nasarawa states.

The organisation said the gesture was done under its pay-at-harvest Area Yield Index Insurance (AYII) project being a component of Heifer’s Naija Unlock signature programme for Nigeria.

Heifer’s Country Director, Rufus Idris, who made the announcement, also noted during the farmers’ insurance claim payout ceremony, held in Makurdi, Benue State, that the organisation resolved to help smallholder farmers mitigate loss of harvests due to poor weather conditions, pest and diseases.

He said AYII was launched in Nigeria in 2021 by Heifer International in partnership with OLAM, Leadway Assurance and PULA to mitigate climate change-induced losses among smallholder farmers and restore investors’ confidence in rice farming.

Idris added that Heifer is on a mission to end hunger and poverty by working with farmers and their communities to unlock opportunities within the agricultural sector for improved incomes, food security and resilience.

The country director also confirmed that a total of 4,358 hectares of farmland belonging to 4,354 smallholder rice farmers in Benue and Nasarawa states were insured during the 2021 wet farming season under the project, among which 3,110 smallholder rice farmers suffered losses due to soil moisture stress.

“The affected 3,110 smallholder rice farmers who suffered poor harvest are scheduled to receive a total sum of N111,398,895, starting today, as insurance compensation claim to enable them to recover their investments and refinance their insurance premium for another farming season,” Idris said.

Also speaking at the event, the Head, Agric and Micro Insurance for Leadway Assurance Limited, an implementing partner for the insurance scheme, Ayoola Fatona, stressed that, “today marks a major milestone in the Nigerian Agriculture insurance space.

“Leadway wishes to reiterate our commitment to assisting smallholder farmers in guaranteeing the food security of the nation by leveraging on this type of partnership with Heifer International.”

Earlier, Rufus explained that the project was carried out through a pay-at-harvest model that enabled participating farmers to pay back the pre-financed premium at harvest when they sold the rice produced to Olam as the off-taker.

He said the recovered insurance premium would then re-used to pre-finance premiums for smallholder farmers during the next farming season, hence guaranteeing farmers resilience to climate-induced losses.

Rufus added, “This cycle continues for three to five farming seasons until the rice farmers see the value of the innovative crop insurance, adopt the new practice, and begin to attract private sector interest for the financing of their crops and farmlands.

“Once this is achieved, Heifer’s investment would then be used to replicate the same solution with other sets of smallholder farmers in another geographical focus area of the signature programme where crop insurance adoption is still low.”

On his part, PULA’s Commercial Manager – West Africa Anglophone, Chukwuma Kalu, maintained that with climate change and adverse weather conditions playing a crucial role in negatively impacting farmer’s productivity and earnings, adding that there’s never been a more critical time for AYII to create a soft-landing for farmers that need protection against nature’s uncertainty.

“We remain dedicated to creating innovative insurance products that de-risk farmers’ agricultural investments and keep them above the poverty line, while driving farming sustainability across Nigeria,” Kalu emphasised.

On his part, Olam’s Vice President for Farming Initiatives, Reji George, posited that, “Olam is excited about this collaboration with Heifer International and we will remain committed to supporting the growth of smallholder farmers that we do business with as we contribute our quota to transforming Nigeria’s agricultural sector.”

The Permanent Secretary of the Benue State Ministry of Agriculture and Natural Resources, Hembadoon Gom, in her speech observed that the situation of the smallholder farmers in the state was pitiable in the past.

“It had been so bad for Benue farmers who lost so much in previous years and some of them could not recover.

“But, today the case is different. This will encourage farmers to farm more,” she said.

Similarly, stakeholders at the event believed that the gesture was would further encourage farmers to invest in insurance because it works, and the farmers also have a ready market in Olam.

The stakeholders believed that with the development, banks would be more comfortable to give farmers money to invest in their farms occasioned by claims that the climate change is projected to cost 6 per cent–30 per cent of Nigeria’s GDP by 2050, translating to $100 billion– $460 billion in losses.

For instance, available records show that in September 2020, farmers in Northern Nigeria lost more than two million tons of rice, a quarter of the country’s projected harvest, due to flooding.