Preparing Nigerian Farmers Against Loses from Climatic Change

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As federal government intensifies efforts to harness opportunities in Nigeria’s agricultural sector, Ebere Nwoji reports that stakeholders are determined to ensure that farmers protect their produce through right insurance policies

Stakeholders in Nigeria’s agricultural sector are leaving no stone unturned in their efforts to achieve sufficiency in food production through harnessing of the potentials in Nigeria’s agricultural sector. They are also working to mitigate the losses of agricultural yields and market price risks for both large scale and smallholder farmers.

At a just concluded workshop for Nigerian insurance underwriters and farmers, promoted majorly by THE African Reinsurance Corporation and the International Finance Corporation (IFC), with the view to educate insurers on the best way to offer agricultural insurance services that suit Nigerian farmers, experts focused attention on protecting the farmers against weather related losses through adequate insurance services.

The contents of the workshop were structured based on farmers’ market needs and it provided an opportunity for insurers in attendance to be thought on topics such as: Price Index; Digital Solutions in the Agriculture Insurance Space and Practical Crop Cuts Methodology.

The farmers at the end of the Workshop which took place in Lagos, visited some farms including rice farms in Badagry Lagos for one-on-one interactions with the farmers on the problems, especially weather related problems affecting their operations.

Through the visit, it was discovered that part of the problems facing the farmers are fluctuations in rainfall and variable temperatures, altering growing seasons, changes in planting and harvesting calendars, and difficulties in water availability, among others.

Meanwhile, through the interaction between the farmers and experts who served as resource persons at the workshop, the organisers were optimistic that lessons from the workshop, would within the next two years, address the challenges facing the Nigerian insurance industry in the implementation of agriculture index insurance contracts.

Other objectives

The Deputy Managing Director/Chief Operating Officer, African Reinsurance Corporation, Ken Aghoghovbia, who reeled out the objective of the workshop to participants pointed out that the event was meant
to address the technical capacity knowhow gap in index insurance space with a special focus on price index insurance with real case studies.

He also stated that it was planned to discuss, among other issues; digital solutions available, lack of data challenges in Nigerian market, provide practical field experience in claims management with special focus on crop cuts methodologies and to update the knowledge of agricultural insurance underwriters on risk management measures in the agriculture value chain, the scope of policy wordings and reinsurance concepts.
The DMD also assured the participants at the workshop that they would interact with knowledgeable resource persons from both Africa Re and IFC.

The participants were, however, exposed to agricultural insurance topics such as risk management and insurance in the agriculture Value Chain in the area of understanding key Agricultural risk transfer process. Other areas touched are; the scope of agriculture insurance policy wording, claims management the reinsurance concept, the fundamentals of index insurance-the weather index insurance key concept, the review of common weather index insurance models, the hybrid index insurance and Area yield index insurance and the pricing and claims settlement.

Also at the workshop, participants were taken through topics like; area yield index insurance -data sourcing and product structuring, pricing and claims settlement, case study in area yield index insurance, price index insurance data sourcing and product structuring, price index insurance pricing and claims settlement, case study in price index insurance, digital solution in the agriculture insurance space.

Clients’ engagement and partnership

Aghoghovbia, noted that since the launch of the Nigeria Index Insurance program, African Reinsurance Corporation, in collaboration with IFC, have initiated various activities in the market to achieve the key objectives of the program.

He pointed out that in order to adequately address the pain points of stakeholders in the agriculture insurance space, Africa Re and its partner reach out to clients individually to collate their needs, adding that one of it turned out to be the five day technical workshop that has exposed the agricultural underwriters to vast knowledge in the above topics treated at the Workshop.

He said the IFC/GIIF fund which Africa Re manages on behalf of the Nigerian agriculture industry stakeholders, aligns with the founding mission in addressing the industry challenges, stressing that Africa Re supported by its partners will continue to work with IFC to provide solutions to the Nigerian agriculture industry by assisting in provision of adequate reinsurance capacity, training, digital solutions and product development.

Also speaking, Regional Director, West Africa Regional Office, Africa Re, Mrs. Funmi Omokhodion, disclosed that Africa Re has collaboration with IFC where the two try to give insurance underwriters capacity by letting them understand how agricultural insurance works. According to her, through the workshop, the underwriters have acquired skill in agricultural underwriting and with the skill, they can go to the field and get the business they are looking for. She said one of their initiatives in equipping the insurers is training to build capacity, which she said IFC was also interested in.

“The whole world, not only Africa, has realised that food production through agriculture is the key. We are having issues where we have about 1000 farmers coming in before we started this arrangement with IFC, we had only one company doing Agricultural insurance we moved to four, now we have twelve and by the end of this month we are going to have fourteen so it means that the organisers are building up capacities that can give farmers the protection they need. This is where we are going”, Omokihodion said.

According to her, previous editions of the workshop have given more farmers insurance protection, pointing out that the organisers cannot ignore the role the regulator is playing.
“They have been with us all the way licensing more companies to underwrite agricultural insurance and giving farmers adequate protection. “The whole idea is to reawaken in us the consciousness in agriculture and to follow suit in what the federal government is doing, everybody is going for Agric now and if there are underwriters who can give capacity to show the farmers that they have protection if they have crisis, they will definitely do better.”

According to her, usually if farmers don’t have good harvest after their toiling, they are done for but now they have protection they can go out their way and buy their seed and work.
She said though there are initial hitches, Agric insurance has future that can overtake motor insurance, because over 80 percent of Nigerians are farmers and African countries have the capacity to feed the whole world.

Place of mediators in the value chain

Speaking, Chief Executive officer, Acre Africa, Mr. George Kuria, said his firm, which is a special team around risk management act as a mediator between farmers and insurers.
“We have in our team agronomist, actualrists and other people in strategy. What we do is that we help insurers design their products, monitor the products, distribute the products and make sure that what they put together are working. We help the companies go to the farmers and we push insurance to them. So, we are integral player in the value chain and we have successfully worked with stakeholders in the countries to grow their businesses.
He noted that climate is a key challenge to farmers but that through the workshop, solution to this will be arrived at by the stakeholders.

“The forum was brilliant. It brought together farmers, different stakeholders, insurers, the product designers like us, the reinsures and big developers like the IFC and as we are talking together, we are going to come up with solutions to farmers’ problems”, he said.

He said climatic change is the key problem facing Nigerian farmers because the seasons are not predictable any more. “Sometimes there is too much rain, at times there is lesser rain and besides, there is also problem associated with markets,” he stated.
According to him, many farmers farm without knowing where to sell their products, adding that the bottom of it all is agronomic practices to make sure they maximse their output per hectare of per acre.

“If it can be overcome so that they produce at the same level as farmers in Asia and in the west, it will help improve their income and enlarge their output This is a key challenge that stake holders need to come together to find solution to.

“To make them have satisfied seeds, agronomic practices, finance to help them buy their inputs, insurance to protect them against unforeseen Risk and market to buy and sell their produce at fair prices”, the Acre African boss stated
From the insurers’ side, the Head Northern Operations of the Industrial and General Insurance (IGI). Tope- Babalola Adebola, expressed satisfaction with the workshop.

She noted that it started in 2016 and that her company had been part of it all through.
According to her, before now, operators have been doing a lot of things without clarity as to how to really package their products to suit and address the needs of the farmers.

She said some negative impact of these initial period mistakes is now eye opener to them adding that with the lessons from the workshop, they will go back and package their products better so that farmers, insurers and federal government will be winners in their ongoing struggle to achieve sufficiency in food production.
Another participant, Leonard Okafor, from AIICO Insurance, said insurers have been expecting good things like the workshop.

He said it is the beginning of better things to happen in Agric sector in Nigeria adding that participants are now in better position to support farmers by providing better financial solutions to various risks they face as farmers.
He said he was optimistic that following what they have learnt from the workshop, insurers will up their games and nobody would have any reason not to do the right thing.