By Adelola Amihere
Worried by Nigeria’s ranking as one of the world’s worst country in the use of agricultural insurance and the need to increase the adoption of fertilizers by small scale farmers in the country, the Fertilizer Producers Association of Nigeria (FEPSAN) and PULA, a pan-African agricultural insurance advisory firm are partnering to upscale the use of agriculture insurance by farmers.
This would be done through the bundling of insurance on up to 14 million bags of fertilsers with an expected projection of about 3.9 million farmers benefitting from the insurance in 2020 and up to 19 million by 2025.
Farmers across Nigeria currently face a range of risks such as climate induced drought, excessive rainfall, pests and diseases, among other challenges that undermine their ability to acquire good yields and incomes.
Pula’s proposed Area Yield Index Insurance solutions, which would compensate farmers in the event of climate or other catastrophes, be an important intervention that helps farmers manage risks and build sustainable farming enterprises that can withstand shocks.
This insurance also provides financial security that gives farmers confidence to invest in additional inputs like fertilizer, knowing that their investment will be protected by insurance in the event of crop failure.
Speaking at a workshop organized by FEPSAN in Abuja, FEPSAN Chairman, Thomas Etuh pointed out that farmers in Nigeria are faced with risk that often mitigate their expected yields per hectare. For him, adopting PULA Area Yield Index Insurance can be a lever for helping farmers cope with weather and other peculiar risks while scaling adoption of fertilizers among small farmers
He said: “We are here to see how we grow insurance in agriculture to the farmers in Nigeria because we have lacking behind. The insurance penetration in Nigeria s 0.2%. we are the worst in the world. But in the last two to three years with the CBN anchor Borrowers programme which made insurance compulsory for the farmers. when they give you the loan, and it comes with insurance.
“We looked at not just insuring the farm, you have to insure the inputs. Because if you give fertilisers, seeds and Agro chemicals, it must be the right blends or right seeds. Today’s workshop is to strategies and synergies with all stakeholders so that we can be practicing index base insurance. The insurance covers the farmers from floods, from yields output. for example, if a farmer is expecting 5tonnes per hectare and he gets 2tonnes, that difference of shortfall is covered by insurance.”
On her part, PULA CEO, Rose Goslinga highlighted that while Area Yield Index Insurance will first and foremost benefit farmers, it also makes business sense to the participating fertilizer companies as insurance creates an opportunity for these companies to build a strong brand with farmers and gain new customers:
“Embedding agriculture insurance to Fertilizer will enable these companies to understand farmers better while providing them with real protection. In the 10 countries that Pula works we have seen that companies adding insurance can grow their customer’s base by 30% in one year.”