Insurance firm highlights risk protection, access to finance and value-chain investment as keys to building a more resilient agricultural economy
AIICO Insurance Plc has called for stronger collaboration among government, insurers, financial institutions, farmers and other stakeholders to accelerate the transformation of Nigeria’s agricultural sector and unlock the full potential of agribusiness.
Speaking at the annual AIICO Insurance training for members of the Nigerian Association of Insurance and Pension Editors (NAIPE) in Lagos, the company’s Agric & Emerging Risk Manager, Mr. Leonard Okereafor, said insurance has a critical role to play in creating a sustainable and resilient agricultural ecosystem.
Okereafor, who made a presentation on agricultural insurance, stressed that the contribution of insurance to the sustainability of Nigeria’s agriculture and agribusiness sector “cannot be overemphasized,” particularly as farmers and investors contend with a range of operational and environmental risks.
According to him, agricultural insurance provides farmers with income stability, improves their ability to access loans, facilitates strategic partnerships and offers peace of mind while serving as an effective risk-management mechanism.
“There is a need to develop a workforce with new skills, values and attitudes to enhance improved productivity and ensure food security. One of the key drivers for transformation is agribusiness,” he said.
From farming to a full-fledged business ecosystem
Okereafor explained that agriculture traditionally focuses on cultivating land, growing crops and raising livestock, whereas agribusiness covers a much broader economic chain.
He said agribusiness encompasses input supply, farming operations, processing and manufacturing, distribution, marketing, retail and export, alongside the financial and commercial activities associated with agriculture.
While agriculture may include small-scale and subsistence farming, he noted that agribusiness is increasingly associated with larger-scale commercial operations, profitability and market competitiveness.
He identified the major stages of the agribusiness value chain as input supply, production, post-harvest services, post-harvest trading, processing, trading of processed products and retail.
Despite the enormous opportunities in the sector, Okereafor said Nigeria’s agribusiness development continues to face significant obstacles.
Among the challenges are limited access to modern agricultural technology, inadequate extension services, weak market linkages, difficulties surrounding agricultural inputs, limited access to agricultural credit and inadequate availability of appropriate financial solutions.
Insurance as a catalyst for agricultural investment
Against this backdrop, Okereafor positioned agricultural insurance as an important component of efforts to protect investments and encourage greater participation across the value chain.
He disclosed that AIICO’s agricultural insurance solutions for Nigerian farmers and agribusiness investors are broadly structured around indemnity and index-based insurance.
Under its indemnity offerings, the company provides insurance for poultry, fish farms, livestock, plantations, farm property and produce, as well as multi-perils crop insurance.
Its index-based solutions include area-yield index insurance, weather index insurance and bundled or hybrid policies.
The poultry insurance product, for instance, covers birds including broilers, layers, parent stock, grandparents stock, hatchery stock, cockerels and ornamental birds against death resulting from perils such as fire, lightning, windstorm, flood, uncontrollable disease and accidents.
For fish farmers, the company’s fishery insurance covers fish against death and fish ponds against collapse arising from fire, lightning, windstorm, flood, uncontrollable disease and accidents.
The livestock policy provides protection for animals such as cattle, sheep, goats, rabbits and pigs against death caused by fire, lightning, windstorm, flood, accidents and uncontrollable disease.
AIICO’s plantation insurance covers crops including cocoa, sugar cane and oil palm against losses or damage caused by fire, lightning, flood, windstorm and aircraft-related perils.
The farm property insurance product, meanwhile, protects agricultural assets such as warehouses and farm equipment, as well as agricultural produce, against a range of risks including fire, burglary, lightning, flood, windstorm, explosion, aircraft damage, earthquake and impact.
Protecting farmers from costly crop losses
Okereafor also highlighted the company’s Multi-Perils Crop Insurance (MPCI), designed to protect farmers against crop losses or damage caused by risks including fire, lightning, explosion, aircraft damage, windstorm, flood and outbreaks of uncontrollable pests and diseases.
The policy provides coverage for the production costs of crops that are lost or damaged between planting and maturity.
With agriculture remaining central to Nigeria’s food security and economic development ambitions, the call for closer collaboration among stakeholders underscores the need to address risks across the entire agribusiness value chain.
For AIICO, strengthening agricultural insurance is not only about compensating farmers after losses occur, but also about creating greater confidence for investment, improving access to finance and helping businesses withstand shocks that could otherwise threaten their survival.
The company’s position suggests that a more resilient Nigerian agricultural sector will require a coordinated approach in which insurance, finance, technology, market access and human-capital development work together to move agriculture beyond subsistence and towards a competitive, commercially driven agribusiness economy.
