A poultry farmer in Ilorin, the Kwara State capital, Mr Joseph Babalola, was feeding his 4,000 ISA-brown laying birds with gusto, assisted by two male attendants, when The Guardian got to his medium-scale backyard poultry farm, called ACS Farm. The house and the farm sit on about seven plots of land.

A probe into how secure the investment was revealed a surprise. The farm was not insured, and reasons the farmer adduced were equally rational, revealing the imperatives of driving financial and insurance inclusion in the agro-allied sector.

A 4,000-laying-bird farm, by any standard, is a huge investment. At the rate of N50,000 per cage, the 44 units of cages housing the birds are worth N2.2 million. At the rate of N1500, the value of the birds is about N6 million. Conservatively, the poultry pens and the perimeter fencing would cost N4 million, excluding the value of the land. None of this is insured!

When asked whether he was aware that there are agricultural insurance policies that cover the mortality of birds, Mr Babalola said: “No. I am not aware. I only know that there are insurance policies that cover general agriculture, but I don’t know of any that covers mortality. I know that there are policies for theft, fire and for transit.”

His is a story similar to those of thousands of small to medium-size farmers, processors and agro-produce dealers in Nigeria. His reasons ranged from lack of awareness to warped reputation on claim payments associated with the insurance industry.

“Those that are ahead of us, the ones that we look up to in the poultry industry, told us that, “look if you face any crisis, the insurance companies won’t pay and there is no point using your money to do it,” Babalola explained.

Shedding light on peer influence of farmers against insurance inclusion based on the perceived reputation of the industry players, he added, “They say it is better to keep a percentage of our income to fight any crisis, or if we have an asset, it can be converted quickly into cash when we’re in crises. They added that those are more reliable ways than giving our money to a firm that will still fail.”

However, Babalola is willing and ready if policies are tailor-made to take care of the peculiarities of the poultry sector, and if insurers would build a good reputation by responding positively and quickly to claims for compensation in cases of losses.

“It is just a matter of education. If we know what is involved, the premium and the whole policy as it entails, I will insure the farm. But in a situation when the education is vague and you are expected to take the policy, this will make me look back at the years the poultry farm has been operating and see that yes, there can be a possibility of risk, but we’ve been managing them by ourselves, so there is no need for the policy,” he told The Guardian.

He concluded that since premiums are paid in installments, “I think everyone will be very much interested with the assurance that the company will act up accordingly in case of any mortality. I think I will take it.”

A fish farmer’s perspective
A fish farmer, Mr Rotimi Oloye, who is also the National President of the Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN), while responding to why most fish farmers do not take insurance policies, said with the exception of the Nigerian Agricultural Insurance Corporation (NAIC) and Leadway Assurance, “insurance companies are not fully knowledgeable about details of our fish business.

“By the time you go through their policies, you will discover that they are just transporting policies from fire and theft policies into aquaculture. So, the right people who studied aquaculture in universities should be saddled with such sectors.

“If issues arise, they use those technical terms either to escape or fulfill their obligations. So, they are trying their best, but they need to be well developed and structured to take care of exigencies that may arise.”

Oloye argued that farmers need something attractive to convince them to pay premiums, and if insurance companies come up with adequate policies acceptable to farmers, they would buy into insurance policies.

“If the insurance companies are serious, they should employ aquaculture experts who would understand the business and challenges of farmers and tailor policies to cover such risks. Every farmer would want to insure his stocks against mortality, morbidity and poor harvest, but when the insurer does not know how the fish grows, it will not work.

“The insurers should know that fish, at so and so ages, should weigh a particular gram and other details,” he added.

Another poultry farmer in Ilorin, Segun Oluwayinka, said his birds and other factors of production were not insure because “good management practices reduce mortality” of his birds, and paying insurance premiums would imply a waste of scarce resources if no incident occurs.

He added that if insurance companies would pay some rebates, say after three to five years of paying premiums without any incident, he would take insurance policies.

His farm in Ilorin also sits on about two acres of land, with an on-the-farm feed mill attached, but none is insured.

President of the All Farmers Association of Nigeria (AFAN), Mr Ibrahim Kabir, told The Guardian that most of the farmers in the association were not insured.

Source: Guardian