Effects of Agricultural Insurance on Food Productivity in Nigeria
Chapter One
OBJECTIVE OF THE STUDY
- To investigate the number of claims that was reported to NAIC yearly.
- To investigate the amount paid by the farmers as premium.
- To investigate the performance of the relevant financial institution and agricultural lending institution on the insurance policy.
- The research will also check the output achieved in farming activities under the agricultural insurance scheme.
- To investigate the claim settlement methods and procedures of the agricultural insurance scheme.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Agriculture remains an important economic sector in many developing countries. It is a source of growth and a potential source of investment opportunities for the private sector. Two-thirds of the world’s agricultural value added is estimated to be created in developing countries (World Bank 2008). In agriculture-based economies, which include most of Sub-Saharan Africa, agriculture generates 29% of GDP on average. In transforming countries — countries in which agriculture is no longer a major source of economic growth, which include most of South and East Asia and the Middle East and North Africa — the contribution of agriculture to GDP is much lower (Mahul and Stutley, 2010). Nearly half of the world’s population, some 2.9 billion people, lives in rural areas. Agriculture is a source of livelihood for an estimated 86% of these people (World Bank, 2008). Agriculture provides employment to 68% of the population in agriculture-based countries and 48% in transforming economies. About 94% of rural households live from their agricultural activities in agricultural-based countries; this proportion falls to 76% in transforming economies. Many developing countries have seen major shifts in their agricultural policies toward the modernization of the agricultural sector over the past two decades. The change in policy contributed to more sustainable growth of the sector, although growth was slower than in nonagricultural sectors, except in agriculture-based countries. Agriculture can contribute to spurring growth, reducing poverty and sustaining the environment. GDP growth in agriculture is at least twice as effective in reducing poverty as non agricultural GDP growth (World Bank, 2008). Agriculture remains the dominant sector in a large number of developing economies. It accounts for a major share of the gross national product and is still the main Net source of employment. Moreover, agricultural products are often an important export item. Productivity gains in agriculture are necessary for self sustaining economic development in most developing countries (UNCTAD, 1994; Mahul, 2010). Despite the importance of agriculture in the developing countries, the various initiatives taken for its development have often failed to deliver full benefits. Low levels of income, low capital-labour ratios, and the general precariousness of agricultural production still characterize this sector in many countries. There is often a dichotomy between the urban and rural sectors of the economy, not only in terms of technology but, more importantly, in terms of access to services, for example, transportation, medical and educational facilities and credit and insurance (UNCTAD, 1994). For an orderly growth of the agricultural, and, more broadly, the rural sector, it is necessary to establish a comprehensive package programme of support services. Agricultural Insurance is a part of this package. Agriculture has always been a risky business. Unlike the industrial sector, it is subject to the vagaries of weather. The variations in productivity induced by nature cannot be fully accommodated by farmers. It is true that since time immemorial farmers have devised measures to limit these risks: crop rotation and diversification, intercropping, use of low yield but stress tolerant varieties, tillage systems, share tenancy, contractual inter-linking, development of non-farm sources of income such as handicrafts and handlooms, socio-cultural strategies which distribute risks within the extended family, and informal financial arrangements.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
SOURCES OF DATA COLLECTION
Data were collected from two main sources namely
-Primary source and
secondary source
primary source: These are materials of statistical investigation, which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary data: These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
POPULATION OF THE STUDY
Population of a study is a group of persons or aggregate items, things the researcher in interested in getting information from for the study the effect of agricultural insurance food productivity in Nigeria. 100 staff of industrial and general insurance and 100 agriculturist was randomly selected by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY CONCLUSION RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to investigate the role of agricultural insurance in enhancing agricultural productivity
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of agricultural insurance in Nigeria.
Summary
Insurance and other risk transfer solutions can be part of a systematic adaptation approach and can enable vulnerable countries to better manage the new climate risks. Insurance can provide financial security against the economic impacts of extreme climate events and may for some climate change perils, be more cost effective than certain prevention measures. The combination of risk transfer and prevention adaptation measures is a subjective change that depends on policy preferences, investment choices and opportunity costs. There are three mechanisms by which insurance can be an important component of adaption. The first is by directly transferring the risks away from the vulnerable allowing people to use insurance payouts to recover from shocks and maintain their livelihoods. The second by allowing them to take productive risks (e.g. to take or make a loan, to invest in their own productive capacity and to develop economically). The poor are almost always the most exposed to climate impacts. They are more likely to escape poverty if they are able to better protect themselves. The third mechanism is through the signals provided by insurance pricing insurance sets a price tag on risks. If certain activities become riskier under a changing climate the insurance price will rise to reflect this risk. The place increase can incentivize change to less risks activities and to roe comprehensive risk management strategies
Conclusion
Modern technology and agricultural insurance are not mutually exclusive. Rather, they should be seen as both complementary and mutually reinforcing. This is because uncertainties in Agriculture transcends the production stage, to include special processes such as harvesting, storage, good-in-transit, pilfering and marketing (prices) because of the perishability nature of agricultural products. Nigeria has made a decent start to tackling its agricultural albeit rural problems. The macroeconomic reforms that have been instituted have elicited some modest supply response. There has been growth in the agricultural sector. The growth has touched virtually all the sub-sectors of agriculture which has lead to an increase in hectarage cultivated. At the same vein there is need for government agencies to address in fractural challenges which constrain productivity
Recommendations
Haven successfully completed the study, the researcher therefore recommends that:
Institution lenders would be encouraged to lend more for agricultural production because of added security of insurance for the loans;
Farmers will be encouraged to take more credit for increased agricultural production when provided with insurance cover against natural hazards i.e. drought, floods pests, diseases etc;
Bank loan repayment will improve because of added supervision of farmers activities by the insurance Agency and other institutions participating in the operation of the scheme;
Administration of the scheme will be made simple because:
- Services of existing financial institution will be utilized;
- Premium will be built in and deducted straight from the loan for payment to the Agency by the financial institution;
- Insurance contracts are made between the insurance Agency and the lending institutions rather than directly with the farmers;
- Indemnities are paid to the farmers through the credit institutions and
- Compulsion for insurance is easily enforced However farmers not taking institutional credit can avail themselves of the protection offered by the scheme.
Reference
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