Evaluating the Role of Government Policies in Promoting Agricultural Insurance in Nigeria
Chapter One
The Purpose of the Study
The purpose of this study was to assess the role of government policies in promoting agricultural insurance as a means for enhancing food security in Rivers state.
The Objectives of the Study
The study was guided by the following objectives:
- To examine the level of awareness of the existing agriculture insurance policies in Rivers state.
- To examine how socio-economic factors influence the acceptance and use of agriculture insurance as a tool for enhancing food security in Rivers state
- To assess the influence of the different stakeholders in implementation of agriculture insurance in ensuring a food secure economy.
CHAPTER TWO:
LITERATURE REVIEW
Introduction
This chapter presents literature pertaining to the study. Gaps and works already done by others in this field are reviewed. The chapter culminates into a conceptual framework that guided the study.
Background on Agriculture Insurance Usage
Agriculture insurance has been used for a long time and was developed over 200 years ago It started as private insurance funds, which offered protection for livestock and perils, such as hail insurances. Though crop insurance has been available for a long time, it has primarily been used in developed countries. However, during the last 50 years the supply and the design of the insurance products have been subjected to vigorous extensions. A major reason for the change is government intervention in terms of premium subsides and support programs. The US is the largest market for crop insurance and has among all countries the biggest impact of government support. Nowadays, many countries in Europe have similar programs with government support and proposals within EU suggest expanded risk management programs (Smith & Glauber, 2012).
In October 2005 Annan said “We cannot stop natural calamities, but we can and must better equip individuals and communities to withstand them. Those most vulnerable to nature’s wrath are usually the poorest, which means that when we reduce poverty, we also reduce vulnerability.” (Annan, 2005)
Kofi Annan’s 2005 International Day for Disaster Reduction message followed a year of natural catastrophes including, among others, the 2004 Indian Ocean tsunami that claimed over 280,000 lives, drought and locust plagues across Africa, devastating hurricanes and cyclones in the United States and Caribbean (including Hurricane Katrina), and heavy flooding across Europe and Asia. Annan’s message focused on recognizing the potential of micro-finance to reduce disaster risk and to improve disaster management; he promoted disaster micro-insurance as an “innovative approach” in this field (Boudreau, 2010).
This message reflects the shifting focus from ex poste disaster aid to ex ante assistance in risk mitigation and risk financing. Stronger focus on preemptive mitigation and financing strategies is increasingly important in what experts are calling a “new era of large-scale catastrophes;” in recent years, extreme weather events have been occurring at an accelerating pace (Kunreuther and Michel-Kerjan, 2008). Over the past fifty years there have been significantly increasing trends in economic losses, insured losses, and fatalities from natural catastrophes around the world. The primary drivers of these trends are changes in land use and increasing concentration of people and capital in vulnerable areas (Mechler, 2005). The Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report also concludes that climate change has likely contributed to increasing incidences of natural catastrophes (IPCC 2007).
The impacts of these natural catastrophes are most devastating and enduring in developing countries. 90% of the most devastating disasters between 1970 and 2007, ranked by number of victims, occurred in developing countries (Hochrainer et al, 2009). In absolute terms, economic losses due to natural catastrophes are greatest in developed countries, as a percentage of Gross Domestic Product (GDP), however, catastrophes inflict higher proportional losses in developing countries. A major natural catastrophe in an industrialized country will have a minor impact on GDP (e.g. Hurricane Katrina in 2005 resulted in a 1.1% GDP loss in the United States); at the other extreme, small island nations can incur damages representing several times their annual GDP (Kunreuther and Michel-Kerjan, 2008).
High fatality rates and high proportional GDP losses are two indicators of the destruction caused by natural catastrophes in developing countries. The impact of natural catastrophes in these countries, however, is much greater and enduring than these
measures may imply. Natural catastrophes prohibit economic development and exacerbate cyclical poverty; in the event of a natural catastrophe, the poor may have to sell assets (e.g. livestock), spend savings or default on loans, and cope with concurrent shocks such as illness (Mechler et al, 2006). Many rely on family networks for support, but families are often geographically concentrated and have highly covariant exposures to natural catastrophes. Furthermore, foreign investment in developing countries remains low partially because investors are averse to taking on the risk of losing infrastructure investments, and small firms and farms are unable to access credit to invest in higher risk, higher-yield activities (Mechler et al, 2006).
CHAPTER THREE
STUDY METHODOLOGY
Introduction
This chapter presents a description of the methodology used to carry out this study. The issues discussed include; research design, target population, sampling procedure, data collection methods or instrumentation, testing for validity and reliability of the instruments in addition to data analysis techniques to be used.
Research design
The study employed the use of descriptive research design which involves the collection of data using questionnaires in order to answer questions of awareness, people’s perception on the cost of insurance premium and social-economic factors that determine the use of agriculture insurance in enhancing food security. The data collection tool was a questionnaire with both open-ended and closed ended questions with the aim of getting data that is cross sectional and comparative.
Target Population
Rivers state’s population relies on agriculture with majority of the population being farmers, and as such the target population for this study. The County has a number of stakeholders who are involved in agriculture insurance who have been selected and they include; the six insurance companies providing agriculture insurance (heritage Insurance Company, ICEA Lion Group.
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION, INTERPRETATION AND DISCUSSION OF FINDINGS
Introduction
This chapter presents the findings of the study. It begins with the presentation of the demographic information of the respondents followed by presentation of the findings as per the objectives of the study.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
Introduction
This chapter presents the summary of the study, conclusion and recommendation.
Summary of the Study
The purpose of this study was to assess the role of government policies in promoting agricultural insurance as a means to promoting food security in Nigeria and specifically in Rivers state. The study was guided by the following objectives: to examine the level of awareness of the existing agriculture insurance policies in Rivers state, to examine how different socio-economic factors influence the acceptance and use of Agriculture insurance as a tool for promoting food security in Rivers state and to assess the role of stakeholders on the use of agriculture insurance among farmers.
Literature review was presented on the major variables of the study such as awareness on agriculture insurance, socio-economic role of government policies in promoting agricultural insurance and the influence of stakeholders on the uptake of agriculture Insurance.
Descriptive research design was used for the study. The population for the study was farmers and key informants from organizations offering agriculture insurance in Nigeria. Stratified sampling technique was used to sample the respondents. A total of 259 respondents were targeted by the study (constituting 240 farmers and 19 key informants) out of which 199 responded (180 farmers and 19 key informants) giving a response rate of 77%. Questionnaires and Interview schedules were used as instruments for data collection. Piloting was done to test on the Validity and reliability of the instruments. Quantitative data were analyzed using descriptive statistics while content analysis technique was used to analyze qualitative data collected using interview schedules. Microsoft SPSS package was used to analyze the quantitative data. Descriptive statistics such as frequencies and percentages was used to analyze the data.
The study found that awareness affects the use of agriculture insurance among farmers in Rivers state. This was evidenced by the fact that 30% of the respondents interviewed had not heard of agriculture insurance and the fact that only 10% of the respondents interviewed had agriculture insurance cover for their crops and livestock. The study also found that socio-economic factors such as the cost of insurance, type of farming practiced, risks surrounding crops and livestock and income generated from farming influences the use of agriculture Insurance. The study finally found that stakeholders influence the use of agriculture insurance in through offering insurance at high costs premiums, long procedures in the acquisition of the policy, delays in compensation in case of loss, inadequate creation of awareness on the available policies and limited risk coverage by the insurance firms.
Conclusion
From the study, it was concluded that lack of awareness is one of the major role of government policies in promoting agricultural insurance among farmers in Rivers state.
It was also concluded from the study that socio-economic factors such cost of insurance, type of farming practiced, risks surrounding crops and livestock and income generated from farming influences the use of agriculture Insurance.
Finally it was concluded from the study that stakeholders influences the use of agriculture insurances among farmers in that they charge high premiums, have long procedures and delay compensation in cases of loss.
Recommendations
The following were the recommendations of the study:
The study recommends that more awareness should be created among farmers. This can be done by holding agriculture meetings with farmers in order to educate them on the benefits and the importance of use of agriculture insurance. This will promote the uptake of agriculture insurance among farmers in Rivers state.
The study also recommends that the insurance premiums charged on agriculture insurance policies should be reduced. This is based on the fact that farmers see the cost of insurance to be so high thus hindering their uptake.
The study finally recommends that the organizations selling the insurance policies to farmers should reduce the procedures and also compensate farmers immediately in cases of loss. This will help will help in building the confidence of the farmers in purchasing the policies thus promoting agriculture insurance.
Recommendations for Further Research
The study was carried out in Rivers state to establish on the role of government policies in promoting agricultural insurance as a means to promoting food security in Nigeria. The researcher therefore recommends that the same study should be carried out in other counties. The researcher further recommends that another study to be done on the benefits of use of agriculture insurance to farmers which was not the focus of this study
REFERENCES
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