Crop Insurance Protects Farming Families in Nigeria
In the Nigerian state of Nasarawa, a place of sweeping hills and valleys and traditional thatched-roof huts, Salamatu Adara shrugs shyly as she tells of the devastating loss several years ago that led her to commit to smallholder farming, no matter the challenges.
Like many girls in Nigeria, Salamatu was a child bride. After she married, she began farming with her husband. This was fine, she said. Farming “suited” her. Then, astonishingly, the young woman’s husband died, leaving her to not only “hold the hoe” by herself, but to raise their small children on her own.
Salamatu eventually moved with her children to her father’s home and, there, she became what she calls a “serious farmer.” When she made this decision — to commit full time to agriculture, Salamatu was well aware that farming in Nigeria is by its very nature high risk. Annual flooding and lack of reliable access to markets and credit are among the many challenges facing Nigeria’s smallholder farmers, who make up more than 80 percent of the country’s farmers and account for 90 percent of local agriculture production. But, she said, she had few alternatives. By then, she was raising seven children single-handedly. She needed to feed them.
In recent years, the climate crisis has exacerbated the challenges Salamatu and other farmers like her face.
Floods and the damage they bring have become much more severe than the annual, predictable floods that have accompanied the country’s six-month rainy season for millennia.
In 2022, floods devastated 140,000 hectares, approximately 346,000 acres, of farmland in 34 of Nigeria’s 36 states. They washed away crops, turned fields into rivers and when they finally receded, they left sand and sediment behind. Houses and buildings, entire villages, in fact, sat roof-deep in water. More than 600 people died and 1.3 million people were displaced.
In the end, farmers were left with less than they began with at the season’s beginning: not only had their crops washed away, but the fertile topsoil had, too. With no crops to take to market, farmers lost the income they would have earned from selling them — money they were counting on to feed their families and pay for other household costs. Farmers also lost the money they had invested in inputs, such as fertilizers and pesticides, and, in some cases, in labor they hired to help with that season’s planting. At the same time, entire communities lost their food sources — rice and produce that they would have purchased directly from the farmers.
After 2022’s flooding, Salamatu said, "I put my hands on my lap and started thinking, thinking how to feed my children, what to eat. I took it as an act of destiny."
Nigeria is Africa’s most populated country, with over 220 million people. In 2014, due to its production of crude oil — it is the tenth largest crude oil producer in the world — it achieved lower-middle-income status and just two years ago it was Africa’s biggest economy.
But today the country is experiencing its worst economic crisis in decades. About 84 million Nigerians live below the poverty line and 26.5 million people face acute hunger. The effects of climate change, including drought, excessive rainfall and floods, have exacerbated food insecurity, poverty and malnutrition.
In the past, when Salamatu’s crops were devastated by flooding or pests, she would find supplemental work on another farm in order to feed her children, waking early to labor in her own fields and then going to work for other farmers. For Salamatu and tens of thousands of Nigerian farmers like her, crop insurance was an impossibility, if they were even aware of the option in the first place; they simply couldn’t afford to pay the premiums.
In 2021, however, Heifer Nigeria introduced a pay-at-harvest insurance program for smallholder rice producers called the Pay-at-Harvest Area Yield Index Insurance. The initiative provides smallholders with an affordable way to reduce their risk of crop loss from pests, diseases, flood, drought and other climate-related events. The pay-at-harvest insurance model was designed by Heifer and its collaborators — Pula Advisors, Olam Agri, Thrive Agric and Leadway Assurance Limited — to address smallholders’ difficulty paying premiums early in the season.
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Farmers receive insurance coverage at the beginning of the season and a full return on their investment if their farms do not produce the projected quantity of harvested crops. They only pay the premium after they have harvested and sold their yields. The program also facilitates a guaranteed purchaser for the harvests, addressing the lack of reliable access many farmers in Nigeria have to markets. The buyer, program partner Olam Agri, actually takes the premium fee from the payment they make to farmers at the point of sale, contributing to the sense of reassurance smallholders feel about their ability to pay insurance premiums.
The pay-at-harvest insurance also serves as an affordable way to mitigate the risks inherent in smallholder farming, including the impacts of climate change. “There is fire, there is flood, there is drought, there is excessive rainfall and there is inadequate rainfall. All these work against farmers when they are on the field,” explained Ayoola Fatona, head of regional technical services and agric- and micro-scheme specialist for Leadway Assurance. “If there is not this kind of support, at the end of the day when the disaster strikes ... the total investment in that particular farmland is lost. So, that is where Leadway comes in.”
Insurance can also provide farmers like Salamatu the time and income needed to learn and adopt climate-smart agricultural practices and offer an entrance point into the formal financial system, further building their long-term stability.
The initiative is part of a Heifer Nigeria program called Naija Unlock, whose aim is to support the “unlocking” of the potential in Nigeria’s agricultural sector to achieve food self-sufficiency and to close the living income gap for smallholder farmers, addressing hunger and building climate change resilience in the process.
"It is a way of contributing to food security of this nation, we know how important food is to everybody. So, in whatever way and whatever role you are playing, either as an investor or an insurance company, in whatever space you are operating, there is the need for every one of us to take interest in agriculture so that we can eat." — Ayoola Fatona, Leadway Assurance
Salamatu learned about the insurance option through her local agricultural cooperative. At first, she admits, she was skeptical, as were other farmers in her community. But the cooperative’s chairman encouraged her and the others to try it. “He called us and informed us that this is a good thing coming and we should try it and see.”
She registered for the program and, after the flooding of 2022, she received a payout. Remarkably, Salamatu said, she received the assistance via an automatic deposit made to her mobile bank account based on the size and location of her land. She didn’t even have to file an insurance claim.
“I thanked God for the cooperative and the insurance,” she said. “These people that we rejected have now assisted us. I was very grateful when that money came because we were facing [a] serious problem of starvation. So, I used it to feed myself and the children. I paid the children's school fees. I bought rice seeds and planted them, and I also bought chemicals and applied them. I am grateful. It has really helped me.”
Since then, other farmers in Salamatu's community have come forward to ask her about the insurance. They, too, plan to register for it, she says with a gentle smile, because they see the growing sense of confidence insured farmers feel. They see the increased food security and economic stability the program provides. And, they see that farmers need not start from scratch every time they lose their crops. These things, Salamatu says, are deeply reassuring. She plans to continue with the program through the next growing season — and the next after that.
"[Insurance] has been good to us," Salamatu said, "and we are happy."
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Financial Inclusion, Climate Smart Financing & Impact Assessment Specialist
3wI am interested in this insurance for the over 5000 farmers financed by my company.