Managing Director of Nigerian Agricultural Insurance Corporation (NAIC) Mr. Bode Opadokun has said that the apparent increase in agricultural investments in Nigeria with attendant rise in risks across the entire agricultural value chain has opened up a big window of opportunity for the insurance industry to manage these risks using insurance as a risk management tool.
Opadokun who spoke as a special guest at insurance forum organised by the Lagos Area Committee of the Nigerian Council of Registered Insurance Brokers (NCRIB) said in view of the huge potential premium earnings that agriculture holds for the insurance industry, it has become important that insurance service providers especially brokers, agents and other intermediaries are advised to take more than a passing interest in agricultural insurance products and services in order to be able to offer investors in agric business the right service on risk Management.
He noted that in the past few years, government has made concerted efforts to boost the agricultural sector adding that this has led to specific, visible and notable achievements in the development of the sector in that reduction of food import in Nigeria by 40 per cent and Nigeria becoming one of the world’s leading producer of cassava are part of the milestones the sector has achieved in the past three years.
He highlighted some notable increase in agricultural investments in the country saying that with the execution of a government enabled, private sector driven transformation agenda that ensures that agriculture is treated as a business and not a poverty alleviation project, the private sector has continued to make extensive commitments to existing and planned investment in Nigeria’s agribusiness and food industry resulting in financial returns and job creation in the sector.
“Today, foreign investors, international donors and developmental partners are all desirous of investing in the Nigerian agricultural sector. The likes of Olam Ltd, Dangote Group, Ebony Rice, Umza Farms and others have invested well over $1billion in Agriculture in the last three years. It has also been reported that the biggest rice farm in Africa will soon be built in Nigeria in partnership with a United States based company. The project is expected to attract an investment of over $200million with an expected production of 300,000 tonnes of rice thereby reducing rice import savings of around $342 million every year and creating employment for the Nigerian economy”, he noted.
The NAIC boss said along this line, the importance of funding to agriculture in Nigeria has become clearer and stable as the Money Deposit Banks (MDB) continue to show more confidence by lending to agricultural projects of private agribusiness investors adding that even the apex bank (CBN) too has continued to provide the appropriate support by making funds available for lending to agriculture at single digits interest rates.
He said because of this, farmers, firms, governments, and many other actors are learning that agricultural production and marketing are complex activities marked by pervasive and increasing risks that results from a broad set of expertise, structural, demographic, market and climatic changes.
He said in treating these risks, experts advocate for the adoption of the value chain approach to agricultural production”.
The approach said the NAIC boss, takes an intrinsic look at the myriad of activities (with its attendant risks)and players involves in creating and moving agricultural products from the farms to the consumers table, that is from the providers of inputs, to producers, to storage, to fund providers, to processors, wholesalers/ retailers and exporters are all linked together with an understanding of the roles that each has to play in the value chain.
He observed that all these activities along the chain are exposed to various kinds of risks which need to beproperly addressed to make agriculture a profitable and viable venture.
“The concept therefore is to manage these risks along the entire value chain and enable agriculture make a meaningful impact on the economy.
He said the implication of this is that it opens up a big window of opportunity for the insurance industry to manage these risks using insurance as a risk management tool.
According to him, recent years have been particularly tumultuous for the Agricultural industry, especially with the production sector being affected by adverse weather events such as flood, drought and disease outbreak, noting, that the issue of flood incident have become more frequent due to climatic change as experienced recently in Sokoto, Kebbi, Adamawa, Rivers, Benue, Ebonyi, Delta, Kogi and others.
Opadokun said risk management in agriculture is now an essential tool for owners of agribusiness to anticipate, avoid and react to climatic shocks adding that effective approach to managing agricultural risks along the entire value chain is therefore needed.