The Federal Government recently announced its introduction of a new insurance policy for farmers to encourage more investment in agriculture in the country. The agricultural insurance, worth $500 million, is expected to mitigate farmers against risks like drought, herders’ attack and price shock, and similar shocks experienced by farmers in the country. The insurance cover initiative is a collaborative effort of the National Insurance Commission of Nigeria (NAICOM), the Central Bank of Nigeria (CBN) funded Nigeria Incentive- Based Risk Sharing System for Agricultural Lending (NIRSAL) and the operators of the insurance industry within and outside the country. Managing Director of NIRSAL, Mr. Aliyu A. Abdulhameed, who spoke at a training programme to sensitise operators of insurance firms on the new index-based agricultural insurance, said the Federal Government had decided to increase insurance coverage for agricultural primary producers from 500,000 to 3.8 million in the coming years and that the training was part of efforts to nurture local and international partnerships to train insurance experts in Nigeria that would midwife the farmers insurance policy. Under it farmers in the country will be provided with cover to de-risk them against possible natural and man-made unforeseen incidences that would ordinarily deter many from venturing into investment in agriculture. Against the bad experiences of farmers in the country as a result of loss resulting from bad weather, natural disasters and other unforeseen circumstances experienced in agriculture, the new agricultural insurance is a step in the right direction and therefore a welcomed development. Apart from the difficult and tediousness of agriculture and the high financial outlay involved in it, a major reason why young people and even the rich stay away from agriculture, particularly large scale agriculture, is the lack of insurance to de-risk them against possible losses sustained as a result of bad weather, pest invasion, fire and burglary, attacks by herders and their cattle as well as insurgents. Across the world the agricultural sector and agro entrepreneurship are plagued with a lot of risks and uncertainty, a situation which makes most financial institutions reluctant to give financial support to farmers. And, apart from the use of modern technology for improved and quality yields per acre of farmland, agricultural insurance is a major reason why many advanced countries like US and in Europe are able to attract many of their citizens and entrepreneurs into agriculture. In contrast, only a few farmers in the developing world have insurance cover. This accounts for why millions of farmers in the developing world, in spite of their efforts, are pushed back into poverty by unforeseen bad weather conditions and natural disasters. In Nigeria, agricultural insurance is more relevant now especially with seasonal wildfires in the savannah and incessant attacks on farmlands by herdsmen and their cattle. With the introduction of agricultural insurance, it will reduce the losses sustained by farmers covered by the insurance. With agricultural insurance, more affluent people with appetite for large scale farming can now move into the sector to boost agricultural production in the country. Cooperative farmers can also take advantage of the policy to embark on large scale farming too, while exporters of cash crops will be able to get improved quality and quantity of exportable cash crops. Agricultural insurance will, no doubt, encourage more Nigerians to move into agriculture and thus boost government’s effort to diversify the economy and create opportunities to promote agricultural business and youth empowerment. However, details of the agricultural insurance policy are still hazy and being a new concept, there is need for more capacity building among insurance practitioners and among farmers too to enhance progress in the drive to achieve efficiency and effectiveness in index-based agricultural insurance in the country. Also, there is a need for more public enlightenment for peasant farmers, as well as for both small and large scale farmers so that they can key into the programme to take advantage of the policy and get into agricultural production. Against the background of many government programmes such as operation feed the nation and operation green revolution that failed in the past, this time around, government must ensure that it takes the necessary and adequate steps to endear the new agricultural insurance to the farmers, make it a reality and an enduring success. Source - https://independent.ng