1.1BACKGROUND OF THE STUDY
Starting in 2010-2011, the government of Nigeria after years of being neglect began to reform the agricultural sector to focus the sector, the government implemented a new strategy called “The Agricultural Transformation Agenda ATA” this policy is aim at helping Nigeria’s refocus attention on agriculture. growth and development in any economy ,especially the agricultural sector is an activity that cannot be effectively carried out without involving insurance, Thus insurance plays a vital role in the development of the agricultural sector Nigeria.
Agricultural insurance is normally undertaken as a market based activity by private or state sector insurance companies, often with the support measures from government .the government through various policies and intervention has been very active in the promotion of agricultural insurance in Nigeria. This is buttressed by the fact that agriculture has been a predominant occupation which has over the years provided economic development, it accounts for about 40-50% of the GDP.As far as agricultural insurance is concern the place of agricultural insurance cannot be over emphasised .one cannot discuss agricultural insurance before first identifying what insurance means.
Udensi (2002) insurance is a system for transferring the responsibility of paying for losses from one party to another. Insurance by conventional definition is the equitable transfer of a loss from one entity to another in exchange for a premium for a guarantee and quantifiable small loss to prevent a large and possible devastating loss. One of the cardinal program of the Obasanjo led administration when it came on board in 1999 was the radical development of agriculture in all its ratification ,not only as a veritable way of bringing about the all round development of the Nigeria state but also as propitious channel of systematically diversifying the mono-cultural tendencies of the Nigeria economy and this was achieved through the establishment of Nigeria agricultural insurance cooperation (NAIC) through the decree no 37 in 1993. Section 3 of the decree of the decree made a provision for the establishment of the Nigeria agricultural scheme which the agricultural insurance cooperation is an executing body. The categorical imperatives of the scheme are to provide financial support to farmers where losses to crops and livestock arise from natural hazards, it is to include provision of credit by financial institution as the insurance cover is an added collateral .Again it helps to promote agricultural production by giving farmers confidence to accept new as well as modern innovations and inputs.
From the beginning, the scheme provided cover to only two crops items and two livestock item namely cattle and poultry and some commercial business like farm building, machinery and equipment. the cover has since been extended to cover more items namely 21 crops items, 9 items of livestock and 12 types of commercial business. It equally design specific cover to suit peculiar customer needs. For example it has designed and implemented a special type of cover for agriculture or produce marketing loan as follows, fire and special perils cover for property used as collateral security for marketing loans .the scheme operates a mandatory cover which applies to the following:
- All agricultural loans from banks taken for all items insurable by NAIC
- All agricultural and agro-related projects which are assisted, supported or fully funded from public funds.
- All direct and on-lending loans taken by all tiers of government for disbursement to farmers and agricultural projects for implementation.
- All forms of loans for agricultural marketing purpose by all banks and non banks lending agencies
- All direct on lending and investment loans disbursed by the Nigerian agricultural cooperation and rural development bank (NACRDB).
The value of the risk taken by NAIC since inception as at the end of 2003 was 80 billion, which were adequately covered by local and international reinsurance treaties .the vast scope of the cover ,the huge volume of risk taken up by NAIC and the 50% subsidy given by the Nigerian government makes the Nigerian agricultural scheme recognized by many countries and the food and agricultural organisation(FAO) of the united nations as a major contributions towards self-sufficiency in food production and as a scheme to be placed in other parts of the world.
1.2 STATEMENT OF THE PROBLEM The efficiency of agricultural insurance in reducing farmer losses has not being in doubt but the constant to its growth. the agricultural sector is a very important aspect of the economy apart from its economic importance, it brings about food security for local consumption during the course of this study the following problems were identified.
One of the major problems of agriculture in Nigeria is the wide variety of agricultural practices in Nigeria many at time the national agricultural insurance cooperation do not provide cover for some of the practices thereby leading to inadequate funding of the agricultural sector by the government, due to lack of proper funding many farmers are not able to go into commercial agricultural and therefore cannot reach their full potentials in agriculture.
However there is a death of professionally qualified manpower in the agricultural insurance sector who are specialist in qualifying and underwriting agricultural risk. Government often times import large number of tractors without a single service station for repairs and replacement of worm out parts thereby creating a problem of unserviceable machinery and farmers resort to the old way of farming .
Farmers most at times are unaware of the functions and merits of involving in the agricultural insurance scheme which tends to lead to ignorance on the part of the farmer.
1.3 OBEJECTIVES OF THE STUDY
This study seeks to evaluate the role of government policies in promoting agricultural insurance in Nigeria other specific objectives includes:
- Analysis of the types of agricultural policy available in the promotion of agricultural insurance in Nigeria.
- To examine the effect of inadequate statistical data on effective rating of agricultural risk in Nigeria
- To examine some of the challenges facing Nigeria insurance agricultural cooperation.
- To examine the effect of government policies in agriculture in Nigeria
1.4 RESEARCH QUESTIONS
- TO what extent has government policies promoted agricultural insurance in Nigeria?
- Are there agricultural policies available in the promotion of agricultural insurance in Nigeria?
- Does government policies have any positive impart to the development of agricultural insurance in Nigeria?
- How has agricultural insurance cooperation contributed to the promotion of agricultural insurance in Nigeria?
1.5 HYPOTHESIS FORMULATION
The assumption by the researcher about the effect of government policy in promoting agricultural insurance will be tested to enable the researcher draw possible conclusion .this study will be tested using Null hypothesis (Ho) and Alternative(H1).
Ho: There is no significant relationship between government policy and agricultural insurance policy.
H1: There is a significant relationship between government policy and agricultural insurance policy.
Ho: There are no agricultural policies available for the promotion of agricultural insurance in Nigeria.
H1: there are agricultural policies available for the promotion of agricultural insurance in Nigeria.
Ho: Government policies has not constitute a positive impart to the promotion of agricultural insurance in Nigeria.
H1: Government policies has constitute a positive impart to the promotion of agricultural insurance in Nigeria.
1.6 SCOPE OF THE STUDY
Agricultural insurance is designed to provide cover for financial losses incurred due to reduction in expected output .this research work is meant to cover the contribution of government to the promotion of agricultural insurance practice in Nigeria .in the event of carrying out this study various related work were review from publication to annual reports, magazines and text books. This study goes further to examine the different types of agricultural policies available to farmers.
1.7 SIGINIFICANCE OF THE STUDY
This study will attempt to determine an appraisal of the role of government policies in promoting agricultural insurance in Nigeria. the significance of this research study is to highlight the effectiveness of government policies in the operation of agricultural insurance in Nigeria. This study is significant in that it will elevate government policies that are beneficial to agriculture there by promoting the development of agricultural insurance practice in Nigeria.
This research work will assist intending researchers in updating existing research work within the frame work of this study area and it will also serve as a source of reference for further research.
- DEFINITION OF TERMS
For clarity, it was important to define some terms used in the study report.
- Agriculture: is the science or practice of farming including the cultivation of soil , growing of crops and rearing of animals to provide food.
- Agricultural insurance: is a financial tool to transfer production risk associated with farming to the third party via payment of premium that reflect the true long term cost to the insurer assuming those risk.
- Government : A group of people that governs a community or unit, it sets and administer public policy and exercise, executive, political and sovereign power through customs, institutions and laws within a state.
- Insurance: may be defined as a systematic plan for protection against economic losses.
- Insurer: An insurance company or other organization that provides insurance.
- Premium: The payment or one of several payment, required to establish and keep a life insurance policy in full effect.
- Promotion: That part of marketing that is concerned with selecting the appropriate technique for selling a product to a consumer.
- Policy: is an evidence of a contract (section 15 subsection (1) insurance act 2004).