Man cannot live without food, hence the need for the establishment of farms in order to secure the foods needed by man. Incidentally, Agriculture is a very risky business. It is affected by many perils that could bring losses to the farmer. It is in this light that we want to examine some of the Insurance Protection needed for agricultural and agro-allied business.


Agricultural Insurance Policy protects farmers against unforeseen losses that he/she could encounter accidentally in carrying out his farming activities.

For Agricultural Insurance to be effective, the farmer who is the insured must pay a little premium to an Insurance Company to guarantee against loss to any peril he may cover for a period of one year with a promise from the Insurance Company to indemnify should such event occur and affect the farm.

In Nigeria today, before any farmer can get a loan from any bank to do his farming business, he/she must have Agricultural Insurance.


The agricultural policy provides indemnity to the insured farmer in the event that he suffers a loss.

The common types of agricultural insurance are;

(1) Crops Insurance – to protect loss of crops such as food crops and cash crops.

(2) Livestock Insurance – to protect losses to animals like cattle, sheep, goats e.t.c.

(3) Aquaculture – for fishery farming activities.

(4) Produce Insurance – for agricultural produce stored for distribution both locally or for international market e.g. Palm oil, Cocoa.

(5) Farm Assets Insurance – loss or damage to farm assets protection e.g. Pump sets, Fishing nets.


The insurance for agricultural risks are mainly sold by the Nigerian Agricultural Insurance Corporation (NAIC) a company specifically set up by the federal government for the purpose. However, some Private Insurance Companies now sells agriculture insurance covers to the Insuring Public.

The farmer that wants agriculture insurance cover can buy directly from the insurer or he can appoint an Insurance Broker who will help him arrange the cover.

It is even advisable that a farmer buys agric insurance using a registered insurance broker, so that he can get a better deal for the premium. It is pertinent to note, that agricultural insurance cost are subsidized by the government through the Central Bank of Nigeria (CBN). This means that, the insured farmer only pays 50% of the requisite premium to the insurer while the government pays the balance.


The benefit of agriculture insurance policy could be seen from the fact that Agriculture in Nigeria is highly susceptible to risk like drought, flood, pest, diseases and thus it becomes necessary to protect farms from natural and man – made calamities, secure farmers investments, ensure food security and inflow of credit from lending institutions. Hence the agriculture insurance cover is designed for all categories of farmers irrespective of the farm size, financial strength, number of livestocks e.t.c. Although many people have keyed into this new drive to boost agriculture in Nigeria, not so many people have knowledge of the critical role of agricultural insurance in safeguarding their investments no matter how small in the Agro – Allied business space.

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