AN ANALYSIS OF THE SOCIO-ECONOMIC FACTORS AFFECTING FARMERS’ PARTICIPATION IN THE NIGERIAN AGRICULTURAL INSURANCE SCHEME IN KADUNA STATE

AN ANALYSIS OF THE SOCIO-ECONOMIC FACTORS AFFECTING FARMERS’ PARTICIPATION IN THE NIGERIAN AGRICULTURAL INSURANCE SCHEME IN KADUNA STATE

Abstract:

This study was designed to analyse the socio-economic factors affecting farmers’ participation in the Nigerian Agricultural Insurance Company in Kaduna state. The objectives of the study included: to summarize the socio-economic characteristics of farmers in the study area; to determine the factors that affect a farmers’ participation in the Nigerian agricultural insurance scheme (NAIs); to critically assess the loss assessment procedures adopted by tne scheme; and to assess the adequacy of indemnity paid. Data were collected from 150 maize and or poultry farmers in the study area during the 1995/96 cropping season. Descriptive statistics and logit regression analysis were used to analyse the data obtained. The study identified loan as the singular most important factor that affect a farmers’ participation in the NAIS because it is mandatory that all those who acquire any form of institutional loan for use in agricultural production, to participate in the insurance scheme. The logit regression analysis also revealed that in addition to Amount of loan, years of education, membership of farmers association contact with extension agents, size of loss suffered and years of experience in farming were other factors affecting farmers participation in the scheme. Loss assessment as undertaken by the scheme is not very satisfactory in ensuring that the scheme fulfills its main role of keeping farmers in production even after suffering a loss. This is because it is based on cost of production as opposed to the cost of replacement. It therefore, does not take into account the effect of inflation. This it was discovered also discourages farmers from participating in the scheme. Indemnity computation and payment were also found to be plagued with a number of problems which include; NAIC keeps a back-log of unsettled claims which may take an average of 3-6 months to be settled; Under insurance by some farmers who insure only the volume of loan obtained from the bank and not the total sum invested on the farm led to material misdescription and misrepresentation. Indemnity paid in the event of a loss in this case, covers only the proportion of the farm insured. Others include the problem arising from the excess clause and minimum loss clause attached to the policy.

AN ANALYSIS OF THE SOCIO-ECONOMIC FACTORS AFFECTING FARMERS’ PARTICIPATION IN THE NIGERIAN AGRICULTURAL INSURANCE SCHEME IN KADUNA STATE

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