Chapter one

Introduction 1.1 background to the study

Producing crops and raising livestock is the art and science of agriculture. Agriculture, in its broadest meaning, refers to the full set of technologies used to produce useful goods from plants and animals, encompassing soil cultivation, crop and livestock management, as well as the activities of manufacturing and distribution.. All the technologies that integrate into the complete inputs and outputs of the agricultural industry are collectively referred to as agribusiness. This means that the production of crops, livestock, and animal products on farms, the processing of those materials into finished goods, and the supply of those goods at the time and location that consumers demand comprise the entire range of economic activities involved in creating and disseminating the industrial inputs used in farming(Allen,2000).

With the raising of domesticated animals and plants (i.e., crops), which enabled the formation of food excesses that allowed for the growth of larger populations and stratified societies, agriculture was the crucial development that contributed to the establishment of civilization by humans. Agriculture includes a wide range of specialties and methods, such as ways to increase the area appropriate for growing plants by creating irrigation systems and excavating water channels. Agriculture continues to be based on the cultivation of crops on arable ground and the pastoral herding of livestock on rangeland. Concern over identifying and quantifying different types of agriculture, such as permaculture or organic farming, and intensive farming (such as industrial agriculture), has grown over the past 100 years. It's interesting to note that for the first ten years following independence, the Nigerian economy could fairly be called an agricultural economy because agriculture acted as the main driver of economic growth (Ogen, 2016). Despite the Nigerian peasant farmers' reliance on ancient tools and indigenous farming techniques, these farmers generated 95% of the country's food needs and contributed over 60% of the GDP to the farming industry in the 1960s (Lawal, 1997:195).

The agricultural industry and crop production, however, were neglected throughout the 1970s oil boom's heyday. Since that time, Nigeria has experienced acute poverty and a lack of staple foods. The neglect of agriculture and rising reliance on an oil-based monoculture are the historical causes of the Nigerian economy's crisis. Nigeria's GDP today only comprises less than 5% of the agriculture sector (Olagbaju and Falola, 1996:263).

The Nigerian government started participating directly in the commercial cultivation of food crops in 1975 in an effort to stop this slide. There were established a number of large-scale agricultural enterprises with a focus on the production of cereals, cattle, dairy products, and animal feeds, to name a few (Fasipe, 1990: 129-130). Sugar factories were also established at Numan, Lafiagi and Sunti (Lawal, 1997: 196).

The government swiftly indicated the wish to develop an agriculture insurance program to safeguard all investments in agriculture after allocating such a sizable sum to agricultural projects. Through Decree Number 37, Nigeria established the Nigerian Agricultural Insurance Corporation (NAIC) in 1993 to perform the following duties: (a) the Agricultural Insurance Scheme established by Section 6 of this Decree, to be implemented, managed, and administered; To use grants received from the Federal, State, and Federal Capital Territory of Abuja to reimburse the premiums charged on specific crops and livestock policies; To foster increased agricultural production generally in order to reduce or remove the need for ad hoc assistance previously provided by Administrations during agricultural disasters; to encourage financial institutions to lend more for agricultural production taking into account the additional security for their loans provided by the Corporation; andTo operate other types of insurance companies as may be allowed by the Commissioner of Insurance at competitive premiums; (f) To engage in any other activity that the Director of Insurance may permit; and (g) To carry out insurance operations as insurers of buildings, equipment, equipment, and other items that form part of the entire investment on farms on an ordinary commercial basis and without aid on premiums..

Furthermore The agricultural industry is categorized as one of the investments with high levels of uncertainty because farmers must deal with a wide range of risks, including those related to pricing, marketing, distribution, pest outbreaks, disease outbreaks, and bad weather conditions like flooding. Nigerian farmers found 2021 to be particularly difficult due to security issues that negatively impacted farmers' output. This was made worse by the fact that at least 25 out of the 36 States in Nigeria, including Jigawa state, were hit by the flood that primarily occurred during the third quarter of 2021. (National Bureau of Statistics [NBS] 2013.

Many farmers express anxiety over the dangers they face, including their inability to pay for overhead expenses, family requirements, and loan repayment, and these fears affect how they view risk. Farmers have been observed to express their risk aversion in part through agricultural insurance, which has been highlighted as a practical tool for risk management. Ajetomobi & Binuomote, (2016) agricultural insurance was defined in a broad sense as the stabilizing of income, employment, price, and materials of agricultural products through regular and intentional saving, as well as the accumulation of funds by many participants in favorable times to protect some or a small number of them in adverse times (Akinsoroton; 2017).

Similarly, Ogomua, (2002), said that the main purpose of any agriculture insurance policy is to protect against losses brought on by natural disasters and act as bank collateral for farmers to secure agricultural loans. The Nigerian Agricultural Insurance Corporation (NAIC) served as the implementing body when the government of Nigeria first legalized farm insurance in 1987. The program was created to address the risks that farmers face as a result of natural disasters like drought, floods, pests, and illnesses. Making agricultural investments more secure will also encourage financial institutions to invest more money in the industry, stabilizing investment levels (NAIC, 2010). From planting to harvest to storage through processing to marketing, profitability in the agribusiness is endangered by variables like underpricing or low-quality produce brought on by insect and disease attack. Farmers face a significant difficulty because of the risk of losing investment due to environmental issues including erosion, drought, and others. Other significant risks and uncertainties in agriculture include burglary, fire, and loss in transit. These factors deter farmers in Jigawa from increasing their investments in agriculture since their resources are insufficient to bear the risk involved in farming. The implications are severe for the economy of a growing nation like Nigeria, which depends heavily on agriculture for a sizable portion of its GDP. Although the government has made numerous attempts to enhance agriculture, food shortages and insecurity still exist, mostly as a result of both natural and man-induced calamities..

The Federal Government of Nigeria established the Nigeria Agricultural Insurance Cooperation (NAIC) as one of its policies to lessen and prevent risk among farmers. The Corporation has offices spread out around the nation in several zones. Therefore, it is essential to assign part of the risk to insurance. Farmers' participation in the agricultural insurance program, which was established to lessen the negative effects of natural disasters on agricultural productivity and the stability of credit through indemnity on sustained losses, might reduce risk and uncertainty.. Therefore, the study became necessary and urgent to evaluate the Role Of Nigerian Agricultural Insurance Corporation (Naic) In the Development of Agriculture/Farming System in Jigawa State

1.2 STATEMENT OF PROBLEM

States like Jigawa are most exposed to and affected by natural hazards such as flood which affects agricultural produce of low and high income farmers. Farmers in Jigawa have limited  or no access to  insurance and financial services and in most cases have to manage weather risks by their  Own means . This is often seen area primary cause for what has been called the “poverty traps. Then when disaster strikes they often lose their productive assets and  are therefore cast into a spiral of destitution, from which it is had to escape. some of the problems are these faced b these farmers in Jigawa state include  Low penetration agricultural insurance scheme among farmers. Lack of financial support to farmers in the event of issues, inadequate flow of agricultural credit to the Nigerian farmers by the Nigerian insurance corporation among others. It is to this the study center on role of Nigerian agricultural insurance corporation (NAIC) in the development of agriculture/farming system in Jigawa state.

1.3 OBJECTIVES OF THE STUDY

1 To examine the impact of agricultural insurance corporation on the development of agriculture/farming system

2 To determine the types of agricultural insurance schemes offered by Nigerian agricultural insurance corporation to farmers in Jigawa state.

3 To outline the challenges facing Nigerian agricultural insurance corporation in  Jigawa

1.4 RESEARCH QUESTIONS

1 What is the impact of agricultural insurance corporation on the development of agriculture/farming system?

2 What is the types of agricultural insurance schemes offered by Nigerian agricultural insurance corporation to farmers in event of loss in Jigawa state?

3 What are the challenges facing Nigerian agricultural insurance corporation in  Jigawa?

1.4 HYPOTHESIS

HO: there is a no significant role of Nigerian agricultural insurance corporation (naic) on the development of agriculture/farming system in Jigawa state

H1: : there is a significant role of Nigerian agricultural insurance corporation (naic) on the development of agriculture/farming system in Jigawa state

1.5 SIGNIFICANCE OF THE STUDY

This research work will be of immense help to:

The student: it will help the researcher to know more on the role of Nigeria Agricultural insurance cooperation in the development of Nigerian agricultural industry.

The Stake holders: this study will be of great importance to stake holders as it will enrich their knowledge on the various roles of NAIC to the farmers in Jigawa.

Insurance company: this will equally be of help to the insurance companies in Nigeria because when the exact role of NAIC is identified and they carry out

1.6 SCOPE OF THE STUDY

The study is delimited to Role of Nigerian Agricultural Insurance Corporation in the Development of Agriculture/Farming System in Jigawa State. The geographical location of the study is Jigawa state

1.7 DELIMITATION OF THE STUDY

The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following.

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

1.8  DEFINITION OF TERMS

Agric insurance: It covers loss of or damage to the crops during the physiological stage due to flood, fire, windstorm, diseases and pest, lightning, explosion and drought. Claims are paid based on the quantum of loss compared to the cost of production or production shortage from the guaranteed.

Farming system: A farming system is defined as a complex interrelated matrix of soil, plants ,animals, implements, power, labor, capital and other inputs controlled in part by farming families and influenced to varying degrees by political, economic, institutional and social forces that operate at many levels

Agricultural sector: The Agriculture sectors comprise establishments primarily engaged in growing crops, raising animals, and harvesting fish and other animals from a farm, ranch, or their natural habitats