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Insurance is needed in order to alleviate the financial losses suffered by policy holders or the general public where the liability under policy is a contingent one. Therefore agricultural insurance takes care of the losses suffered by the farmers. To do this very successfully by an underwriter the compensation have to be made from contributions (premium) of all parties participating in the insurance.

It is the aim of this research work therefore to find out if agricultural insurance has contributed in any meaningful way to enhancing agricultural productivity. Whether agricultural insurance has actually gained acceptance by the rural farmers. If compensation are adequately paid when losses are encountered by the farmers. And the possible areas the farmer can cover with agricultural insurance policy this research work has five chapters.

Chapter one contains a general background discussion on the role of agricultural insurance in enhancing agricultural productivity. It went further to state the problem to be studied and why this research study was carried out, the scope and limitation of the study and finally the research questions and the definition of terms.

A number of related literature as it affects agricultural insurance were critically reviewed in chapter two to provide enough background to the study.

Chapter three deals with the design of the study, the methods used in collecting relevant data it also deals with the way questionnaires were distributed and the treatment of data.

The data got from the research survey were analyzed interpreted and presented in chapter four. Also in this chapter was the distribution of questionnaires, characteristics of respondents and set two questionnaires for NAIC.

Finally, the summary of findings, conclusion on the research and recommendations made by the researcher are all in chapter five.

It is beloved that at the end of this research work the researcher would have established of actually agricultural insurance have successfully contributed in its role of enhancing agricultural productivity.


Title page

Approval page




Table of contents


  • Background of the study
  • Statement of problems
  • Purpose/objectives of study
  • Significance of the study
  • Research questions
  • Scope and limitations of study
  • Definition of terms


2.0     The role of agricultural insurance in enhancing agricultural production

2.1     Risk in agriculture

2.2     Risk management in agriculture

2.3     Nigerian agricultural insurance scheme

2.4     Operation of NAIS

2.5     Problem and prospects



  • Sources of data
  • Sample
  • Methods of investigation



  • Distribution of questionnaires
  • Characteristics of respondents
  • Set two questionnaire for NAIC
  • Production number of farmers with agricultural (crop) insurance in Ezeagu L.G.A 1997 – 2000



  • Summary of findings
  • Recommendations
  • Conclusions








          Agricultural insurance as an alternative for risk management started as crop insurance in Europe more than one hundred years ago and then spread to the United State of America at the beginning of the 20th century. It has since then been embraced by a lot of the world like Canada, Mauritius, Zimbabwe, Philippines, Iran, Zambia and Nigeria with varying degrees of success and failures in agriculture production.

In Nigeria there has been growing need since, 1976 to evolve a worthwhile and more permanent natural approach to risk management in agriculture and this has continued to attract the attention of the various government. To this effect, the Nigeria Agricultural Insurance Corporation was established by the federal government of Nigeria and funded largely by her with the participation of state government and the organized private sector. Nigeria Agricultural Insurance Corporation stated as a company but became a corporation in 1993 by the virtue of decree 37 of 1993.

The introduction and formal lunching of the Nigeria Agricultural Insurance Scheme by the president and commander in chief of the Armed forces of Nigeria, President Ibrahim Badamosi Babangida on the 15th December, 1987 was designed to benefit the small, medium and large scale farmers from the effect of natural hazards in consideration of a determined price called premium.

More so, NAIS is to ensure the payment of appropriate compensation sufficient to keep the farmer in business after incurring any loss on their insured farms.



In the result past, various government in Nigeria have launched different agricultural policies in their relentless effort to enhancing agricultural productivity. They also have committed a large sum of financial and human resources in their zealous desire to achieving an increased agricultural production but have continually and repeatedly failed. One of the reasons for this failure is that mist farmers in Nigeria have never discovered the need to insure their farms and other agricultural investment irrespective of the good objectives of the federal government in establishing the Nigerian Agricultural Insurance Scheme (NAIS).

Sourcing of funds has proved highly impossible because the lending institution also are supposed to fund agricultural development are quite doubtful of advancing loan to this sector because of the risks of uncertainty and insecurity. Consequently, the Nigeria Agricultural Insurance Corporation was set up to provide collateral security to the lender of institutions in the form of investments. However, the Nigerian Agricultural Corporation have not sailed smoothly because of the following problems.

Lack of reliable data on livestock and crop yield and losses, non-utilization of modern management techniques in livestock business, inadequate land record system, lack of understanding of what agricultural insurance is about on the part of the farmers, insufficiency of trained personnel to monitor effectively the insured, fraudulent practices by the clients and lack of necessary infrastructures are major problems confronting the agricultural insurance which if well addressed, the researcher believes will enhance the role of agricultural insurance in enhancing agricultural productivity.



This research is bent on carrying out analytically the study of the number of farmers in Ezeagu Local Government Area with agricultural crop insurance policy. Other specified objectives include:

  1. To investigate the number of claims that was reported to NAIC yearly.
  2. To study the number of claims that was settled each year in EZEAGU local government area.
  3. To investigate the amount paid by the farmers as premium.
  4. To investigate the attitude of Nigeria farmers towards agricultural insurance scheme.
  5. To investigate the performance of the relevant financial institution and agricultural lending institution on the insurance policy.
  6. The research will also check the output achieved in farming activities under the agricultural insurance scheme.



This research topic allows for many questions to be asked. This research was carried out with an attempt to answer these questions. It look into the role of agricultural insurance in enhancing agricultural productions raises some of these questions.




  1. Do small scale farmers embrace the agricultural insurance scheme more than their large and medium scale counterpart?
  2. Is there any significant difference between the period of cover of agricultural insurance policy offered by Nigerian Agricultural Insurance Corporation (NAIC) and Niger Insurance Plc in Nigeria?
  3. How doe the claim settlement methods and procedures affect the prospects of the agricultural insurance scheme.


Agricultural insurance unlike the conventional insurance is relatively new in Nigeria. Consequently, there are many problems involved in collecting data and other materials for research in the field of insurance. This problem underscore the significance of this piece of work hence, the study will be helpful to students of insurance and other interested discipline who may wish to carryout further study on this new field.

The research will assist both the federal government and the Nigeria Agricultural Insurance Corporation which are directly involved in the implementation of the scheme as the device better ways of improving their performance. This will also enlighten the various marketing intermediaries on the need to participate more effectively in the operation of the scheme to ensure it success.

Furthermore, since the scheme serve as a kind of protection to the insuring public (i.e the insured farmers) thereby enhancing greater confidence to all farmers (whether insured or not) on adopting a new and improved farming practice and in making greater economy, perhaps aids to increase the state agricultural production.




Nigerian Agricultural Insurance Corporation is the only corporation underwriting all agricultural insurance policies in Nigeria with a network of branches made the study unique. The research work carried out tend to be in a dynamic setting as the scope of the work extend from the head office of the Nigeria Agricultural Insurance Corporation in Abuja to the nearby zonal office here in Enugu. The research work covered agricultural crop insurance product.


The volume of work load required in a research of this nature could not be carried out without some limitations. First, was inadequacy of finance, second was the dearth of books, journal, magazine on agricultural insurance as secondary source of data collection. Thirdly, the illiteracy level of respondents farmers constituted serious handicap and mount loss of vital information relevant to this piece of work.



          The following terms used in this study should be taken to mean the following:

  1. Agricultural Insurance: Is insurance cover given to farmers or stake holder in the agricultural sector.
  2. Underwriting: Means undertaking by signing an insurance policy to pay damage whenever losses occur. This is done by the insurance company or society which, thereafter, is called the underwriter.
  3. Policy holder: The individual or corporate body who purchase the insurance cover from the insurance company.
  4. Premium: Means the consideration or amount paid by the policy holder for the insurance cover.
  5. Compensation: This is the money paid to the policy holder by the insurance company when a loss is recorded.
  6. NAIC: Nigerian Agricultural Insurance Corporation.
  7. NAIS: Nigerian Agricultural Insurance Scheme.



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