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With Nigeria regarded as the 55th most vulnerable county to climate change in the world today, an international non-profit organisation, Heifer International, says it is looking to introduce the Area Yield Index Insurance (AYII) to rice farmers in Nigeria as part of the organisation’s commitment to helping farmers mitigate climate change-induced losses.

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The organisation which believes it is creating much-needed solutions through this initiative hopes that introducing this to farmers will go a long way in restoring investors’ confidence in rice farming in Nigeria.

From available information released recently by the organisation, introducing the Area Yield Index Insurance (AYII) to farmers will ensure farmers get full returns if insured farmland does not produce the projected quantity of crops and guarantees that they do not suffer loss.

A statement released by the organisation reveals that the scheme which is part of Heifer International’s Program “Naija Unlock”, is implemented in collaboration with three insurance companies, including Kenyan Insurtech Company, PULA, and Leadway Assurance Ltd. The “Naija Unlock” as an initiative of the organisation is aimed at unlocking Nigeria’s potential for food self-sufficiency and enabling one million people to reach Sustainable Living Income by 2030 by strengthening local market systems and promoting innovative agribusiness models in the rice, tomato, and poultry value chains.

The Country Director of Heifer International in Nigeria, Rufus Idris said

“Constant exposure to unreliable weather conditions, new pests and diseases, cripple farmers’ businesses and discourage agribusiness financiers and investors. AYII provides rice farmers in Nigeria with an affordable way to mitigate the impacts of climate change on their businesses.”

He went further to explain that “Most smallholder farmers in Nigeria see insurance as a burden without any benefits. When farmers are interested, the cost can be prohibitive, as they have to pay for it at the beginning of the farming season, when their limited funds are needed for inputs and preparing the land.

“We believe insurance is an innovative financial solution that can increase the resilience of smallholder farmers in Nigeria. Designed by PULA and supported by Heifer International, the scheme will make farmers aware of the benefits of insurance and increase coverage, attracting more financiers to the sector to improve financial resilience for millions of farmers.”

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The Area Yield Index Insurance (AYII) is an internationally recognised agricultural insurance solution. According to the World Bank, with this type of insurance, the indemnity is based on the realized (harvested) average yield of an area such as a county or district. The insured yield is established as a percentage of the average yield for the area (typically 50–90 percent of the area average yield). An indemnity is paid if the realized average yield for the area is less than the insured yield, regardless of the actual yield on a policyholder’s farm. This type of index insurance requires historical area yield data on which the normal average yield and insured yield can be established.

According to PULA’s Commercial Manager-West Africa Anglophone, Chukwuma Kalu,

“With climate change and adverse weather conditions playing a crucial role in negatively impacting farmer’s productivity and earnings, there’s never been a more critical time for AYII to create a soft-landing for farmers that need protection against nature’s uncertainty.”

He maintained that PULA “remain dedicated to creating innovative insurance products that de-risk farmers’ agricultural investments and keep them above the poverty line while driving farming sustainability across Nigeria.”

The AYII is believed to have originated in Sweden in the early 1950s and has been successfully implemented in a few other countries around the world. For instance, in India, the AYII has been in place since 1979 and since 1993, it has been an option for farmers in the United States.

Other forms of ‘crop index insurance’ that exists in the world include the Crop Weather index insurance and the Normalized difference vegetation index (NDVI)/satellite index insurance.

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This article was first published on 11th March 2022


Ifegwu-Mbonu Victor is a Personal Growth and Leadership Trainer who provides training and coaching to individuals and organizations.

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