The Fertilizer Producers and Suppliers Association of Nigeria (FESPSAN), in collaboration with Pula Insurance, has created a new insurance product for smallholder farmers.
According to FESPSAN, the new invention would cover for the risk arising as a result of climate change, including climate-induced drought, excessive rainfall, pests and diseases or other issues that will affect farmers’ ability to acquire goods yields and income.
The product was unveiled at a stakeholders’ meeting across the fertilizer value chain. The meeting was a one-day workshop on, “Bundling Insurance with Fertilizer: A Way to Increase Fertilizer Sales to Small-holder Farmers.”
The new insurance product called Area Yield Index Insurance (AYII) by Pula Insurance will mitigate various risks being faced by smallholder farmers and is expected to cater for 14 million bags of fertilizers, among other insurance products for 3.9 million farmers by next year, and then 19 million farmers by 2025.
“We believe that through adding insurance we will kill two birds with one stone; improve our farmers’ resilience and grow adoption of fertilizer in Nigeria,” Chairman FESPSAN.
However, the Chief Executive Officer, Pula Insurance, Rose Goslinga, stated that AYII would also be beneficial to participating fertilizer companies, as the innovation would create an opportunity for them to build strong brands among farmers, and gain new customers.
Goslinga said the insurance policy would be subscribed to automatically by farmers through the purchase of fertilizer products for their farms.
“Embedding agriculture insurance for fertilizer will enable these companies to understand farmers better, while providing them with real protection. In the 10 countries that Pula works, we have seen that companies adding insurance can grow their customer base by 30% in one year,” Rose Goslinga said.
At the end of the workshop, stakeholders, said Pula’s proposed AYII solution would compensate farmers in the event of climate or other misfortunes. It is also an important intervention that would help them manage risks, and build sustainable farming enterprises that can withstand shocks.
“This insurance also provides financial security that gives farmers confidence to invest in additional inputs like fertilizer, knowing that their investment will be protected by insurance in the event of crop failure.”