A Policy Officer at AGRA, Dr. Dorothy Effah, has said that agricultural insurance could provide a solution to the challenges farmers face when applying for loans from financial institutions.
A research down by the Institute of Climate and Environmental Governance ( ICEG), small smallholder farmers in the northern regions primarily rely on Village Savings and Loan Association ( VSLAs) and assistance from family and friends for funding their production activities.
This is the case despite many years of advocacy and calls for the banking sector to increase financial support to the agricultural sector, especially for the substantial smallholder farming community in the country,
Dr. Dorothy has therefore called for the creation of an agricultural insurance fund that will provide a comprehensive agricultural insurance system, “it needs to be subsidise agricultural insurance, ”
The Policy Officer said this during a press soiree at the conference room of AGRA in Accra to brief the media on the upcoming Africa Food Systems Forum, as well as discuss AGRA’s new strategy aimed at transforming Ghana’s food systems through agro — processing.
Farmers require insurance, because without it they struggle to secure loans from banks due to the significant risks in agricultural.
An entire farm can be destroyed by fire, flood or pests, resulting in complete loss. Consequently, it becomes challenging for farmers to repay their loans.
This is why banks hesitate to lend to farmers. So, I consider agricultural insurance to be highly important if we aim to enhance agricultural in the country.
The Ghana Agricultural Insurance Programme ( GAIP) has provided agricultural insurance for Ghana since 2011, providing a risk management tool for the adverse effects of climate change and other risks to agricultural production.
The insurance is provided by a pool of 19 Ghanaian insurance companies — the Ghana Agricultural Insurance Pool ( GAIP).
The array of products include drought index insurance for maize, soya, sorghum and millet, as well as multi — peril crop insurance tailor — made to cover the various risks experienced by commercial farmers and plantations.
This was before the National Insurance Act underwent an amendment in 2021 to incorporate agricultural insurance.
This has made private insurance companies disinterested in offering agricultural insurance services because there was no legal framework supporting it.
As large — scale farming requires huge capital investment for land acquisition, preparation, procurement of improved technology and advanced inputs like high yielding seeds, farmers inability to access larger funds for investment from the banking sector has crippled their ability to embark on large scale farming.
A safety net that helps make households or individuals shock resistant is access to a production credit . This outcome is not unexpected, given that these organisations frequently have severe terms and conditions which may not be advantageous for local farmers — whose output is frequently modest
For farmers, having access to finance is crucial because it gives them the funds needed to make investments in their farms.
Credit enables farmers to buy necessary inputs like seeds, fertiliser and equipment, boosting agricultural production and crop yields.
Additionally, credit makes it easier to implement cutting edge techniques and technology that can boost productivity and cut expenses. It can also be used by farmers to lessen risks from changing weather, pests and illness,.and erratic market prices…..Story by Bugbila Moadow.