Agriculture, unlike many other investment activities is exposed to a wide variety of risks and uncertainty ranging from input supply and prices. Other hazards such as floods and Firw outbreaks are equally important with regards yo their impact on the success or failure of an agricultural Enterprise. Therefore agricultural insurance scheme came up with a solution to compensate farmers for their loss by introducing National Agricultural Insurance Company in which they can be compensated.
Agricultural insurance is defined as the stabilization of income, employment, price, and supplies of agricultural products by means of regular and deliberate savings and accumulation of funds in small installments by many farmers in favourable time periods, to defend some or a few of the participant in bad time periods.
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’s one. Therefore agricultural insurance takes care of the losses suffered by the farmers. To do this very successfully by an underwriter the compensation has to be made from contribution (premium) of all parties participating in the insurance. It is the aim of this research work therefore to find out if agricultural insurance has contributes in any meaningful way to enhancing agricultural productivity. Weather agricultural insurance has actually gained acceptance by the rural farmers. If compensation and adequately paid when losses are encountered by the farmers. And the possible areas the farmer can over with agricultural insurance policy the research work. Contains a general background discussion on the role of agricultural insurance in enhancing agricultural productivity. It went further to state the problem to be studies 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
The first major benefit of taking this form of insurance is because it aids in fighting poverty. A natural disaster is unpredictable. When they happen, farmers who have invested heavily in agriculture gets their investment destroyed. This in turn makes them poor. If the farmer had bought the insurance, the companies compensate them. With money paid out, farmers are in place to reinvest in farming and other agricultural activities making them rich again.
Agriculture investment is expensive since it involves putting a lot or resources in one place. Agriculture is a risky business; however, it is among the most profitable. Farmers who buy the insurance premiums for their agriculture businesses have a big advantage because they are in place to recoup all their losses. Such losses could be in crops, animals and farm inputs. By paying, the insurance premium that is affordable, farmers recover their losses.
An important benefit of buying agriculture insurance premiums is that farmers get peace of mind. Natural disasters are unpredictable since they can happen any time. For those who have bought insurance premiums, they get peace of mind in that if anything happens to their investment, they are sure of compensation from the company providing insurance packages.
A good agriculture practice involves investment in new technology, machines and tools. Agriculture insurance taken against the crops and livestock allow farm managers to open up for new technologies in the market. Each year, there are new technologies invented to help farmers get more produce from their investments. Since the new investments are risky, insurance packages help the farmer to try new technologies. The insurance companies allow farmers to get insurance covers for the new technologies such that if they fail, farmers will not get losses as the insurance company compensates them.
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