Economic impact assessment of crop insurance schemes on farm income security

Abstract:

Nearly 80% of Nigerian farmers operate holdings smaller than two hectares, making them acutely vulnerable to yield losses from weather extremes and pest outbreaks. This research assessed the economic impact of the Nigeria Agricultural Insurance Scheme (NAIS) on farm income security among smallholder cultivators in two contrasting agro-climatic zones Ibadan district of Oyo State and Abeokuta district of Ogun State during the wet and dry seasons of 2022-23. A stratified random sample of 480 farm households (240 insured, 240 uninsured) was surveyed using a semi-structured interview schedule covering crop economics, insurance participation, claim history, and perceived income stability. Net farm income, benefit-cost ratio, and income variability (coefficient of variation) served as the primary outcome measures. Insured farmers recorded 21.3% higher net seasonal income and 34.6% lower income variability than their uninsured counterparts across both districts. Rice-cassava and vegetable growers showed the strongest insurance effect. Claim settlement delays averaging 52 days, however, reduced the effective income-stabilising benefit by an estimated 9-12%. Logistic regression identified farm size, education level, and prior claim experience as the strongest determinants of insurance adoption. The findings recommend streamlining claim processing timelines and expanding awareness campaigns targeted at legume and root crop growers with low enrolment.