Parliament to approve US$100m insurance for rice farmers

Parliament is set to approve a US$100 million insurance facility for rice farmers across the country, the President of Ghana Rice Inter-professional Body (GRIB), Nana Kwabena Agyei Aryeh II has revealed.

This follows continuous appeals made by rice farmers and stakeholders on the need to institute an insurance package in the sector. The most recent appeal was made during the 5th National Rice Festival organized by GRIB last month.

When approved, the facility will be channeled into farm-risk insurance for rice farmers to ensure their safety and ameliorate the various risks associated in the sector as well as increase production and yields.

Currently, rice farmers are not beneficiaries of the Ghana Agricultural Insurance Pool (GAIP), an initiative launched in 2011 to develop agricultural insurance for farmers in the country.

Agricultural insurance includes a variety of product types such as property, causality, life, and health insurance. The farm-risk insurance will focus on production and technical risk, output and input price risk, financial risk and personal risk.

Insurance cover for small farmers will significantly improve their credit worthiness, by providing some level of guaranteed income, whatever their production levels. This would in turn give them, better access to commercial loans.

Inadequate loan financing has been identified as a major constraint to agricultural production by small scale farmers.

Last year, government set up an ambitious plan to increase rice production by 49 percent as statistics from the Agricultural Ministry indicates that the shortfall below self-sufficiency in rice production now stands at 51 percent, despite a 200 percent increase in production over the last decade.

The plan is to boost rice production to over one million metric tonnes to address the 40 percent shortfall in supply, below market demand.

Speaking to Goldstreet Business, Nana Agyei Aryeh II said the facility has come at a time when the need for insurance for rice farmers has been intensified due to the numerous challenges and high-level of risk in the sector.

“Aside the facility, there are some negotiations ongoing for concessionary loans for rice farmers. When approved, the details will be made known. Currently, we don’t know how its going to be disbursed. We will look at the details after it has been approved”, Nana Agyei Aryeh II said.

Currently, records indicate only 15 percent of rice farms are irrigated whiles the remaining 85 percent do not have access to mechanized irrigation facilities. This Nana Agyei Aryeh II noted is a serious risk factor which needs immediate intervention.

Nigeria loses about 20 billion naira (about US$55 million) annually due to the failure of insurance companies to create products that cover small farmers.

 By Dundas Whigham