When floods submerged farmlands in parts of Nigeria last year, many farmers lost crops, livestock and months of investment almost overnight. Others watched poultry diseases spread through their farms or saw prolonged dry spells reduce harvests.

These risks have made agricultural insurance a bigger talking point within Nigeria’s farming sector. Guinea Insurance Plc recently disclosed that it had insured about 50 farmer groups, including agritech firms, within six months, saying more farmers were beginning to seek protection against production risks.

Yet, insurance penetration among Nigerian farmers remains low. While affordability plays a role, misconceptions about how agricultural insurance works also continue to discourage many from signing up.

Some of these beliefs are exaggerated. Others stem from genuine concerns based on past experiences. Here is a closer look at five of the most common myths.

Myth 1: Agricultural insurance is only for big commercial farms

Many smallholder farmers assume insurance is designed for large mechanised farms with significant capital investments.

The perception is understandable. Commercial farms are more visible, more likely to access bank loans and often have stronger relationships with financial institutions. Insurance products have historically been marketed more aggressively to this segment, reinforcing the impression that small farms are excluded.

However, eligibility is not necessarily determined by farm size. Several insurers, including the Nigerian Agricultural Insurance Corporation (NAIC), offer products for smallholder farmers. Development programmes supported by governments and donor agencies have also used agricultural insurance to protect small-scale producers.

The bigger challenge is often awareness and accessibility rather than eligibility. Many rural farmers simply do not know what products exist or how to access them.

Myth 2: Insurance companies don’t pay claims

This is probably the most widespread belief among farmers, and unlike some other myths, it did not emerge in a vacuum.

Across different sectors, delayed claims, disputes over policy terms and poor customer experiences have contributed to public distrust of insurance. Agriculture is no exception.

However, it is also true that insurers reject claims that fall outside policy conditions or where losses cannot be verified. Agricultural insurance usually requires field assessments to determine whether the damage resulted from an insured event.

That means the issue is more complicated than the blanket statement that insurers never pay. Some claims are honoured, some are disputed, and some are rejected because they fall outside the agreed cover. For farmers, understanding exactly what a policy covers before paying for it may be just as important as deciding whether to buy insurance in the first place.

Myth 3: Insurance covers every farming loss

Some farmers believe insurance guarantees compensation whenever a farm records poor yields.

That is rarely the case.

Agricultural insurance is designed to protect against specific risks listed in the policy. Depending on the product, these may include flooding, drought, fire, windstorms, disease outbreaks or other defined events.

A poor harvest caused by poor agronomic practices, late planting, poor-quality seeds or inadequate farm management may not qualify for compensation simply because production was low.

This distinction is important because many disputes arise when farmers expect broader protection than the policy actually provides.

Myth 4: It is too expensive to be worthwhile

For many farmers, particularly smallholders, insurance is another cost added to seeds, fertiliser, labour, transportation and land preparation.

Given rising production costs, choosing not to buy insurance can seem like a practical way to reduce expenses.

But this calculation depends on how a farmer views risk. A producer farming in a flood-prone area may weigh the premium differently from someone operating in a relatively stable environment. Likewise, a commercial poultry farmer with thousands of birds faces different financial risks from someone cultivating a few hectares of cassava.

The question is therefore less about whether insurance is universally affordable and more about whether the potential loss justifies the cost of protection in a particular farming enterprise.

Myth 5: Farming has always been risky, so insurance won’t change much

Many experienced farmers have accepted crop failures, pests and unpredictable weather as part of agriculture.

But the nature of those risks is changing.

Climate scientists have repeatedly warned that extreme weather events are becoming more frequent and more intense. Floods that once occurred occasionally now affect farming communities more regularly, while prolonged dry spells and heat stress are disrupting planting calendars across several parts of the country.

As agricultural risks become less predictable, traditional coping mechanisms such as savings, family support or borrowing may no longer be enough after a major loss.

That does not automatically make insurance the right solution for every farmer. But it does explain why insurers, financial institutions and policymakers are paying greater attention to risk-sharing mechanisms that can help farmers recover after severe shocks.

Agricultural insurance is unlikely to gain widespread acceptance through advertising alone. Farmers will judge it by how transparent policies are, how fairly claims are handled and whether compensation reaches affected farmers when disasters occur.

Until those issues are consistently addressed, skepticism will remain. But so too will the need for practical ways to manage the growing risks facing Nigerian agriculture.

Bottom Line

Agricultural insurance is neither a silver bullet nor a scam. It is one of several risk management tools available to farmers. As climate-related shocks become more frequent, the real challenge is ensuring that insurance products are affordable, transparent and trusted enough for more farmers to see value in them.