How erratic rainfall turned Kano farmer’s loan into crushing debt

Lukman Abdulmalik

When Abdulwahab Adamu borrowed N1.3m to cultivate his rice farm in Kura Local Government Area of Kano State, he expected the harvest to repay the debt and leave him with enough money to prepare for another farming season.

Instead, the rain turned his investment into a devastating loss.

Adamu cultivated two hectares of rice, investing money, labour and borrowed funds in a farm whose success depended heavily on the weather. But the rainfall pattern became erratic, damaging the crop and wiping out what he had invested.

He estimates his loss at more than N3m.

The N1.3m he borrowed remains unpaid.

For Adamu, the failed harvest did not end when the crop was destroyed. The consequences followed him home in the form of a debt he still has to repay, without the expected proceeds from the farm.

“I lost more than N3m from the farm,” Adamu said.

What makes the loss more painful is that he had no insurance to fall back on.

Adamu said he was unaware that farmers could insure their crops against certain weather-related risks.

Had he known, he said, he might have considered protecting his investment before planting.

His experience illustrates a vulnerability facing many smallholder farmers as unpredictable weather increasingly threatens agricultural production: farmers invest heavily in seeds, fertiliser, labour, land preparation and other inputs, yet many remain personally responsible when a climatic shock destroys their harvest.

When bad season becomes a debt

For farmers who depend on loans to finance cultivation, crop failure can have consequences far beyond a lost harvest.

The farmer still owes the lender even when the farm produces little or nothing.

That can force farmers to borrow again, sell assets or reduce the scale of their next farming season simply to stay afloat.

Research on agricultural financing in Kura has identified credit constraints and the need for stronger risk-management mechanisms, including crop insurance, among challenges facing rice farmers.

Adamu’s N1.3m debt therefore represents more than a personal financial problem.

It shows what can happen when a farmer carries the full financial risk of a farming season in an environment where weather conditions are increasingly difficult to predict.

When the weather becomes the biggest risk

Agriculture has always depended on weather, but changing rainfall patterns are making planning increasingly difficult for farmers.

Recent analysis by the World Bank found that partial crop losses in Nigeria increased substantially between 2018/19 and 2023/24, with climate shocks and environmental stress among factors affecting agricultural production.

For farmers in northern Nigeria, where rainfall remains crucial to wet-season farming, changes in the timing, intensity and distribution of rainfall can undermine an otherwise carefully planned season.

A farmer may prepare his land on time, purchase improved seeds and fertiliser and hire labour, only for an abnormal rainfall pattern to destroy the crop.

That is where agricultural insurance becomes important.

Insurance cannot prevent drought, flooding or excessive rainfall. What it can do, when the relevant risk is covered by the policy, is transfer part of the financial consequences of the loss from the farmer to the insurer.

Could insurance have helped Adamu?

Nigeria has an agricultural insurance system through the Nigerian Agricultural Insurance Corporation.

NAIC says its crop-insurance products cover risks including fire, lightning, explosion, windstorm, flood and drought. Its crop-insurance framework also covers risks associated with pests and diseases, depending on the policy.

Rice is among the crops eligible for its subsidised crop-insurance policy.

Under the subsidised scheme, NAIC says farmers pay 50 per cent of the premium while the Federal and State Governments bear the remaining 50 per cent under the subsidy arrangement.

The scheme is open to both individual and corporate farmers, including farmers who did not obtain agricultural loans.

This means a smallholder farmer such as Adamu is not automatically excluded from agricultural insurance because of the size of his farm.

But there is an important caveat: having an insurance scheme available does not mean every crop failure automatically attracts compensation.

The exact policy determines the risks covered, the premium payable, how losses are assessed and the circumstances under which a claim can be made.

NAIC says farmers seeking crop insurance are required to complete a proposal form, undergo pre-insurance inspection and pay the applicable premium before the policy is issued.

Kano farmers are not new to crop insurance

Kano has had experience with agricultural insurance.

Research on rice farmers in the state has documented participation in agricultural insurance involving the Nigerian Agricultural Insurance Corporation and the Kano State Agricultural and Rural Development Authority.

The study covered rice farmers in Kura, Bunkure and Dawakin Kudu, among other areas.

Another study of rice farmers in Kano found that factors including education and farm size influenced participation in agricultural insurance.

That finding is significant in Adamu’s case.

His problem was not necessarily that an insurance product did not exist.

It was that he did not know about it.

Why farmers need insurance

Agricultural economists and insurance specialists regard insurance as one component of a broader strategy for helping farmers manage climate-related risks.

Research on agricultural insurance as a climate-adaptation mechanism in Nigeria has found that uptake among smallholder farmers remains limited despite the potential role insurance can play in managing climate risks.

Studies have also identified access to extension services, farmer organisations and better information as factors that can influence farmers’ willingness to adopt insurance.

This means creating an insurance product is only part of the solution.

Farmers need to know that the product exists.

They also need to understand what it covers, how much the premium costs, what documentation is required, how claims are processed and how compensation is calculated.

Agricultural extension workers, farmer associations, cooperatives, lenders and government agencies therefore have an important role in closing the information gap.

Insurance is not a guarantee against every loss

There is another distinction farmers must understand.

Buying insurance does not mean every failed harvest automatically qualifies for compensation.

The terms of the policy determine what is covered and how a claim is treated.

NAIC requires insured farmers to report losses and subject them to verification before claims are settled. Policy conditions, including applicable excesses, can also affect the amount paid.

There are also index-based insurance products that operate differently from conventional farm insurance.

Rather than assessing every individual farm loss, an index product can use predetermined rainfall or yield thresholds to trigger payouts.

Such products can simplify claims administration, but farmers need to understand their terms because an individual farmer’s loss does not necessarily mean a payout will occur if the agreed index threshold has not been reached.

The missing link

For Adamu, the lesson came after the damage had already been done.

He had borrowed N1.3 million.

He cultivated two hectares.

He estimates that he lost more than N3 million.

But he did not know agricultural insurance was an option.

The result is that the financial consequences of the failed harvest remain entirely with him.

There is no insurance payout to help offset the lost investment.

No compensation to reduce his debt.

No financial cushion to make the next planting season easier.

His experience raises a broader question about Nigeria’s agricultural risk-management system: what good is an insurance scheme if the farmers who need it do not know how to access it?

Beyond insurance

Insurance alone cannot solve the risks facing Kano’s farmers.

They also need access to irrigation, reliable weather information, agricultural extension services, improved seeds, affordable credit and functioning rural infrastructure.

Insurance should complement these measures, not replace them.

For a farmer who depends heavily on rainfall, better weather information and water management can help reduce exposure to climate shocks.

But when a farmer still suffers a covered loss, insurance can provide a financial cushion.

That becomes particularly important when the farmer has borrowed money.

The lender’s repayment schedule does not automatically change because the harvest has failed.

A debt that followed the failed harvest

For Adamu, the failed rice farm has become a debt that remains long after the farming season.

He still owes N1.3m.

The expected income from his two hectares is gone.

And the more than N3m he estimates he lost cannot simply be recovered by waiting for another rainy season.

His experience raises questions for Kano’s agricultural authorities, lenders, farmer organisations and insurance providers.

For farmers such as Abdulwahab Adamu, the rain destroyed the crop.

But the absence of insurance turned a bad farming season into a debt that will follow him into the next one.