News & Insights

Australian farmers need insurance protection against crop failures

Published 19 November 2018

This year farmers across the country, from Queensland to Western Australia, are facing the prospect of the lowest winter crop yield in 20 years, the result of the combined effects of drought and frost, ABC News reports.

According to industry statistics, less than 1% have multi-peril crop insurance, a relatively recent form of available cover which is perceived by many to be too expensive, although it provides the substantial benefit of enabling farmers to access funds to continue operations into the new agricultural year.

Peak bodies such as the Australian Farmers Institute, the National Farmers Federation and Grain Growers are campaigning the Federal Government to provide a 60% tax rebate on premiums over the next five years, to encourage uptake. Part of the issues involved is ensuring risk is spread broadly enough over different geographical regions.

Kylie HullGallagher Area Director Kylie Hull (pictured) believes farmers need insurance protection for their incomes, not just their crops.

“The Australian insurance Industry, in combination with the Federal Government, owes it to our farmers to provide some form of cover for the weather perils they face,” she says.

“The product needs to be some sort of revenue protection and be available for all farmers, not just for crop insurance.

“In order to work it will need to be continuous to ensure consistency and fairness of pricing, premium pool and longevity of the scheme.”

Single event cover

An alternative to multi-peril crop cover is weather insurance, which enables farmers to insure against single weather events, as recorded by the Bureau of Meteorology. This form of index-based cover pays out for every day weather events exceed a predefined limit. These include

  • rainy days
  • dry days
  • heat days
  • frost
  • dry season
  • rainy season.

Index-based insurance products provide insurers with the benefit of streamlined handling but require farmers to accurately estimate the effects of such weather events, which can be inter-related and complex. For example, recent drought conditions were also responsible for the severe frosts that have affected farmers’ crop yields.

Gallagher offers both options, along with flexibility in formulating insurance programs to suit farmers’ individual needs – and budgets. Talk to one of the Gallagher farm insurance specialists for an obligation-free chat about your needs.

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