News & Insights

Insurance market update: food production challenges from farm to table

Published 19 May 2020

The COVID-19 pandemic has challenged Australia’s food production sector on all fronts from a spike in distribution and transportation demands following a period of panic buying through to declining exports and slowing trading conditions in key markets such as China.

The suspension of international tourism and domestic travel further exacerbates this situation. As households continue to tighten their belts in the expectation of tougher times ahead, the demand for premium meat and seafood products may also decline in response.


The bulk of Australia’s food producers were fortunate to avoid the summer bushfires, although some in the Adelaide Hills were affected. Thankfully, recent rainfalls have gone some way towards alleviating the financial pressures Australian farmers are facing but once the product reaches the gate there is still a long road ahead to return to a near-normal pre COVID-19 position.

Distribution and logistics, and supply chain disruption remain areas of concern. With shifts in consumer demand the majority of businesses in lockdown and the ebbs and flows associated with household stockpiling and panic buying, the need to have a robust business continuity plan and an ability to respond to prevailing demand and emerging markets is more important than ever.

From an insurance perspective COVID-19 and the subsequent post-pandemic position, food growers and agribusiness should consider the following:

  • Impacts to midstream production throughput shaped by reduced commercial demand and shifting household purchasing patterns will affect standard operating patterns and may present new risk exposures and the need to review existing insurance arrangements.
  • Flow of imports and exports including negative demand for premium Australian food products in regional/international markets and supply chain challenges in spaces such as packaging and specialist ingredients that may be delayed or supplied at inflated costs in the short term. Current rate fluctuations should also be closely monitored in the context of continuity planning, as well as decreased sea and air freight capacity.
  • Social distancing requirements and workplace adjustments  and the flow-on impact to production capacity and production processes.
  • Changing regulations, legislation and inter-state biosecurity controls  the broader impact of COVID-19 on the food production sector from a compliance and regulation perspective remains to be seen. We will continue to monitor the situation closely.
  • Reduced access to international and regional labour supply this remains a concern for the food and agribusiness sector in accessing foreign workers, particularly in specialist horticulture and food processing facilities.

Business interruption cover

Although some of the larger food production operators may be covered for specific aspects of the interruption to standard operations caused by COVID-19 under their industrial special risks (ISR) policy provisions, feedback from the global insurance market is that insurers will be looking to further restrict cover related to quarantinable or infectious diseases, moving forward. On that basis it is unlikely that this cover will be available again at renewal.

The way forward…

Despite the expectation of challenges ahead, there is a way forward and we are working closely with businesses across Australia and insurers to develop alternative solutions. Please call to speak with one of our food production specialists to seek advice on your current insurance program and planning ahead from a business continuity perspective.

Business Insurance and Risk Market Update

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This article was originally published in the Business Insurance and Risk Market Update May 2020.

In this report you will find additional insights on current market conditions and the effects of unprecedented impacts from extreme weather catastrophes, political and economic turbulence to the significant blow dealt to the recovery process dealt by the COVID-19 pandemic, including:

  • professional and financial risks — board governance and directors' liability 
  • business continuity — what's your Plan B?
  • cyber — risks evolving as fast technology itself
  • claims — preparing for a new normal.

Contact us

We strongly encourage any food production business owner with prevailing concerns around the adequacy of their insurance cover to speak with Gallagher subject matter experts at the earliest opportunity. We are here to help and, through our strategic partnerships and access to exclusive markets, we may be able to present an improved course of action for your business.

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Further reading

Food production insurance and risk management expertise

Insurance market update: food production challenges from farm to table

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.
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