CROP insurance is an achievable goal for Queensland but how it is structured for northern Australia could be very different from conventional insurance models.
An insightful presentation from multinational risk and insurance adviser Julian Roberts from London headquartered company Willis Towers Watson unwrapped some of thinking at the Rural Press Club in Brisbane about how the so-called ‘Holy Grail’ of risk management could be delivered for farming in northern Australia.
In fact, many countries including southern Australia, Canada, Mexico, France and Italy all offered good examples of how risks associated with climatic extremes were able to be insured. Multi-peril crop insurance (MPCI) was common, but it remains relatively expensive without government support. In fact it was only in the US where the government subsidised a whopping 63 per cent of the premium where the uptake of MPCI was overwhelming.
Mr Roberts, an expert in agribusiness and weather risk, has been working with the Queensland Farmers’ Federation, the University of Southern Queensland and the Queensland Government to explore how a workable crop insurance schemes could be developed.
Mr Roberts said a sustainable model may not even involve on-farm assessments but rather use indexes that monitored key factors such as rainfall, temperature, frost or hail to trigger payments.
An example was where the Roy Hill mine in the Pilbara region of WA had used an index measuring cyclones to protect the construction phase of the project. Another was measuring fruit quality on a New Zealand orchard. Similar thinking could be applied to agricultural crops in Queensland, he said.
AgForce Grains president Wayne Newton said the diversity and complexity of northern Australia’s production systems was a significant challenge for any form of risk management.
“Queensland the cropping system is a whole lot more complex and diverse,” Mr Newton said. “What is important is that insurance companies are willing to offer coverage year in, year out. We don’t need companies refusing to insure when they assess the risk is too high is coming year. Whatever scheme it is has to work all the time, be sustainable and be affordable.”
- The Rural Press Club’s Malcolm McCosker Memorial Address will be delivered at the Ekka on August 10. The speaker is Australian Country Choice group managing director David Foote.
