Farming crops is no different to many other businesses in Australia. Like some others, it has its opportunities and challenges and is open to a wide variety of risks.
For example, technology is having a positive effect on agribusiness. Historically farming has been built on sweat and labour, meaning there were fewer opportunities to increase production, but with the advent of the likes of GPS and autosteer being fitted to tractors, sprayers and headers, efficiencies have been made in all manner of areas
There are also a number of threats targeting farmers across the country. Australia’s weather is the envy of other nations, and one of the reasons why it can be such a great place for people to work. However, that same bonus also carries with it a number of risks – from bushfires to flooding – and the effects these can have on crops and business can be devastating if not properly managed.
This is because many farms are not supported by large capital safety nets that many organisations are. In its latest Farm Facts report, National Farmers’ Federation found there to be around 134,000 farm businesses in Australia, with practically every one (99 per cent) owned by a family.
With family-run businesses pushed for time and resources, there is no wonder why accidents can happen, or dangers ill-prepared for, which is why it is important to discuss crop insurance with your insurance broker.
Adverse weather a growing concern
Australia’s weather has the potential to be particularly damaging. Despite the country only forming 2 per cent of the reinsurance market, weather-related damages accounted for 6 per cent of all losses in the five years to 2013, according to a recent Insurance & Risk Professional (A&RP) report.
The value of these losses is even more significant, with damage by weather creating all but one of the 20 largest property losses nationwide over the past four decades.
What makes Aussie weather some of the most dangerous is its constant threat. Bushfire season gives way to flood season, meaning there is little respite for farmers in coastal and in-land regions alike.
It is widely accepted that climate change is set to create more disruptive and damaging weather on an increasingly frequent basis, making the protection offered by business insurance all the more pressing.
In the worst global warming conditions, experts say the insurance industry will play an important role for protecting businesses from going under financially, even if their valuable crops do so physically.
Lloyd’s of London Head of Asia Pacific Kent Chaplin explained in a report by A&RP how the industry is helping to protect against weather extremes for farmers and other susceptible businesses.
“The insurance industry sits at the forefront in helping to mitigate the impact of extreme weather,” he explained. “Communities across Asia-Pacific are highly exposed to these risks and catastrophe modelling firms and insurers need to account for surface sea level and air temperature rises in their modelling so we can better understand and prepare for their impact.
“Insurers can also help to strengthen defences against climate change by sharing our knowledge and expertise with the public sector to encourage climate change mitigation and adaptation strategies across the most vulnerable regions.”
Mitigating risks with crop insurance
Crops in Australia keep the nation running. Wheat, barley, sorghum, cottonseed and canola, for instance, provide a variety of uses and sustenance. Keeping these businesses afloat is not merely a challenge for the property owners, then; much of the economy rests on local production.
Each farm in Australia supplies food to around 600 people, according to National Farmers’ Federation. Farming also provides around 1.6 million jobs and almost $50 billion for the Australian economy.
And yet, farmers may feel held back by the lack of support offered to them. For mitigating against the risk of weather, and other daily challenges, help is at hand. To discuss the risks your land, crops and business are susceptible to, and to find an insurance package that works for you, it will be a good time to discuss the needs with your insurance broker.
MGA have offices all over Australia, allowing us to give specialised advice about your regional risks. To discuss more, visit our website to find the telephone number for your nearest insurance specialist.