Trusting the insurance safety net

Farmers are given a comfort zone to make the best decisions, not just the safe decisions

INSURANCE companies aren’t usually a farmer’s best friend, because the money paid into policies is often never seen again.

Hence any sales pitch for a 'new fandangled' product tends to be approached in a somewhat sceptical manner.

However, Australia’s farming sector holds big potential for new risk management products, both for the investor and the user.

Whether it's a product which covers input cost recovery, revenue or loss of crop due to floods, drought or frost, the need to take out policies in what is an increasingly variable climate is also becoming greater.

The rural economy needs a boost to get rolling again and will only turn around if farmers are confident they’re not throwing their money away.

Our government provides plenty of taxpayer dollars to support insurance in other industries, be it health, social security, superannuation or motor vehicle insurance, but has thus far been reluctant to develop products for agriculture.

Providing products which remove a chunk of the risk would have the flow-on benefits of healthier rural communities, because even if a crop failed, a farmer would be in a better position to pay local businesses for their input costs as well as retain staff.

With the handful of producers who have taken up some of the new insurance products, we are already getting a glimpse of how it adds confidence to their decision making and the windfalls this can produce.

By providing that safety net, farmers are given a comfort zone to make the best decisions, not just the safe decisions.

If the season comes through with a lineball rain result, the extra, better quality inputs that farmer had the confidence to apply could have been what was needed to get the crop over the line, hence avoiding a crop failure and a payout.

While the producer might wave goodbye to the policy cost for that season by taking a payout, they will have potentially reduced their premiums in the future.

If good rain fell, then the risks taken on inputs had the ability to pay-off well, putting more cash in the farmer’s pocket for re-investment or as a 'haystack'.

Better insurance therefore has the potential to be a catalyst for helping kickstart a better farming economy.

It’s not the whole answer, but it’s one which can have a big impact.

Andrew Norris

Andrew Norris

is the editor of The Land
Date: Newest first | Oldest first


2/01/2015 6:42:54 AM

One thing your article does do Andrew Norris, is point out to the handful of farmer haters and whiners on this web site, that the urban, non farming citizen gets plenty in the way of assistance from Government. It also highlights that farmers certainly get no help with insurance while the general public does via health, social security and motor vehicle. But we do note that those who choose to label the farmers with such childish tags as rara's, agsocs and hands out types, have nothing in the way of logic in their spiteful rants anyway.
2/01/2015 11:31:02 AM

Thanks for your concern over the lack of farming confidence and profitability Andrew. Apart from your angle, there is also the fact that farmers are regulated to pay the highest global input and supply chain costs (largely via the Industrial Awards System), and yet forced to take the totally unprotected and corrupted low global prices for what they produce. A little shift away from that inequitable status would improve things too.
Bushie Bill
3/01/2015 8:06:46 PM

What happened GFA? Santa didn't bring you the head of critic on a silver plate? Can't take the heat, old son? Time to pack up and head to the coast and live on your multi-million dollar Farm Deposit account, eh?
Bushie Bill
5/01/2015 7:49:38 AM

So, JT, what exactly were the "regulated" arrangements when you decided you were going to be a farmer? Were they any different to now? Perhaps you have been around since the now long-gone (thankfully) days of old Black Jack Mac, who ensured RARA belonged to the chosen few, and did not have to justify their economic existence because, as old BJM was won't to say, "the world owes us a living because we are special people".
5/01/2015 6:34:52 PM

Nice in theory but when you have a lopsided market it doesn't work so well. farming is riskyy and so teh price of insurance is high for good reason.
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.


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