AN international insurance giant looms as the key piece in the puzzle of how to deliver crop insurance to farmers.
Swiss Re Corporate Solutions is a global agriculture and food company which already insures farmers and agribusiness supply chains in the US, Russia, South Africa, Ukraine, Argentina and Brazil.
The company will run a pilot insurance program in WA this year and is aiming to launch the product officially in November, ready for the 2014 growing season.
Last week the global head of Swiss Re's agri corporate business, Bernard Belk, met with about 20 farmers in Bruce Rock to discuss the real opportunity to finance and structure a Crop Mitigation Insurance (CMI) in WA.
Mr Belk was in WA for three days and said many of the farmers were clearly in need of the insurance.
"They (the farmers) were commenting that there were no options and that they need Crop Mitigation Insurance," Mr Belk said.
"There were three generations in the room and the younger guys were saying they needed something to take out the catastrophic event risk to continue to stay in business."
Mr Belk said after a lengthy discussion on how such a product might work in WA, the farmers seemed very much in favour of the concept.
"We still have to work on the detail but what we want to bring is that technology that we have in other countries and replicate that here and adapt it to Australian conditions," he said. "But we want to bring a product that is as cost efficient as possible and to do that we need to cut out unnecessary costs, which for me are mainly administration costs."
Mr Belk said the system would be automated meaning farmers wouldn't have to claim.
At the end of each season the data is configured in the system and determines crop yields, so there would be no delays.
He said the CMI would cover much more than just frost and drought and it would be up to the farmer as to how much they wanted to cover.
"Farmers will have the option to cover whatever amount of dollars they want to cover," he said.
"They will also get to decide whether they want to cover the cost of production, or more than cost of production or less than cost of production."
Mr Belk said the proposed model, which is set to be fully released later this year, after more detail of the product is released in April, was similar to the model already set up in the US which works with no subsidies.
"One fundamental difference is that in the US, this product covers what is not covered by the federal crop insurance program, the latter program is subsidised by the government," he said.
"Now what we need to work on is to get the information.
"And the information means that we must have historical data of the farm.
"So the historical yield data of the farm is the absolute key and CBH has a lot of that data but it will have to ask the grower (for permission to release it)."
Mr Belk said the company also needed access to weather information from the Department of Agriculture and Food WA (DAFWA).
The original plan is to discuss with the industry in more detail during the week starting April 22, the same date Mr Belk is set to return to WA.
"We and our partner The Climate Corporation, are committed to doing this because there is strong demand, there is substantial potential if you look at the seven million hectares you have in WA and it is an efficient product," he said.
"So that is why we are prepared to spend the resources to make it happen."
Member for South West Region Nigel Hallett and former Nationals WA members, now Independents, Max Trenorden and Philip Gardiner played key roles in getting Mr Belk to WA.
All three travelled to Europe at the end of last year to learn and meet with industry professionals to discuss how a program might be suited to WA.
A number of industry leaders have labelled the announcement as one of the biggest in WA agriculture's history, but many also would have liked to see this introduced a few years ago.
Mr Hallett said the product should have been in operation three or four years ago and took aim at Agriculture Minister Terry Redman for slowing down the process.
"Farmers would never have been in this sort of financial pressure if something like this had been introduced then," he said.
"Miracles don't happen overnight, but we could have moved along a lot quicker if we had an Agriculture Minister that would have worked with us and supported the feasibility of it, instead of just dragging out an old report and saying it cant work based on MPCI."
During Mr Belk's three day visit Agriculture Minister Terry Redman did not meet with Mr Belk, despite an invitation.
Mr Belk did, however, meet with farmers, banks, CBH and consultants.
It is understood tensions are high between Mr Redman and Mr Hallett, Mr Trenorden and Mr Gardiner as the Minister refused to speak on the issue.
But following a story in The West Australian this week, five days after Mr Belk originally arrived in WA, Mr Redman sent out a media statement at 4pm on Monday afternoon saying he had welcomed the announcement by Swiss Re.
"Two years ago the State Government invited international and national experts, industry organisations, bankers, consultants, farmers and agri-business leaders to an industry forum to discuss the development of commercially-based risk management options for WA farmers," Mr Redman said.
"At that forum we were told more comprehensive weather information and accurate local yield data was what insurance companies needed to develop a crop insurance product.
"Since then Royalties for Regions has contributed funding to the expansion of WA's network of automated weather stations, with 70 new stations installed across the South West and Wheatbelt.
"We also provided data and analysis to Swiss Re and CBH to help them develop their recent trial product.
"I'm glad this effort looks like bearing fruit, and we look forward to continuing to provide insurers with the accurate local data they need to offer crop insurance for WA farmers."
Mr Redman said The Nationals WA $300 million agriculture policy included additional measures to provide more data to insurers and help farmers manage risk.
"Our $10m risk management package includes further expanding and upgrading the network of weather stations, the construction of two new radar stations at Merredin and Jurien to provide more accurate weather forecasts and 50 more Yield Prophet sites to give farmers accurate soil and moisture profiles," Mr Redman said.
"It also features an AgTech initiative to help farmers make better decisions, like the best time to seed and when to apply fertilisers and pesticides.
"These initiatives will give farmers the reliable information they need to keep the costs of production down, make the most of it when times are good and minimise losses when times are bad."
Mr Redman also continued to deny the Nationals were out of touch with regional WA.
Mr Trenorden said clearly what Mr Redman had done through the industry forum two years ago didn't work.
"The information that he received from that forum was extremely negative and hampered the development of CMI," he said.
"But if the Minister has got a change of heart then the reinsurance industry and insurance industry desperately requires a range of information from not only DAFWA but other State agencies and the first thing he could do to help is make this information readily available as we will be back in April."