Overwhelming vote for MPCI scheme

30 Sep, 2010 09:47 AM
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Agriculture and Food Minister Terry Redma addresses the Kulin meeting.
Agriculture and Food Minister Terry Redma addresses the Kulin meeting.

WAFARMERS will continue pushing for the introduction of a government-backed multi-peril crop insurance (MPCI) scheme as a way to improve grain grower risk management profiles.

The potential lobbying action could also include a march through the streets of Perth to State Parliament.

An estimated 220 farmers, rural business representatives, government officials and other industry members voted overwhelmingly in favour of government backing for a MPCI scheme at a public community drought forum organised by WAFarmers at the Kulin Freebairn Recreation Centre last Friday.

But politicians and other public officials have been given a slight reprieve from the public pressure, at least for the time being, with the meeting's organisers now giving an opportunity to respond to the concerns raised by farmers before any further political demonstrations are held.

The meeting came after WAFarmers Corrigin-Lake Grace Zone passed a motion of no-confidence in Agriculture and Food Minister Terry Redman, mostly over his stance against a government-backed MPCI.

The motion was moved by former One Nation Party state president Ron McLean at the zone meeting in Lake Grace on Friday, September 17.

The motion said the meeting was, appalled with Mr Redman's attitude and "hereby move a motion of no confidence in the Minister".

WAFarmers has expressed repeated concerns that its members face the prospect of financial ruin unless they find a way of insuring themselves against risks such as frost, drought, flood and fire.

The issue is becoming increasingly important to growers this year, with many facing potential financial ruin on the back of another poor season.

Some industry analysts are saying up to 10 per cent of WA graingrowers could be forced off the land after this season because of the severe drought and the accumulative impact of several bad seasons.

Mr Redman spoke at the Kulin meeting and outlined his basic view of a MPCI scheme.

He said he supported a MPCI in concept but also warned he did not want to raise false hope or give any false impressions.

The arguments for and against the scheme are complicated.

Mr Redman's view comes down to the notion that State funding increases the risk of "moral hazard" in regards to decision making and falsely inflates land values.

Mr Redman told the meeting he supported the notion of a MPCI scheme, "as a commercial instrument".

"In the first instance I absolutely support the notion of a MPCI or frost insurance or dry seasons' insurance," Mr Redman said.

"We need to be careful what the definitions actually mean but collectively we refer to it as MPCI.

"I support that as a commercial instrument.

"What we are doing and I have directed the Agriculture and Food Department to do the work, is to get the yield data, the risk assessment data that insurance companies and risk companies and different risk insurers need, to assess whether a commercial instrument can work in a particular area and what the premiums are like.

"They are working jointly with insurance companies to get that information such that insurance providers have got the knowledge and understanding in order to be able to confidently pitch a risk management insurance scheme into the market.

"What I don't support is either the government underwriting the premium or underwriting the pay out in a MPCI scheme.

"I have two underlying concerns; one is that there are a number of commercial instruments trying to make their way into the marketplace now with different levels of success and I'm sure with different views about how good instruments they are.

"If we are going to genuinely look at getting information together to have an insurance company look at it and go over it and try to provide a commercial instrument, if we were to underwrite it in any way, you will keep the commercial players out of the market."

Mr Redman further explained his concern around decision making as a product of having an instrument that was in essence underwritten by government, "what they call moral hazard".

"If someone is paying your insurance or if I pay my 21-year-old son's car insurance, he is not going to behave quite as well in that car as if he was paying it himself," he said.

Speaking after the meeting, WAFarmers Corrigin-Lake Grace Zone president Bob Iffla said he was pleased Mr Redman supported the concept of a MPCI scheme but was disappointed he was "refusing to support government underwriting".

Mr Iffla said a suggestion was made to march on Parliament House.

But he said the lobby group would firstly focus its efforts on pushing the MPCI cause more formally, to see if the government changes its direction and to also give more time for discussions to be held with a broader range of politicians and public officials.

He said the farm lobby group would now take its case to other politicians to help them understand what graingrowers were trying to achieve collectively.

Mr Iffla said an aggregate of more than 600 people attended meetings throughout the Corrigin and Lake Grace region over the past two weeks.

"These meetings have been made up of concerned farmers and business people over their futures," he said.

"It is unfortunate that we have to go to this extent to hold public meetings of this nature because the government sat on its hands from March 19, 2010, to September 24, 2010, when they were warned that a looming rural crisis was on our door step.

"To ensure that this does not happen into the future we need fortnightly progress reports from the government to show they don't fall asleep at the wheel."

Mr Iffla said the recent meetings were a great success.

"I can assure the Government as the Corrigin and Lake Grace zone president we will ramp up the fight to get a fair go for all country people," he said.

"Country people must stick together like glue to be ready to fight the next battle.

"The farmers, the business people and employees need to push the MPCI scheme campaign at every level in government."

Mr Iffla welcomed suggestions on how to make the whole agricultural industry viable and to keep communities together.

He said rural businesses also needed strong support to ensure they remained viable and were finding the current situation extremely difficult.

Former WAFarmers grains council president Robert Doney, Dudinin, said he believed Mr Redman would probably be more sympathetic towards MPCI now, following his appearance at last week's meeting.

Mr Doney said the issue now was how to make MPCI work.

He said he supported a scheme that covered production costs but believed it needed to be implemented on a national scale and not just be WA based, to help spread the risk factor.

As an example, Mr Doney said the Eastern States were having a bumper year this year and would produce a larger volume of grain but WA was facing the possibility of a situation where a MPCI would have 80pc payout on claims.

He said the scheme would also need to be voluntary and warned against making it compulsory.

"It can't be compulsory because as soon as you make it compulsory somebody takes control of it and it goes in another direction; growers must have the choice," Mr Doney said.

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