MELBOURNE, AUSTRALIA — Grain Producers Australia (GPA) facilitated a meeting in Melbourne, Australia, the week of Sept. 8 to discuss establishing a multi-peril crop insurance program.
Grower groups from around Australia attended the meeting to consider the latest developments in comprehensive crop insurance to protect farm working capital against drought, flood, frost and market risk. In addition to the key producer groups, major bank and farm supplier representatives also joined the meeting in Melbourne.
Multi-Peril Insurance has so far failed to attract government support as a viable alternative to existing production risk strategies. Australian farmers have some of the lowest levels of government support in the OECD. The government provides ad hoc drought and flood relief to farming businesses on the basis of subjective qualifications of exceptional circumstances, the GPA said.
“There must be, and is, a better way to provide a functional, objective and viable mitigation of normal production risk to improve the financial resilience of the agricultural sector,” said GPA Chairman Andrew Weidemann. “This meeting was the first step taken to identify the impediments to the introduction of nation-wide multi-peril crop insurance. Improvements in managing moral hazard and having a better understanding of systematic risk mean we are ready to undertake a meaningful industry wide approach to multi-peril insurance.”
The meeting established the need for a greater understanding of requirements that reinsurers are looking for when developing insurance risk policies.
“Clearly reinsurers have found the lack of both the quantity and quality of production data a barrier to establish multi-peril crop insurance products in the past and it remains the single greatest impediment. Frankly this issue can be solved quickly by the growers themselves being prepared to engage with reinsurers,” Weidemann said.