WESTERN Australian primary producers now have access to a new form of insurance to mitigate against weather-driven income losses thanks to Nutrien Ag Solutions.
Nutrien Ag Solutions' Australian insurance business development manager John Snowball said while Parametric Weather Insurance (PWI) had been available globally for more than 20 years, it had mostly been utilised in non-agricultural industries such as mining and energy, although Europe, Brazil, Chile, India and Russia had pursued some agricultural adoption.
"In mining for instance it has been used to insure against things such as cyclones causing forced site shutdowns," Mr Snowball said.
"Here in WA we see its application being most significantly against losses as a result of rainfall and temperature fluctuations.
"In local GRDC surveys these were identified as the two biggest influencers on production losses in agriculture, particularly with regard to crop yields.
"However, it could equally be used to cover against wind, water or sun (cloud cover) fluctuations."
Mr Snowball said PWI was different to traditional insurance policies in that it did not insure the loss of a crop or pasture, but rather it covered losses as a result of an adverse weather event.
"For example you could insure against things like too much rain in December during harvest, low temperatures in August and September in frost-prone zones or temperatures that are too high during a crop's flowering window," he said.
"A viticulturalist might insure against too much rain when grapes are ripe (causing them to burst), an export hay producer might insure against too much rain during baling and a livestock producer might insure against a lack of rain at a time critical for pasture growth.
"Or a local agricultural show or field day could insure against excessive rainfall which may cause the event to be cancelled."
Mr Snowball said because PWI had coverage across such a broad range of industries and applications, the risk was better spread which allowed for more affordable premiums, something which set it apart from multi-peril crop insurance, where the insuring base was narrow and funding was largely reliant on the incoming premiums.
"Importantly it does not rely on an all-in or blanket approach and it is not determinant on better producers propping up less efficient operators," he said.
"It does not matter what or how you're farming and what crops are being grown, you are insuring against cover for weather.
"Policies can be tailor-made to suit every individual and every situation, with choices often in line with their level of exposure to debt."
Mr Snowball said some growers may just want PWI to cover their seed and fertiliser bill for the following season, others may require more, but regardless each individual could select the 'blocks' they wanted to build their policy around for their particular tipping point.
"The longer the period of cover and the higher the amount of cover, the higher the premium, but it's not rigid, it's your call," Mr Snowball said.
Insurance indexes or parameters for PWI were determined by comparing the policy holder's weather records with those of their nearest recognised Bureau of Meteorology (BoM) weather station.
"There are thousands of stations around Australia and these cover at least 80 per cent of all potential clients, the exceptions being in western New South Wales and northern Queensland where NASA satellite data in five kilometre grids is utilised," Mr Snowball said.
"For example, a farmer might consider insuring against receiving less than 20 millimetres of rainfall for the month of September.
"If this eventuates, that farmer would be paid out on a sliding scale for every millimetre missed, less than 20mm."
Mr Snowball said while WA and Australian farmers from around the country had been very resilient and good at managing their own risk for more than 100 years, it was important now more than ever, that Australian agriculture survives and succeeds.
"Australian agriculture is essential," he said.
"It feeds Australia and it also helps feed the world.
"We have seen in the past few weeks, just how important that food security is," he said.
"Insurance that supports producers through uncertainty, like PWI, gives producers some control over the one thing in farming they cannot control and that is the weather."
"This in itself can provide a producer with peace of mind," Mr Snowball said.
"We have also heard from people that having the PWI cover has given them the confidence to try new things such as alternative crops or other yield uplift activities, where previously they would have been compelled to wait for rain first.
- More information: contact your local Nutrien Ag Solutions office.
