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Multi-Peril Crop Insurance is a risk management option worth considering

by Grain Central, 04 June 2018

NATIONAL grain farmer representative body, GrainGrowers, has released an updated report highlighting the range of Multi-Peril Crop Insurance (MPCI) options available for grain farmers.

The report, ‘Managing risk using Multi-Peril Crop Insurance 2018’, was produced by GrainGrowers with technical support from Kondinin Group to raise awareness of the MPCI products currently on the market.

The report is released at a time when many of Australia’s grain growers are experiencing drought conditions, some for the second year in succession.

GrainGrowers CEO David McKeon said MPCI was just one tool in the risk management toolbox that farmers could use to manage the risk of possible crop losses and reduced income streams caused by perils such as drought and frost.

Mr McKeon said the results of GrainGrowers’ member surveys about MPCI showed that a lack of information and understanding of the available insurance policies and companies was a contributing factor in low uptake among grain farmers. Another was the view of farmers on the cost of premiums.

“Our goal is to inform farmers about the types of product on the market, the application process and associated costs,” he said.

Mr McKeon emphasised that GrainGrowers was not advocating MPCI over other risk management tools.

“We are only asking that growers consider it as one tool of many which might suit their particular circumstances and requirements. Hopefully this report goes some way to assisting farmers consider the range of various options for managing perils such as frosts, droughts and pest damage.”

The booklet also includes details of the Federal Government’s Managing Farm Risk Programme, which offers a $2500 rebate for advice and assessments to help farmers prepare and apply for a new insurance policy, and of other government initiatives in this area.

“The Managing Farm Risk Programme was a key element of the Government’s Agriculture White Paper, and while the programme has faced some challenges, we encourage farmers to consider whether they can benefit from the assistance available,” Mr McKeon said.

“We are continuing the conversation with government about other options that better suit the needs of growers for managing their risk.”

The report also highlights that some states appear to be doing more than others in improving the uptake of MPCI products.

“On top of the cost of a policy, stamp duty can add further significant cost. While Governments in Victoria, South Australia and NSW have removed stamp duty on MPCI policies, Governments in Western Australia and Tasmania still charge 10 per cent, while the Queensland Government charges 9 per cent,” Mr McKeon said.

“This equates to thousands of dollars on top of the cost of the actual insurance premium and our members say this is a major deterrent.”

“GrainGrowers calls for the WA, Qld and Tasmanian Governments to follow the lead of other states and abolish stamp duty on MPCI products.”

Source: GrainGrowers

Read the report: http://www.graingrowers.com.au/policy/resources

 

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