Industry bodies welcome NSW Government funding for farm insurance research

Deputy Premier and Minister for Regional NSW John Barilaro and Minister for Agriculture Adam Marshall have announced that the NSW Government will spearhead a campaign to establish a nation-wide income protection scheme to shield farmers from financial impacts of future droughts.

Barilaro said the NSW Government was allocating $2 million to kick-start the process and was calling on the Commonwealth and other states to come to the table and back the national insurance scheme.

“Our primary producers are facing one of the worst droughts in living memory and the NSW Government wants to make sure our farmers have the ability to endure the harsh conditions that Mother Nature can often throw their way,” he said.

“That’s why we’re putting cash on the table to go to work with the National Farmers Federation and identify potential models that could be used to protect farmers against income loss in future droughts or even natural disasters.

“We’re starting with a blank canvass here in terms of what a potential scheme could look like and that’s why it’s important all parties come together and work collaboratively to design a scheme that genuinely benefits farmers.

“The NSW Government has already committed $1.8 billion to drought assistance measures but we need to be looking forward to the next dry spell and thinking of innovative ways to help reduce its sting.”

Marshall said a national income protection scheme was the best measure to help farmers combat drought.

“The best drought assistance measure a government can deliver is to help the agricultural industry to self-insure,” he stated.

“As this drought rolls on it’s obvious we need to be looking at ways to roll out a product that would cover all producers – whether croppers, graziers or horticulturalists – against the devastating loss of income that comes with drought and other natural events.

“This is something that has been called for by the agricultural sector for a very long time but so far insurance products have largely been constrained to individual
production sectors within the industry.

“What we’re looking at here is something completely new: a national scheme that all farmers, regardless of what they grow and the size of their operation, can buy into and be permanently covered by.

“We’re putting money on the table and are determined to get this up and running. The Commonwealth and all other State Governments need to get involved and back this in too.”

The NSW Government will partner with the National Farmers Federation (NFF) to investigate potential risk mitigation models that could be used to protect farm incomes during times of drought or other hardship, such as natural disasters. The project will involve looking at other comparable models in overseas jurisdictions as well as the best way to deliver the product across Australia.

NFF President Fiona Simson said, “Drought continues to severely impact farmers and rural and regional communities across the east coast.

“With the Bureau of Meteorology forecasting no rain in sight, and drought predicted to become more frequent and prolonged in future, we need long term solutions now. Farmers and agriculture-dependent communities need support to get through what could be another disastrous year in some parts of NSW and other parts of Australia.”

Simson said farmers in many of our overseas competitor markets enjoy access to mature and deep financial risk management markets.

Chair of NSW Farmers’ Grains Committee, Matthew Madden, said the funding came on the back of NSW Farmers’ long-standing support for a national risk insurance market and the hosting of a
recent industry roundtable on farm risk insurance.

“While these products should not be considered a ‘silver bullet’ for drought support, they are effective tools to help manage other climate based perils such as frost, flood, fire and other
adverse weather conditions.”

David McKeon, GrainGrowers CEO said, “Grain farmers incur significant costs upfront when planting a crop and are unable to recoup these if the crops fail. MPCI and weather derivatives allow a farmer to ‘farm with certainty’ and stay self-reliant. We look forward to working with Government, National Farmers’ Federation and NSW Farmers to ensure the right tools exist for growers.”