AUSTRALIAN growers will have less choice in the multi-peril crop insurance (MPCI) space this year, with pioneering MPCI business Latevo International confirming it would not offer cover this year after its three year pilot program.
However, chief executive at Latevo, Andrew Trotter, said this did not spell the end of the business.
“We are finalising a deal with an overseas insurer to underwrite our MPCI products for next year,” Mr Trotter said.
“We tried hard to get something up for this year, but we just were not able to do it in time.”
Grain Producers Australia chairman Andrew Weidemann said the farming sector still wanted MPCI in spite of low take up of initiatives such as the Federal Government’s rebate scheme where it provides up to $2500 dollar-for-dollar matched funding against the cost of seeking insurance assessments and audits.
“The major problem with MPCI as it stands now is that the products and costs remain prohibitive.”
“We still very much want to get a viable scheme or schemes running, as it will have benefits for the entire grains industry, but at present I am not sure exactly what that scheme will involve.”
Mr Weidemann said while no one wanted to see insurance providers exit the market, there were still options available to growers should they want cover this year.
Dan Cooper, former chairman of NSW Farmers’ grains committee and involved in lobbying government on the issue during his time at the helm, agreed with Mr Weidemann that at present cost was the major hurdle to greater grower participation.
“It is not like the US where the Government does put up subsidies for the product and that is extremely unlikely to change in the short term.”
“While farmers are supportive of the concept of MPCI, at present it is more manageable to self-insure.
“For the price of the premiums they are probably better off investing the money into off-farm assets.”
He said he saw merit in government potentially co-investing in an MPCI provider as a means of ensuring a scheme could weather potentially difficult early years before getting significant uptake.
“We’ve seen cases of government seed funding getting various businesses up and running before they are sold off to the private sector at a later stage, it is something to look into.”
Mr Trotter said the indications were the Australian grains industry, after a generally strong season last year, may find itself in a position where thresholds for MPCI pay-outs could be exceeded this year.
“You look around the country and there are patches where crop has not emerged yet and the long term weather forecast is not that promising.”
He said long-term, Latevo was committed to creating a product that met farmers’ pricing expectations while still delivering adequate cover.
“We got premiums down to $15 a hectare last year and we want to make the process easier so we can get more people to apply for 2018, which obviously brings cost down.”
Mr Trotter said he was confident his firm was on the right track.
“I spoke at the International Agricultural Risk, Finance and Insurance Conference in Paris recently and there was good interest in the model we used in our three year pilot program, we are now in negotiations with global partners to take it to other countries.”