PROTECTING THE FUTURE OF FARMING

With El Niño already causing problems for farmers, it’s essential that those sometimes overlooked risks are fully covered.

By MARTIN WANLESS

Farmers across the country have been keeping an incredibly close eye on the Bureau of Meteorology’s monthly forecasts over recent months, and news of the imminent El Niño has caused a significant amount of uncertainty after a strong period following the ‘Black Summer’ of 2019/20.

The probability of El Niño means conditions in certain areas of the country – particularly northern NSW and Queensland – will become increasingly tough, with a lack of rain and warm, dry conditions causing a number of consequential issues.

As farmers balance this prospect with increasing premiums due to inflation and supply chain issues we are all experiencing, affordability heading into a period of significant risk becomes a major issue.

“Income pressure combined with pricing has resulted in farmers cutting back their insurance coverage, and there is an increasing amount of assets not being covered,” says James Hooper, Managing Director of Rural Affinity.

“The biggest issue with El Niño is a generally poorer financial performance for many farmers and the associated affordability impact. Farmers tend to reduce coverage at a time when their ability to deal with an uninsured loss is at its lowest.”

The Very Real Weather Threat

The impact of El Niño could be exasperated by the wetter conditions we’ve experienced over recent years. While El Niño brings dry, hot weather, significant rainfall accompanies its counterpart La Niña –and the combination of the two creates significant fire risks.

“It is now generally accepted that there is a higher-than-average chance of Australia moving into a period of El Niño, which will bring hotter, drier weather conditions, along with a decrease in rainfall,” says Tim Stanford, Director at FIS Insurance Services.

“This will most likely lead to an increase in bushfire risk. Farmers should now be carefully looking over their insurance schedules and checking whether the sums insured they have is adequate to cover the cost of a complete rebuild, as any property fires will more likely than not lead to a total loss scenario. With building prices continuing to increase, it is very important to regularly check the values.”

Hooper says, “We certainly face an increased fire risk as farm insurers this summer.