GrainGrowers seeks improved risk management tools at Drought Summit

GrainGrowers, will ask the Federal Government to introduce a range of initiatives to help support improved risk management by grain farmers at the Prime Minister’s Drought Summit in Canberra today [Friday 26 October].

GrainGrowers Chair, Victorian Mallee farmer, Brett Hosking, who will attend the Summit, said GrainGrowers recognised there was a need for immediate help to take the pressure off farming families suffering from the drought with improvements to measures such as Farm Household Allowance which is  currently under review. GrainGrowers agrees with the National Farmers Federation’s recommendations for improving FHA as an effective short-term safety-net that enables farmers to make long-term decisions about their businesses.

“Last year at this time, growers in many regions were starting their harvest, but this year drought has removed that source of income for many. We understand the struggle these farmers are under to make ends meet.

“However, the longer term question is how to improve the range of risk management tools farmers have at their disposal to deal with increasing climate variability.”

Mr Hosking said that one tool to manage the risk of possible crop losses and reduced income streams caused by perils such as drought and frost was Multi-Peril Crop Insurance (MPCI).

“Farmers want to be able to ensure their production and income risks can be managed. That’s where products like MPCI are important,” said Mr Hosking.

“GrainGrowers’ member surveys identified that growers are interested in taking out MPCI, but nearly 80 per cent of survey respondents say the cost of MPCI premiums is the biggest factor in influencing uptake.

Mr Hosking said GrainGrowers is asking the Federal Government to introduce a 150 per cent tax incentive to stimulate the market for Multi-Peril Crop Insurance (MPCI).

“The MPCI market at the moment is immature and the products are underdeveloped. It’s now time for the Government to offer tax incentives to enable the market to build a critical mass and bring onboard more  providers with a full range of targeted and affordable products.”

Mr Hosking said the Agricultural Competitiveness White Paper released by the Government in July 2015 recognised that managing risk was essential to the sector.

“Unfortunately, the government’s Managing Farm Risk Program has done little to stimulate the market, and it’s now time for the Government to offer tax incentives for five years to enable the market to establish,” said Mr Hosking.

Mr Hosking said a federal government tax incentive to establish an MPCI market was only one ask GrainGrowers was putting forward to the Summit.

“We are also asking governments in Western Australia, Tasmania and the Queensland Government to remove stamp duty on MPCI policies. Stamp duty in these states equates to thousands of dollars on top of the cost of actual insurance premiums and our members say this is a deterrent,” he said.

Mr Hosking emphasised that what’s important to growers is access to a range of risk management tools so they can choose the products which best suit their needs and farming systems.

“MPCI, Farm Management Deposits and instant asset writeoffs all have an important role to play,” he said.

He said that GrainGrowers also supported the measures in the National Farmers’ Federation’s national drought summit proposal.

Watch the video here from GrainGrowers Chairman, Brett Hosking, in Canberra.