Summary
The Australian MultiPeril Crop Insurance (MPCI) and drought insurance market is in disarray. Providers have exited the market. Farmers will find it very difficult to insure themselves against drought in 2019.
GrainGrowers is urgently calling on the Federal Government to show leadership and address the market failure that exists in the Australian farm income insurance market.
GrainGrowers is calling for the introduction of a temporary 150% tax incentive on MPCI and weather insurance premiums to support the development of the Australian market.
The MPCI Market in Australia in 2019
MPCI products protect farmers against crop yield and revenue losses by enabling farmers to insure a percentage of crop production or revenue. MPCI products cover a range of risks, from drought to frost and pests to prices, and cover a range of crop types.
MPCI and related products such as weather derivatives help farmers ‘farm with certainty.’ Farmers with effective insurance are self-reliant and able to manage drought without government assistance. In 2018, the drought reinforced why market-based solutions such as MPCI are required in the Australian agriculture industry, particularly for cropping where costs are incurred upfront and revenues are deferred.
GrainGrowers in recent years has compared the range of MPCI options that are available for Australian grain farmers.1 However, GrainGrowers will not be releasing a 2019 MPCI product review. The reason is simple. MPCI is largely not available in the Australian market in 2019. The market has failed and is in urgent need of Federal Government intervention.