Review rejects MPCI scheme

Bruce Rock farmer Stephen Strange

02-07-2009
Grains | Lara Ladyman

The State Government will not be backing a multi-peril crop insurance scheme (MPCI), with a review by the Department of Agriculture and Food concluding it is not commercially viable in WA.

Agriculture and Food Minister Terry Redman said that while he was supportive of an MPCI scheme, it would have to be driven and funded by industry.

The Minister requested earlier this year that the department hold a review to determine if the market had changed and if a scheme would now be viable in WA, after two previous reviews by State and Federal governments concluded it was not.

"Currently WA farmers can insure their crops against fire and hail but the concept of insuring against other risks such as drought, flooding and frost has been discussed Australia-wide for a number of years," he said.

"Although insurers in WA have the option to offer MPCI, it appears they see the risk as too big, with a significant take-up for the scheme needed.

"However, the report does note that there is now an emergence of other types of innovative risk mitigation products, which are at an early stage of grower take-up and that these insurance products may prove supportive for growers."

"The department's report concluded that any MPCI scheme was more likely to be successful if the policy was offered across Australia, thereby significantly reducing the risk undertaken by insurers."

Mr Redman said he would welcome comments from industry on the report before July 30.

These comments should be directed to the Department of Agriculture and Food at mpcireport@agric.wa.gov.au.

He said the department would continue to work closely with farmers on climate adaption strategies and drought mitigation options.

"We are supporting farmers with research into preparedness and self-reliance to overcome our variable climatic conditions and looking at ways to lower input costs for cropping and better utilisation of water," he said.

In March this year, 111 growers who attended a forum at Bruce Rock unanimously voted for a multi-peril crop insurance scheme to be introduced after suffering severe damage from frost, hail and storms last year.

Forum coordinator and Bruce Rock shire president and farmer Stephen Strange said the cost of frost damage last year for his shire alone was in excess of $10 million while the total loss for WA grain growers was $100 million.

O'Connor MHR Wilson Tuckey said he wanted a Government subsidy similar to private health insurance to replace the means-tested Exceptional Circumstances (EC) funding as a way of insuring growers.

Mr Tuckey has calculated that such a scheme would allow farmers to insure for one tonne per hectare of production and over the past 16 years, he said the potential claims would have amounted to about $2 billion, compared with the $3 billion spent during the same period on EC funding.