Risk factors loom as key to coverage

Claire TyrrellCountryman

CBH’s multi-peril crop insurance product has sparked mixed reactions from growers.

The grain trader and handler teamed up with insurance group Willis Australia to offer cost of production cover to WA growers this season.

CBH Mutual’s product covers the cost of production for wheat and barley if crops are affected by natural catastrophe.

CBH risk mitigation officer Rob Maurich said the cover was priced according to growers’ locations and average yields over the past decade.

Details of premiums were released on CBH Mutual’s website this week.

The cheapest cover at just above 2 per cent of production cost and the most expensive at just above 10 per cent.

Mr Maurich said the product needed a spread of growers to succeed.

“If all the people applying are from one shire it wouldn’t make the scheme work, because there won’t be a spread of risk,” he said.

“The product has been priced fairly enough so that growers in reliable areas should be able to take it out as a risk mitigation tool.”

Ogilvie farmer Peter Allen said it was unlikely growers in the region would justify the cost of the cover.

“I think you have to be sure of getting some significant losses to justify the high premiums. I tend to think people in this region are not high risk enough.”

Mullewa farmer John Tropiano welcomed the production cover product.

“I think they’re on the right track,” he said. “If you can cover your production costs you are half-way there.”

CBH Mutual’s crop protection cover will be available to 15 per cent of growers this year.

Cunderdin grower Ash Teakle considered his property to be in a moderate risk area.

While it was unlikely he would take out the cover this year, Mr Teakle said he would keep an eye on the trial.

“We probably won’t look at it for this year,” he said.

“It will be interesting to see a few growers do it this year and see how it goes.”

Esperance Farmanco consultant John Richardson said there was likely to be some interest from his region.

“Some growers in the northern parts of Esperance might see some value in the scheme,” he said.

Mr Richardson said the scheme was risky for CBH.

“It’s interesting that the year claims will be heavy is the year CBH will get reduced income into its storage and handling system,” he said.

CBH Mutual’s cost of production cover product insures for tonnages produced regardless of quality.

Mr Richardson said this could deter some growers.

“Wet harvests are an issue for a lot of growers further south,” he said.

“This affects quality rather than yield, so this could put some growers off.”

Farmers can take out cover at 30, 40, 50 or 60 per cent of their expected value of production. Mr Maurich said it was also important to get variation in the level of cover taken out by growers.

Growers need to apply for the cost of production cover product from April 4 to 30.

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