Multi-peril crop insurance the focus of new study
It’s one of the most topical subjects for Australian farmers but Dylan Hirsch thinks we all have a lot to learn about multi-peril crop insurance.
As of of five Western Australian 2018 Nuffield Scholars, the Latham farmer plans to investigate financial risk management systems in variable climates, including low-rainfall areas, across the globe.
Internationally, Mr Hirsch plans to visit North America, Canada, India and Europe to research both government-subsidised and private insurance products.
He also plans to visit South Australia, Victoria and New South Wales to examine how farmers use MCPI in their enterprises.
Mr Hirsch was one of the first WA farmers to incorporate MCPI into the management plan at his 6180 broadacre cropping enterprise at Latham.
He said the creation of more products could reduce financial risk in low rainfall areas and open up capital for agronomic improvements to increase production.
“Using MCPI could potentially stabilise land prices, reduce the financial risk of businesses and the banks that back them, thereby reducing overall financial costs and enabling better, more efficient businesses,” Mr Hirsch said.
“This then has potential to improve efficiency and production rates.
“It could also have the benefit of reducing stress over unpredictable events such as frost or drought.”
MPCI policies, which cost between $15,000 and $20,000 per 1000ha of crop, cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze and disease.
Mr Hirsch plans to compare MCPI to other methods of financial risk management, including weather derivatives, index insurance products and diversifying locations of cropping areas.
His project is supported by Grains Research and Development Corporation.
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