Multi Peril Crop Insurance

image001

Bob Hall is a well-known agricultural consultant based in Darkan, Western Australia.
Back in the sixties Bob challenged us all about the way we managed our merino sheep.
There was nothing theoretical about Bob’s challenges. They were based on sound, practical and proven experience gained through working with his clients.
Bob offered solutions stretching from sheep yard and shearing shed design, to management practices designed to improve the efficiency and profitability of growing merino wool, which are still, maybe even more, relevant today.
Bob now manages a broad portfolio of consultancy covering all aspects of farm management in the wheat sheep belt of Western Australia. Here he presents his views on a hot topic of the day, Multi Peril Crop Insurance.

I am increasingly concerned that Multi Peril Crop Insurance (MPCI) It will not only come into being but also will be sponsored by the federal government as they pretend to deal with drought mitigation.

My first point is philosophical. With insurance companies taking half the premium either for themselves or with generous commission for those selling the product, how can this benefit the farming community as a whole? Basically it is merely an added cost.

Secondly, like so many things, if you can afford the premium you do not need it and if you need it, you cannot afford the premium!

Third. Once it is available, lenders will start to demand it. Take those financing inputs in particular. They will certainly tend to require it to cover their backsides. What they should have is a higher interest rate to cover default (rather like credit cards).

Banks could also get into the act particularly with marginal clients who can least afford the premium.

Finally, the best way to deal with drought mitigation in the long run, is Farm Management Deposits. After all they used to be called “Drought bonds”. They could be greatly improved especially by making them capable of being transferred from one generation to the next. Currently they have to be liquidated at death or the cessation of primary producer status. Suggestions of this fall on deaf ears, particularly with the treasury. I tend to think they actually hate FMDs

In fact, the taxation office appears to not like concessions to primary producers. A good example of that is the latest budget where the concessions proudly announced by our non-thinking treasurer are not going to be implemented until some time in the future. This came as a surprise to the minister of agriculture and may get altered for earlier adoption.

It was either a plot with Hockey and treasury or merely treasury being somewhat sneaky.

Actually, the implementation of a lot of the bad things in both state and federal budgets have been delayed for a year or so. I guess the proponents are hoping people will either forget or there will have been an election in the mean time, etc.

Bob Hall

2 thoughts on “Multi Peril Crop Insurance”

  1. I agree with Bob. MPCI is a distraction from many larger issues that need addressing. Climate change, farm financing, declining terms of trade (cost/price squeeze), and lack of risk mitigation for small businesses, to name just a few of the issues.

  2. Tyson, the “declining terms of trade (cost/price squeeze), ” is the main game to deal with -Then everything else will be tolerable!. Primary products are stuck on 1980’s rates with 2015 record high prices.You can’t insure against guaranteed eventual failure hastened by all the extras hands and snouts getting all the cream. I have given my all trying to get Joyce and the braindead LNP to enact my PRIMARY PRODUCTION PRICING Bill= paste this-
    https://agriculturalcompetitiveness.dpmc.gov.au/sites/default/files/public-submissions/gp217_moore_rob.pdf

Leave a Reply to Rob Moore Cancel reply

Your email address will not be published. Required fields are marked *