After the storms in the spring last year, a common question from urban folk was, "Are farmers insured from such a huge loss"? Up until now no such cover existed but recently Farmers Mutual Group launched a product that would cover such a risk.
With sheep farmers lambing their ewes outside, at some stage the vagaries of the weather will take its toll on newborn lambs, and the cost can be high.
Careful and skilled management can minimise those losses with such techniques as making sure scanned multiples are in sheltered paddocks, having foetus size optimal for survival, and birthing on adequate covers, but as last year showed even the most skilled operator can get caught.
FMG's product is offering an agreed cash payout covering losses over 15% of total stock covered. Units will be purchased covering value ranges of livestock and they will pay a reimbursement for losses incurred if over that level. ie 1 unit ($25,000 payout) will cover livestock in the range of $100,000 to $250,000 if losses exceed 15% of the value. Costs for this cover are around $700 for 2 units which southern and central NI farmers would think is reasonable based on last years storm losses.
Federated Farmers welcomes one of the first practical measures to emerge from last September's devastating storms in Southland and South Otago, FMG's introduction of a ‘Livestock Catastrophe Policy' for sheep farmers. "Last September's storms were the worst weather I've ever experienced. Not only was our lamb crop devastated but we lost invaluable capital stock in ewes about to lamb," says Don Nicolson, Federated Farmers president.
"As a sheep farmer myself I faced a significant reduction in income with my farm's profit potential massively reduced. It was hugely negative for the balance sheet once you factored in the loss of capital stock and equity.
"There was no insurance product to reduce farm business risk from the catastrophic stock losses we sheep farmers experienced. "This product is a balance sheet protector and is a great risk management tool."As a trustee of Federated Farmers' Adverse Events Trust, I'm pleased to see one of our supporters, FMG, launching a first of its kind in New Zealand. Effectively it's business interruption insurance designed specifically for sheep farmers.
"Other insurance products exist in agriculture covering damage from hail or extreme frosts on crops for example, but last September's storms exposed a real hole in the insurance market covering livestock losses. "It's intended to meet the unique impact natural disasters have on a livestock farmers' bottom line. While the demand is from sheep farmers initially, it provides a basis to expand to other livestock types once the product beds down. "Risk management is an increasingly big thing on the minds of farmers so having an option like this is a new feature in our collective toolbox.
1 Comments
First of all let's see what the premium will be. The type of storm that occurred last year may not happen for another 10-15 years or in a farmer's lifetime. It is quite possible that a farmer could lose 12-14% of his flock each year and there will be no compensation.
I think that a better plan for farmers is to keep their debt to a minimum and not be beholden to the bankers.
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