SA records first multi-peril claim

The need for access to multi-peril crop insurance - and the best model for such a system - has been debated for years, with the insurance potentially mitigating some of the many risks associated with agriculture.

Australian farmers now have access to multi-peril crop insurance through Latevo International, with the first SA claim lodged this year. Underwritten by Alliance, Latevo's Certainty Insurance safeguards croppers against a multitude of challenges, including drought, frost, pests and diseases.

While Kerry Modystach, Woollahra, Wilmington, wishes he was not the first SA farmer to make a multi-peril insurance claim, he says having the policy has protected him from massive losses after frost decimated his crops in August.

"Some of my paddocks were 100 per cent gone, and we cut them for hay, but some have recovered and the new tillers have grain in them," Mr Modystach said.

"I'll still get some grain, but I'm glad I've got the insurance there because I don't think I'll get what they've covered me for.

"I don't want to be the first to claim - I wish I had my wheat.

"I'd much rather pay the premium and not have to claim. I'd be happy to pay out that money and not use it every year if I could."

Signing up for multi-peril crop insurance has given David Newbold, Warooka, the confidence to invest more heavily in his cropping program.

"This year we've spent a lot more on our crops than we ever have before, there's no doubt about that," David said.

"We're trying to improve things, but we've always been worried about spending extra money because you don't know if it's going to be there at the end. This just lowers the risk and helps me sleep at night.

"I think it worked out at $17 a hectare for my cover, and it's guaranteed to $312 – that didn't seem bad value to me, especially in my country where it's very sandy and we've missed out on the late rain in the past few years."

While its popularity is growing, many farmers are unsure if the insurance will suit their operations.

Latevo has planned a series of regional meetings across SA next week to help interested farmers learn more.

"People can come along, have a listen and learn for themselves," Latevo chief executive officer Andrew Trotter said.

"We're not telling people they have to buy, but the first step in that process is making sure they're educated."

He said the regional meetings would also help explain how Latevo's Certainty Insurance differed from unsuccessful multi-peril systems mooted in the past.

Previous models used yield and district averages to calculate cover - a flawed formula, according to Mr Trotter.

"You can have a modest yield and a low price and be in more trouble than if you had a low yield and a high price," he said.

"If your policy is triggered on yield, it doesn't actually work and it will induce claims incorrectly.

"By default, the farmers who always grow the least amount of grain will have the lowest tonnes a hectare, so they will always be claiming in preference to good growers."

Latevo's insurance instead calculates an individually assessed per hectare cover level.

One of the biggest reservations farmers have about signing up for multi-peril crop insurance appears to be the detailed audit that must be completed before cover is awarded.

Farmers must supply five years' worth of financial records to allow Latevo to calculate average revenue, expenses and returns, with applicants generally covered for 70 per cent of their average returns.

"It might seem daunting, but really it's the due diligence that we do upfront that makes it work," Mr Trotter said.

Latevo meeting dates:

October 13: Kimba, Cummins

October 14: Booleroo Centre, Jamestown, Snowtown

October 15: Kadina, Minlaton, Yorketown

October 16: Kapunda

October 17: Karoonda, Loxton

* Full report in Stock Journal, October 9, 2014 issue.