OPINION ARTICLES

It is stating the obvious, but we all understand how much the agricultural industry relies on climatic conditions for its success. Unfortunately, the recent drought and fires reminded us of this fragile co-existence yet again. And then, to top it all off, we have to include the volatile economic markets into this relationship circle as well.

The saying “safety first” rings true, especially since farmers form the backbone of our economy. It therefore goes without saying how important it is to invest in the safety and wellbeing of your agricultural business. It is also vital to comprehend how effectively insurance can be utilised to support your farm’s sustainability.

Contrary to popular belief, there isn’t a one-size-fits-all solution to farming insurance. In fact, there is a plethora of Agri insurance solutions available. And, if the right policies are taken in conjunction, it can ensure continuous operation – even during difficult times. The following important scenarios should be taken into consideration when reviewing your insurance portfolio:

Be Careful of Average

This is something that catches a lot of farmers off guard, and can have detrimental effects. Agri businesses with big packhouses and warehouses, that own imported or high technological machinery, need to ensure that the insured value of these items are insured for replacement value. Items include buildings, machinery, as well as the stock that are being packed. If it is not insured for replacement value, then average will apply.

Insure Your Machinery Correctly

Expensive and imported machinery with technological aspects are best insured under a policy that offers more cover than the traditional Fire Section. This will prevent limited cover.

Be Ready for Business Interruption

Another important aspect to keep in mind, is Business Interruption. This will protect you from unexpected and sometimes unforeseen events that seriously affects the profitability of your farm. For example, your warehouse burns down and you don’t have another place to store or pack your products before they are sold or shipped out of the country. Business Interruption protection will make provision for these types of losses.

There are additional insurance options that will cover the unexpected costs, should you need to pack your products at an alternative pack-house, storeroom or location. This will ensure that you at least limit your loss of income, or eliminate it in its entirety.

Be Cyber-Aware

All businesses rely on the internet to function, even if it is only for financial or record-keeping purposes. And, while we are relying more and more on computers and systems, cyber-criminals are attacking smarter and more frequently – regardless of the size of your business. It is therefore imperative that you are also protected from cyber-crime activities should you fall victim to such a crime.

Using the same analogy – a lot of big pack-houses with very sophisticated technology and systems in place, make use of off-site experts to fix problems or change settings. As these technological whizzes are mostly based overseas, they usually operate remotely via the internet to save time and money. Unfortunately, this scenario also opens the business to multiple online vulnerabilities.

In one such recently reported case, cyber-criminals hacked a system while the technicians were busy working on it, and they held the packhouse ransom for money. A situation like this can leave any business suffering severe financial distress, as it could go on for months – or until the money is paid. That is, if they ever release the information again. Not to mention that the warehouse cannot operate until ownership of the equipment, or system, is regained. It is therefore advised that Business Interruption Following Cyber Crime is taken in conjunction with Cyber Insurance to ensure that you are adequately covered in such an event.

Each agricultural business is unique, and faces diverse risks. Therefore, it is imperative to ensure that you are properly covered, and that all your risks are strategically assessed. Our team of financial advisors have an in-depth understanding of Agri Insurance and have been insuring farmers for more than 30 years. Speak to one of our brokers for advice on your farming insurance.