The National Farmers Federation has completed a NSW Government-funded project looking at farm risk management tools.
“The NFF has a goal for 90% of Australian farms to be employing risk management tools by 2030 to build resilience in the face of challenges such as drought,” NFF Chief Executive Tony Mahar said.
“This project allowed the NFF to take a detailed look at the various tools available, both in Australia and overseas, and assess their advantages, disadvantages and compatibility with Australian farm businesses.”
Approaches examined included insurances; hedging products; incentivising off-farm income; leveraging mutual and cooperatives; education and training, and public policy setting.
The NFF established an industry working group with representatives of state farming organisations and commodity groups to scope and design the project and assess its progress. Six sub-projects were carried out by experts in risk management.
“It was important to get a diversity of views and expertise both from within and outside the farm sector.
“Not unexpectedly, the research revealed there was unlikely to be one silver bullet to managing farm risk and the best results would be achieved by deploying a combination of tools and approaches.”
Mr Mahar said the project identified a number of reasonably straight forward changes to assist farmers with better managing risk.
“The low hanging fruit is for governments to invest in more reliable and granular weather and production data and in improving the risk management capabilities of the agricultural advice network.
“It is also clear that there is a requirement for the establishment of more transparent pricing for relevant commodities to enable the use of futures contracts as viable risk management tools.”
The project conclusively found that government intervention and/or incentives in the multi-peril crop insurance were unlikely to be of significant advantage and that the significant annual investment required would greatly outweigh any benefit.
“This was a disappointing finding for industry and NFF members and will need to be revisited over time as improved weather and production data allows the better characterisation of these aspects of agricultural risk,” Mr Mahar said.
The next step for the NFF is to consult with the industry working group on how best to communicate the results of the project.
“We thank NSW Agriculture Minister, Adam Marshall and his Government for supporting this two-year long body of work.
“The results have been illuminating and will be integral to developing programs and policies that can help farmers adopt risk management tools with the aim of becoming more resilient farm businesses,” Mr Mahar said.