Wild weather brings timely reminder for farmers

18 August 2011

Arctic storms raging across the country this week provided a timely reminder of the impact on livelihoods bad weather can bring. And for farmers about to get into full swing with lambing, the potential losses are very real. FMG General Manager and former Hanmer Springs farmer Conrad Wilkshire has witnessed first hand the damage such storms can have on the sheep farmers bottom line.

“We’re very aware of the financial impact stock losses bring with them, particularly at such a vital time in the season. Whilst early warning systems and improved weather forecasting make it possible to have a strong first line of defence, there is a limit to what can be done on the farm.”

The need for a second line of defence has seen FMG introduce Livestock Catastrophe Insurance. A first of its kind in New Zealand, the simple, cost-effective cover looks to tackle the financial impact of natural disasters or climatic events on sheep farmers. An agreed cash payment is made based upon the number of livestock units the customer chooses to insure. The recent insurance innovation for sheep farmers’ arose following the week long blizzards that hit both islands hard in September 2010.

“The need for insurance in this instance was very clear,” said Mr. Wilkshire. “To give an analogy, we realised that you don’t take out fire insurance because you expect your farm homestead to burn down, but because you want to be covered if it does. That’s exactly the type of belts and braces thinking behind livestock catastrophe insurance; it’s for when a big event hits and all practical on-farm options have been exhausted and still farm income remains at risk."

“A claim is triggered if the farmer loses 15% or more of their farmed sheep livestock caused by a natural disaster or climatic event, relative to the opening balance sheet sheep numbers for the season. Importantly this trigger covers immature stock, including lambs (natural increase) not in the opening numbers."

“We’re committed to helping farmers consider what is new thinking on protecting the bottom line" Said Mr. Wilkshire. "FMG is asking farmers to consider their long term commitment to an industry developed risk management solution. The success of this product is entirely dependent on strength in numbers farmer support, not unlike past times where farmers would voluntarily truck a unit load of hay from one Island to another to help another farmer out, when the going got too tough climatically."

“As a New Zealand owned and operated insurer FMG’s priority is to develop products that allow farmers to consider taking out a long term hedge against adverse weather events over and above the farm management strategies already in place. Livestock Catastrophe Insurance does just that.”

ENDS

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