BRISBANE, October 30, 2023 – WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company, has today called for support to increase uptake of Nitrogen Risk Insurance by Queensland’s sugarcane growers. This follows a doubling of prices for conventional nitrogen fertiliser in the past year, impacting the viability of many farming operations.
Russell Mehmet, an Account Director for WTW based in Brisbane, recently appeared at a Queensland parliamentary inquiry into the financial impact of climate change on the state’s agricultural sector, saying the focus was on finding ways to support farmers, the economy, and the environment.
Russell commented: “The recent doubling of the nitrogen fertiliser price, and an expectation this will remain high for the foreseeable future, results in a need for farmers to look at alternative risk transfer solutions. It performs without the need for expensive on-farm loss adjustment and covers sugarcane farmers for variations in their yield. This means farmers can apply lower levels of nitrogen fertiliser knowing that a reduced yield will be covered.”
Nitrogen Risk Insurance was launched for the 2022 harvesting season and is now available to Mackay and Herbert cane farmers in 2023, in addition to Babinda, South Johnstone and Tully cane farmers. Russell said: “Farmers have already taken up this solution and were compensated for simulated shortfalls in their yields. Each policy was tailored to that farmer’s location, soil type and crop start.”
One farmer based in Tully, south of Cairns, gave feedback on the solution, said: “I took up insurance because I wanted to reduce my nitrogen fertiliser application levels without having to worry about the impact it would have on my yield results. Not only was I able to save costs on nitrogen fertiliser, but I was also paid out by WTW following the season without having to do anything myself. This made the whole process very easy for my work, and it’s a small step in the right direction for sugarcane farming.”
Russell added: “For most farmers, there is little or no ‘heritage’ of buying crop insurance and it is therefore just not part of the farm business management process. It is far more common to make a judgement call and hope for the best. In countries where the take-up of crop insurance is very high, the farm budget routinely includes this premium as a line item and growers would simply not contemplate farming without the protection being in place. This is also often the case in regions in which the growing conditions are far less volatile than those experienced by Queensland’s farmers.”
The environmental benefits are also significant. Russell told the Queensland inquiry that lower application of nitrogen fertiliser will result in less run-off and enhanced water quality in the Great Barrier Reef.
A joint Queensland and Australian government initiative, the $3 billion Reef 2050 Plan, has listed five priority areas for action to safeguard the reef’s health, including “improving water quality by working with landholders, industries and communities to accelerate action to reduce the impacts from land-based activities”.
Great Barrier Reef Foundation Managing Director Anna Marsden said the Great Barrier Reef is Australia’s irreplaceable ecosystem, but poor water quality from runoff is one of a growing combination of threats to its health that we must address.
Anna said: “We’re proud that, through our partnership with the Australian Government’s Reef Trust, we’re able to catalyse this project which is creating a step change in water quality improvement and has the potential to create enduring impact on a scale never seen before. Queensland farmers and the agricultural community are already working to safeguard the future of the Reef. Nitrogen Risk Insurance enables them to take this to the next level without risking their profitability.”
WTW says insufficient education and awareness among farmers are key constraints on further uptake of Nitrogen Risk Insurance. Russell commented: “WTW believes that, given the importance of the Reef, and the sugarcane industry to Queensland’s economy, concessional support for part or all the premium cost from the Queensland Government would have a net positive effect. This approach has been adopted in many other developed economies that have a strong agriculture sector.
“The government could take a leading role in promoting industry and environmental health by promoting the benefits to farmers in terms of the savings in nitrogen fertiliser costs, and the wider economic advantages.”
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