WTW has called for greater uptake of nitrogen risk insurance by Queensland's sugarcane farmers.
In a recent statement, WTW explained that increasing the uptake of the parametric insurance solution will benefit Queensland sugarcane farmers following a doubling of prices for conventional nitrogen fertilizer in the past year, which impacted the viability of many farming operations.
Launched for the 2022 harvesting season, nitrogen risk insurance is now available to Mackay and Herbert cane farmers in 2023, in addition to Babinda, South Johnstone, and Tully cane farmers.
Russell Mehmet, Brisbane-based account director for WTW, appeared at a Queensland parliamentary inquiry into the financial impact of climate change on the state's agricultural sector.
“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,” Mehmet said. “Nitrogen risk insurance is a world-first parametric product underpinned by over 20 years of sugarcane production research by the CSIRO and developed in partnership with the Great Barrier Reef Foundation. 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.
“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.”
Mehmet said that lower application of nitrogen fertiliser could benefit the environment as it will result in less run-off and enhanced water quality in the Great Barrier Reef.
Dr Peter Thorburn, digital innovations group lead in CSIRO, shared the same sentiments.
“Publicly funded water quality improvement costs up to $200,000 per tonne of dissolved nitrogen,” Thorburn said. “If a farmer can achieve that using their own business strategies and commercial programs, the potential savings for the public are immense.”
“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,” said Anna Marsden, managing director of the Great Barrier Reef Foundation. “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 also recently launched a new engagement tool to help company boards and senior management suits better understand their exposure to ESG and climate-related risks and opportunities.
