The Best Agricultural Insurance in South Africa

As a farmer, it is extremely important to ensure that your crop, herd, equipment, and other aspects of your business are covered. Whether the damage occurs due to natural disasters, or “Acts of God” such as lightning striking your prize bull or a flood ruining your crop, it is important to ensure that you are insured for such events.

 

There are many aspects that contribute to risk in farming which then, in turn, has an effect on the insurance one opts for. In this article, we will discuss what agricultural insurance is, the different types of risk it can cover, how agricultural insurance forms a part of agricultural risk management, as well as which agricultural insurance in South Africa you can trust. 

 

What is Agricultural Insurance?

Agricultural insurance is insurance that has been specifically developed and designed to provide farmers with protection against all of the risks that they face. As with all insurance policies, it requires the farmer to pay a monthly premium (amount of money), to an insurance company, in exchange for coverage and protection should something go wrong. Coverage can be defined as the insurer paying the farmer the value of the loss they incurred when or if damage occurs. Depending on the type of farming a farmer is involved with they will take out coverage for different types of risk.

 

What Can Go Wrong?

Farming is a high-risk industry that could have detrimental effects on both the farmer and others if obstacles arise that can’t be overcome. It is considered high-risk because there are a number of problems that can’t always be avoided or planned for. Some of these risks include:

  • Weather: The weather has always been hard to predict. It is almost impossible for a farmer to know at the beginning of a season whether a crop-damaging hail storm will hit or a tornado will rip through the farm. This risk has increased even more over the years as climate change has made our weather even more unstable than ever before.
  • Pests: Pests have always been hard to control, and even though one can take precautions by spraying crops with pesticides and treating cows with flea dipping, there is always the chance that locusts sweep through a crop or a particularly resistant species of fly targets your herd.
  • Diseases: As much as we can try to prepare for disease, it is very hard to fully guard against a new virus, fungus, or bacteria infecting one's crops and herds.
  • Equipment Failure: Equipment failure can occur without warning and can be detrimental in every stage of farming. For example, if one’s tractor fails while preparing the ground for the new season or the irrigation system breaks during the growing season the crop could fail or at the least produce a smaller yield.

 

Insurance as a Support to Risk Management

Even though it is extremely important to ensure that one is covered for all of these risks, insurance should be seen as being complementary to risk management and not the risk management plan itself. For example, one should ensure one’s farming equipment but also regularly service and maintain equipment to prolong its lifespan. This can also be taken into consideration with the weather by not planting crops that typically require a lot of sun in a rainy and cloudy location. A risk management strategy focuses on reducing the risk as much as one can, but the effectiveness of this strategy depends on whether the farmer is risk-averse, a risk-taker, or risk-neutral. Depending on the farmer's attitude towards risk, their risk management plans will be different and be more based on luck or planning.

 

Which Agriculture Insurance Should I Choose?

When looking for a comprehensive agricultural insurance provider, it is important to keep your farming practices and product in mind. It is also advisable to investigate whether an insurance provider specialises in commercial or independent farming operations.

 

Hollard is an insurance provider that offers comprehensive agricultural insurance in South Africa to farmers with varying products. Some of their most popular offerings include coverage for public liability as well as livestock and pedigree animals. To find out more about how Hollard can provide insurance for your independent or commercial farming operation, visit the AgrifoodSA directory.

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