Business Interruption Insurance (Crop Insurance) a Rain of Blessing Amidst a Dry Spell

According to the Brisbane Times, Brisbane is currently on the receiving end of a dry spell that could spell disaster for businesses, reports. The dry spell has already moved to threaten wheat production in the entire east coast. With cattle raisers and bakers, among others, reliant on wheat, a significant drop in production may as well imply an impending shortage.

“The chance of below median rainfall between August and October is greater than 60 per cent in northern Queensland, southern New South Wales and most of Victoria, the BOM said.

The dry outlook threatens wheat production across the Australian east coast, analysts said.

“The crops in the northern regions of the east coast need rains and if it stays dry then we could be looking at below trend yields,” said Paul Deane, senior agricultural economist, ANZ Bank.”

Australia produced an estimated 27 million tonnes of wheat in 2013; an increase of more than 20 percent from 2012. With today’s dry spell, however, economists dropped the outlook for the 2014-15 cycle to below 24.6 million tonnes. According to the Australian Bureau of Agriculture, Resource Economics and Sciences, wheat comprises over half of Australia’s grain yield.

wheat crop worries as dry weather persists

As the country also has a substantial meat market, wheat and other grains find their way to cattle raisers. A drop in feed supply could also affect the supply of livestock.

This domino effect in the supply chain has long-term implications. It only takes a faulty chain link to sever the entire chain clean off; for a business hanging onto this chain, severance means a long fall. Something has to support the failed link until the situation is stabilised; something like business interruption insurance in the form of Crop Insurance.

Supply issues just so happen to be right up the alley of business interruption insurance. An insurance policy will cover net losses brought about by these supply issues, operating costs, and costs of provisional measures to counter these issues. Depending on the nature and gravity of the issue, insurance coverage may last for months or years. Crop Insurance is protecting the loss of revenue (partially or totally) from fire, spray drift and mainly hail. Other businesses may utilise business interruption cover in the event of damage to their premises and facilities in preparation for or during the crop season.

Sometimes, it doesn’t take a drought or natural calamity to interrupt businesses. Issues between supplier and contractor can also affect the normal workflow. In any case, it pays to know that a Buddina business continuity insurance company like Insuring theProduct has your back during these tumultuous times and can explain the covers available and the products relevant to your own business and industry.

(Source: “Wheat crop worries as dry weather persists,” Brisbane Times, July 24, 2014)

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