CONSIDER OPTIONS: David Newbold, Warooka, with dogs Ruby and Gus, says he will consider MPCI for the assurance it brings.

MPCI waiver may help mitigate crop risk

FARMERS considering investing in multi-peril crop insurance this year can shave a little off their budget, with the state government introducing an exemption on stamp duty.

FARMERS considering investing in multi-peril crop insurance this year can shave a little off their budget, with the state government introducing an exemption on stamp duty.

In its mid-year budget review in December, the government included the exemption – 11 per cent of the overall policy cost – in place from January 1.

The government estimates the cost of the exemption to the Treasury will be about $275,000 a year, impacting about 100 insurance policies.

Grain Producers SA chair Wade Dabinett welcomed the news, which the organisation had been calling for.

Midway through last year, Vic moved to waive its 10pc stamp duty on MPCI, while NSW also waived its 2.5pc from January 1. WA, NT and Tas each still have a 10pc stamp duty in place, while Qld sits at 9pc.

The policy had initially been touted by the Liberal opposition.

Opposition agriculture spokesperson David Ridgway said he was “pleased the government had copied yet another one of our policies”.

He said the decision sent a message of support to those farmers prepared to take this step.

“It made sense that if a farmer wants to manage their own risk, why should we tax them?” he said. “SA stamp duty is the most expensive in the nation.”

Mr Ridgway said the decision to take up MPCI was an individual one by farmers but he expected this to encourage more people to consider it.

“The more people who participate, the bigger the pool of money and the more cost-competitive it becomes,” he said.

MGA Insurance Brokers agri risk consultant Kym Bache, Clare, said there had been more awareness of MPCI in recent years, particularly as input costs rose, but the price was still a deterrent.

He said it was primarily used by people in higher risk areas, such as those prone to drought or frost, but less considered by those in more reliable districts, leading to a lower premium pool and a high risk of payouts.

“Pretty well every country that has successfully implemented this type of cover has done so with some type of government subsidies, either the premiums or underwriting claims,” he said. “The industry is looking at ways to make it more affordable.”

He said at a state government level, a stamp duty concession was all that was achievable.

Agriculture Minister Leon Bignell was contacted for comment.

WAROOKA farmer David Newbold was among the first in the state to trial multi-peril crop insurance on his farm.

After a few years of coverage, he does not have it in place at the moment, partly due to some of the prohibitive costs associated.

“We are in a fairly reliable area so I realised, in a couple of years, we could have paid out $35,000 and never made a claim – which is a good situation to have,” he said.

He said the cover they had did not suit, but with more options coming out, he would consider using MPCI again in the future.

“But we need the cover to suit us,” he said.

“We would consider it again, as it does give that peace of mind.”

Mr Newbold said the government’s move to waive the 11 per cent stamp duty of MPCI from the start of the year was a good first step and could help save farmers money.

“The government ought to be helping out,” he said.

“They’ve spent a lot of money with drought relief, so this could be saving them in the long run.”

Rural Directions consultant Patrick Redden said price had served as a barrier to farmers taking up MPCI in the past, but this exemption may encourage people to consider if it fitted their operations.

He said last year’s season had been variable across the state, which may have people looking at the potential value of MPCI.

“Last year highlighted how fickle it could be,” he said.

“That underlines the need for people to have good risk management.”

MGA insurance broker David Guidero, Cummins, said there had been a lift in interest in the use of MPCI in the past year, in part driven by variable growing conditions in parts of the state, such as the lower Eyre Peninsula.

He said in the past few years, there had been an increase in flexibility in policies, with farmers able to choose to tailor the premium they pay in order to cover input costs.

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