A Griffith-based company is seeking to offer to farmers what every other industry already has: income protection insurance.
Andrew Trotter, who in 2014 launched his company Latevo, believes that alleviating the fear of disaster is exactly what Australian farmers need to be viable into the future.
“There’s massive volatility in farming in Australia. We know we live in a country, particularly in a state, that has droughts, floods and pouring rain,” Mr Trotter said at the Rural Women’s Gathering last weekend. “It’s about being prepared for a drought, rather than being reactive. What we wanted to try to do was build a program that took out the highs and the lows.”
Mr Trotter understands the highs and lows of agriculture – he runs a farm in Victoria with his father.
“One of the issues that we face on our farm in Victoria is that while we’re only relatively small, 1000 hectares, it still costs $500,000 a year to run the farm. There was no way that we could buy any form of insurance to protect that investment on a year-on-year basis.”
Mr Trotter’s work on the family farm made him realise that there was a serious gap in the insurance market for Australian farmers.
“The Australian insurance industry never provided a solution where Australian farmers could insure what it costs to operate a business,” Mr Trotter said.
As the Australian insurance market wasn’t up to the task, Mr Trotter found himself looking to Canada for a solution. According to Mr Trotter, around 70 per cent of Canadian farmers have income protection insur-ance. In the US, 100 per cent of farmers are insured.
“We’ve worked with global insurers to bring this program to market. We’ve had a lot of trouble with the Australian insurance market. They just see it as too risky; they don’t want to play with it. What we’ve had to do is work with global people who actually understand agriculture.
“It’s funny; we have people in London, Toronto, and Zurich who understand agriculture better than anyone in Sydney or Melbourne. It’s quite staggering, but we literally can’t work with anyone in Australia. They understand insurance of property, of high rise buildings or cars, but they have no touch with the rural sector,” Mr Trotter said.
Since 2014 Latevo have moved away from Canadian insurers to London syndicate Lloyds, and are now an underwriting agency for Lloyds. At the moment, Latevo is more tailored to broadacre cropping, but Mr Trotter was hopeful that things could change.
“The unique thing about this program is we’re built on income or revenue. It doesn’t matter whether your income is built on wheat or broccoli or potatoes. Income is income. We have the ability to migrate this model, and that’s our plan over the next five years – to migrate it to other agricultural sectors. There’s huge issues in horticulture, they just can’t get insurance,” Mr Trotter said.
Mr Trotter said he was hopeful that more Australian farmers would take up insurance.
“We’ve had a slow uptake with farmers. We’re looking not at the cost of insurance – nobody likes writing an insurance cheque out. The only reason you buy insurance is to get a claim when you need it. The most important thing is that a claim rocks up when you need it most, when you are most vulnerable financially. It’s so nice to have a cheque from someone who’s got your back.”
Mr Trotter used examples from three farmers in Forbes, who were flooded out at the end of last year. Because they had insurance they were able to claim back the cost of their crops, and had the ability to recover and go around again. Their neighbours had to sell.
The Latevo program is gaining momentum, and Mr Trotter has approached the NSW Nationals party regarding his plans.
“Their leader John Barilaro has been very good on this. I think we’re going to see a policy in the coming months, where they’re going to put some stimulus to try and get farmers to really come on board with this concept. To really make it work we need widespread adoption,” Mr Trotter said.
Felicity Nolen, who has worked for Latevo since 2015, also talked at length about her experiences with agri-business.
“I couldn’t understand how these poor farming families would spend all this money putting crop into the ground, year on year out, and then have to worry about it until they harvested it, if they could. When I started back in 2015, I reckon I spoke to 200 farmers, and they were all broken men. They were just stressed out, didn’t know if they could continue.”
Ms Nolen spoke about how worried she was for the mental health of the farmers she spoke to. Around half, she estimated, would have been depressed enough to consider suicide.
“I guess from my point of view we just wish we could see a lot more people getting quotes for our products. We’ve got many people that have had a claim in the past, and they all spruik the same thing; that it helps us, we don’t know how we could have survived if we had another drought, or a flood and so forth.”
Ms Nolen said that the product had the potential to completely change the mentality of Australian farmers.
“There’s absolutely no reason why farmers need to be in this challenged mindset, worrying about if something’s going to happen. That doesn’t need to be how it is.
“I’ll never forget an incident that happened in the first four weeks that I’d started work. We had just sent a cheque to a client for $450,000 for their claim – that’s what the product is designed to do – and we got an email a couple of days later from the farmer’s wife. She just thanked us for the cheque and said, if we didn’t have that money, I’m sure my husband would be dead.
“I still can’t understand it; if we buy a house we have to have insurance, if we buy a car we have to have insurance, but you can spend $500,000 on inputs for a crop, and you have to worry for the whole season. If Mother Nature has a hissy fit, what are you going to do?
“It’s just a situation that, if people can cover themselves and get protection through this product, it can change lives,” Ms Nolen said.
Latevo’s Griffith office can be contacted on 6964 7111.