AgriRisk started by looking at rainfall insurance because it was already available in the market, but soon realised the rainfall type of insurance covers weren’t ideal because they don’t take into account sub soil moisture profiles, soil moisture retention, how the rainfall is delivered or the prevailing weather conditions. All these factors impact on yield, and yield impacts on revenue and profitability.
AgriRisk then worked closely with Primacy on their YieldShield product that looked at the impact of moisture stress on yield. YieldShield was a complicated product and growers struggled with the basis risk as it was based on a whole shire’s yield (determined by the Oz Wheat model), rather than the yield achieved on farm.
AgriRisk continues to work on a yield shortfall derivative product specifically tailored for the supply chain. We hope to run a pilot program this season for a number of interested parties. The reason why this product is designed at the supply chain rather than individual growers is because organisations within the supply chain can generally manage variability in production between shires – they are more concerned about the aggregate position. The ultimate aim is to further refine the product to suit individual growers.