Locusts threaten crop premiums

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6 September 2010

Agricultural insurers could be facing a drop in crop insurance premiums, depending on the impact of this summer’s locust plague.

Next year’s crop insurance premiums will be based on this year’s harvest, which could be severely disrupted by lower yields caused by the pests.

Primacy Underwriting Agency Insurance Underwriting Manager Peter Book says locusts are just one of the problems facing insurers this summer.

“We have seen predictions of good commodity prices due to the drought in Russia, but if the yields are down due to locusts then we will face lowering premiums,” he told insuranceNEWS.com.au.

“We have also seen reports of above-average rainfalls for Queensland from the Bureau of Meteorology.”

State governments are predicting this will be the worst locust plague for 75 years with the first hatching already reported in western NSW and expected to spread south as warmer weather arrives.

The risk zone for locusts covers a considerable part of inland NSW, southern Queensland, northern Victoria and central South Australia.

Mr Book says farmers cannot insure against locust damage as it is hard to assess, but seasonal yield is an accurate method of assessment for future cover of crops.