Insurance industry stakeholders in the farming sector are reporting an uptick in the adoption of precision agriculture (PA). The farm management strategy includes using high tech yield monitors and drones. Underwriters say this is helping improve risk management of the sector’s challenges, including drought and flood, and enabling them to come up with more offerings for brokers.
“There's a really big take up of innovation and technology amongst our farming clients,” said James Hooper, managing director of Rural Affinity, an underwriting agency that provides covers to ag businesses across Australia.
He said drones are now being used for a wide range of tasks “that our minds couldn't have imagined 20 years ago.” The tasks include applying fertilisers and pesticides and distributing seeds.
Hooper grew up on a farm in Tottenham, Central NSW and has 30 years of insurance experience in the rural sector.
“A great example [of PA] is yield monitoring information,” he said. “As a farmer harvests their crops they get direct information about the yield in each particular area of their farm and paddock.”
The information, he said, is helping farmers make better decisions about how much fertilizer to apply, seeding rates or whether certain parts of a paddock are productive.
This raw data, said Hooper, also enables underwriters to write innovative products.
“It gives us access to data which we've never had before or never trusted,” he said. “It's really up to us and the insurance industry to keep pace with that.”
Insurers have traditionally relied heavily on farmers for data about their harvests. Hooper and industry stakeholders say that, often, this data is not accurate.
The PA techniques increasingly being used by farmers, he said, overcome this challenge and provide accurate and transparent information that can be the basis for more sustainable insurance decisions.
According to online sources, PA yield monitoring systems can include:
Some of the yield mapping techniques include point-based mapping and interpolation methods.
Hooper said PA techniques are becoming “really powerful” across farming businesses. The underwriter said they offer farmers precision around what’s happening in any of their paddocks.
“What chemicals you're applying, what fertilizer you're applying and what yield is being produced - it’s then informing management decisions,” he said. “That’s really useful for efficiency.”
For example, Hooper said GPS is now used to drive tractors that distribute seeds or chemicals. He said this cuts out any overlap.
“Rather than in the old style back 20 or 30 years ago, when my father was farming, he was doing it by eye and guessing where he'd already gone over and there was a meter or two overlap,” he said.
Drones, he said, can be particularly useful for applying chemicals in wet conditions. This is when fungal disease risk is at its highest but the ground is too wet for farmers to spray chemicals from tractors or other machinery.
One example of how agriculture sector insurance firms are using PA and new technology launched in December.
Insurance Facilitators (IF), a family-owned agency, launched a new coverage via brokers using data-driven satellite technology. The geospatial crop insurance solution was developed by Digital Agriculture Services (DAS) and provides detailed mapping and verification of insured properties, crop types and yields.
“This has been a game-changer for us in managing where farms are situated and then the distance between them,” said Kirsten Mooney (pictured) IF’s general manager. “That assists us with our vision of exposure.”
In a recent interview with Insurance Business, Mooney said this technology can “drill down” into farmers’ properties and see their exact crop type, number of hectares and estimate yields.
She said DAS reports data back every two weeks.
“That's a really good snapshot for us at pivotal points in time,” she said.
Mooney expected this to help solve two of the biggest challenges facing crop insurance: premium leakage and accumulation.
Are you an insurance broker in the agriculture sector? How is precision agriculture impacting the insurance and risk management work you do? Please tell us below.
