Dr Peter Thorburn1, Mr Jody Biggs1, Mr Tony Webster2, Ms Larelle McMillan1, Mr Russ Mehmet3
1CSIRO Agriculture and Food, 2CSIRO Agriculture and Food, 3WTW Australia
Biography:
Dr Peter Thorburn is a Chief Research Scientist and Research Group Leader with CSIRO. He is an internationally recognised cropping systems modeller, interested in developing tools that can help farmers better manage their crops.
Abstract:
There are benefits from minimising the environmental footprint of cropping. One example is reducing the impact of sugarcane cropping on the Great Barrier Reef (GBR) through optimising N fertiliser applications. For sugarcane farmers, managing N fertiliser is an exercise in risk management: applying sufficient N to minimise the risk that N deficiency will limit yields. As an alternative approach, we have developed a novel parametric insurance concept where farmers receive a payout in years where yields are impacted by reduced N fertiliser applications. The risk of yield loss is simulated at the field scale for conventional and reduced N rates specified by the farmer. To determine the appetite amongst sugarcane farmers for such a concept, we developed a prototype commercial product and had sugarcane farmers in the Wet Tropics (N Qld) “buy” mock insurance. Feedback from the farmers about the concept was positive. Water quality and financial outcomes of these “purchases” were evaluated over 70 years. Farmers were financially better off because payouts from the mock policies combined with savings in fertiliser costs were on average more than $8/ha greater than insurance premiums. If an insurance product like this was implemented over 40% of the Wet Tropics region there would be approximately 100 t/year less N discharged to the GBR at no cost to the public. Achieving that outcome from publicly funded grants and incentives to farmers would cost ~$20M /yr. This innovative insurance concept can provide a win-win for farmers and the GBR. The use of cropping systems modelling in insurance is not common and it could have benefits if applied to other cropping risks.