Why Crop Insurance is essential this season: protecting profits in an era of climate volatility

Why Crop Insurance is essential this season: protecting profits in an era of climate volatility

As Australia enters the winter cropping season, farmers face a complex and evolving risk landscape. In Queensland and New South Wales, early autumn rains have enabled planting to progress steadily, while growers in Victoria and South Australia are predominantly dry sowing amid inconsistent rainfall. This makes it a critical time to reassess and tailor crop insurance to meet specific needs.

Australia’s agricultural sector operates in one of the most climate-exposed environments globally. Despite this, it remains an economic powerhouse contributing over $100 billion in 2023¹ and accounting for more than half of the country’s land use.²  In this unpredictable setting, crop insurance has evolved from a discretionary safeguard into a strategic necessity, enabling farmers to mitigate risks and build resilience. 

A growing risk landscape

Climate change is reshaping the operational dynamics of many industries, but few are as directly impacted as agriculture. Shifting weather patterns and natural resource availability make the sector especially vulnerable.

• Heatwaves are becoming more frequent and severe, threatening crop yields.
• Droughts are expected to intensify, particularly under warming scenarios of 2°C and above.
• Cool-season rainfall (April to October) in southern Australia has declined by 16–20% since 1970.³
• Extreme rainfall events are more frequent, increasing flood risk.

Economic volatility also continues to pose significant challenges. In FY2025, the total value of crop exports dropped 6.5%, from $42.9 billion in FY2024 to $40.1 billion, due to reduced yields and softening global prices for wheat, barley, and sorghum.⁴ These unpredictable market dynamics demand that farmers adopt agile, forward-looking risk strategies.

Biosecurity remains another persistent challenge. The Brown Marmorated Stink Bug (BMSB), a pest originating from northeast Asia, poses a serious threat. It infests over 300 plant species and has disrupted Australian supply chains before, notably in the 2018–2019 season when its interception caused significant import delays and costs.⁵

Crop insurance options in Australia

Broadacre Insurance

Designed for large-scale cropping operations, this traditional coverage protects against named perils like hail, fire, and frost - providing a safety net for specific, clearly defined risks.

Multi-Peril Crop Insurance (MPCI)

This type of insurance covers multiple risks e.g. drought, flood, pests, fire, hail. MPCI policies can be tailored as yield-based, which compensates for reduced harvest volumes. 

Parametric Insurance

An innovative model that pays out automatically based on triggers like rainfall or temperature thresholds, without the need for physical damage assessment. This is ideal for fast-moving or hard-to-assess events and is gaining popularity in climate-vulnerable regions.

Yield Shortfall Insurance

This is an insurance solution designed to protect farmers against poor yields, regardless of the cause, by covering their input costs. Premiums are calculated based on each farmer’s individual production history and experience, rather than broader regional or industry experience - ensuring the cost reflects their unique risk profile and experience. 

Top threats this season: what to watch

• Drought – intensified by El Niño/La Niña patterns and declining rainfall.
• Hail & storms – especially damaging in spring and summer.
• Flooding – both riverine and flash flooding risks remain high in low-lying areas.
• Pests & disease – often emerge after wet conditions.
• Heat stress & bushfires – on the rise in southern cropping regions.

Why now is the time to reassess your insurance

As climate impacts intensify, reassessing your insurance coverage is essential. Advances in agtech have made policies like yield shortfall insurance more accurate and accessible. Proactively safeguarding your operation during good seasons ensures financial stability when conditions worsen. Crop insurance offers the security to weather poor seasons without depleting reserves.

Fit for the field: choosing insurance that matches your risk

Choosing the right cover isn’t about ticking boxes, it’s about customising protection for your operation. Your broker should be:

• Conducting in-depth risk assessments, including climate exposure and historical yields.
• Tailoring solutions to align with your strategic and financial priorities.
• Leveraging technology and data to support smarter, data-driven coverage.
• Monitoring market and climate shifts, so your risk strategy evolves accordingly.

Crop insurance is no longer optional - it’s a cornerstone of resilient farm management. With the right cover in place, farmers can approach the season with greater certainty and confidence. The time to act is now: early planning helps protect not just this year’s crop, but the long-term viability of your business.

¹Research For Agriculture, The Farming Industry in Australia: A 2025 Perspective https://researchforagriculture.com.au/the-farming-industry-in-australia-a-2025-perspective/ [accessed 26 June 2025].
²Australian Government Department of Agriculture, Fisheries and Forestry, Snapshot of Australian Agriculture 2025 https://www.agriculture.gov.au/abares/products/insights/snapshot-of-australian-agriculture#biosecurity-and-australian-agriculture [accessed 26 June 2025].
³CSIRO and Bureau of Meteorology, State of the Climate 2024 (Australian Government, 2024) http://www.bom.gov.au/state-of-the-climate/ [accessed 7 July 2025].
 ⁴Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Agricultural Commodities Report – June 2025, Department of Agriculture, Fisheries and Forestry, Canberra, 2025, https://www.agriculture.gov.au/abares/research-topics/agricultural-outlook/june-2025 [accessed 11 July 2025].
⁵ Australian Farm Institute. “Current Threats to Our Biosecurity.” Australian Farm Institute, https://www.farminstitute.org.au/current-threats-to-our-biosecurity-2/ [accessed 7 July 2025].