Rewriting the rules of crop insurance: why farmers need Yield Shortfall Insurance

Rewriting the rules of crop insurance: why farmers need Yield Shortfall Insurance

Weathering the storm in an unpredictable environment 

In recent years, Australian farmers have faced increasingly erratic seasons. The frequency and severity of extreme weather events such as droughts, floods, frost, and heatwaves has heightened, and the impacts are being felt acutely. 

The 2022 floods in Queensland, for example, had devastating impacts on farmers causing an estimated $254.5 million in agricultural production loss¹, with more than 2,250 primary producers affected across 17 local government areas at the time of the report².  Climate change is accelerating, and market pressures are intensifying; traditional farming risks are no longer seasonal concerns, they’ve become systemic threats that demand strategic, data-driven solutions.

As the nature of farming practices dynamically evolves to meet today’s challenges, so must insurance. Many farmers still rely on traditional policies that cover specific events, such as hail or fire, but these fail to mitigate the broader financial impact of reduced yields. That’s where Yield Shortfall Insurance comes in.

A smarter solution: what is Yield Shortfall Insurance?

Yield Shortfall Insurance is an innovative product designed to safeguard farmers from the considerable financial fallout that can occur from reduced crop yields, regardless of the cause. While some insurance products rely on regional yield statistics, this solution is tailored to the individual farmer’s yield profile, offering more accurate and relevant protection. Whether it’s drought, water logging, pests, or disease - if it reduces yield, it is covered. Currently the product covers wheat, barley and canola with the scope to cover more crops in the future.

The product is powered by AgArea’s technology (an Australian AgTech company), which integrates multiple data sources to create a reliable and independently verified yield profile. This insurance uses each individual farm’s real-time data. It incorporates farm boundaries, machinery-generated data, production plans and records, and planting and applied data, to assess productivity and therefore determine the coverage needed. That means no paperwork, no disputes, and fast payouts based on clear, pre-agreed terms. It’s a smarter, fairer and more flexible alternative to traditional insurance solutions.

"With Yield Shortfall Insurance, you're planting with confidence because when nature is unpredictable, your future doesn’t have to be". – Matt Weaver 

Tailored protection built around your farm 

Yield Shortfall Insurance is specifically designed to match your risk appetite. You choose when your cover starts and when it ends:

Target yield:
Your coverage is grounded in the average yield from your last five seasons, giving you a realistic benchmark that reflects your farm’s actual performance.

Break-even yield:
This is the point where your protection begins. It’s pre-agreed as a percentage of your target yield, ensuring you’re covered when yields drop below what’s financially sustainable.

Probable minimum yield:
This defines the lowest expected yield and sets the maximum payout. It ensures you’re protected without overpaying for coverage you don’t need.

Policy excess built into the structure:
The difference between your target yield and break-even yield acts as your excess, so you only pay for the protection that truly matters.

Real benefits for farmers 

Covers input costs in low-yield seasons
When yields fall short, farmers still face the same upfront costs on seeds, fertiliser, fuel, and labour. Yield Shortfall Insurance ensures these costs are covered, helping farmers avoid financial strain and allows them to continue operations and safeguard their farm’s future.

No paperwork. No disputes.
Traditional insurance often involves arduous factors like lengthy claims processes, assessors, and back-and-forth negotiations. This product removes those burdens. Claims are triggered automatically using verified farm data, saving time and reducing stress.

Easier access to operating loans
Lenders are more likely to support farms with robust risk management strategies. Yield Shortfall Insurance considerably improves a farmer’s risk profile, therefore making it easier to secure financing for inputs, equipment, or expansion.

Support for contract fulfilment
If a farmer’s yield drops below what’s needed to meet a supply contract, the insurance payout can be used to purchase additional crop. This flexibility helps protect business relationships and maintain income streams.

Backed by a world-leading, AA-rated insurer
Trust and reliability matter. This product is underwritten by a globally recognised, AA-rated insurer, giving farmers confidence that their coverage is secure and their claims will be honoured.

The time to act is now

The agricultural landscape is rapidly changing. Climate volatility is no longer a distant threat, it’s impacting daily reality more profoundly than ever before. Even the most resilient operations are succumbing to the mounting pressures of unpredictable weather patterns. 

At the same time, data-driven technologies are becoming the norm across many different industries, and farming is no different. As modern growers are leveraging technology to significantly improve efficiency across planting, monitor performance, and make more informed operational decisions, insurance solutions must simultaneously adapt to offer coverage that reflects real-time conditions, instead of outdated averages.

Meanwhile, financial institutions are increasingly favouring farms that have strong risk management strategies in place. Yield Shortfall Insurance can therefore be used as a strategic tool to leverage accessibility to operating loans and strengthen a farm’s financial position.

It empowers farmers to build resilience, protect their investment and plan their future with confidence in a volatile environment.

¹Queensland Reconstruction Authority, The social, financial and economic costs of the 2022 South East Queensland Rainfall and Flooding Event, Deloitte Access Economics, June 2022, https://www.qra.qld.gov.au/sites/default/files/2022-07/dae_report_-_south_east_queensland_rainfall_and_flooding_event_-_8_june_2022.pdf  [accessed 15 October 2025].
²Queensland Government, More than $160 million delivered to support flood ravaged Western Queensland, Ministerial Media Statement, 11 April 2025, https://statements.qld.gov.au/statements/95831 [accessed 15 October 2025].