Cover for farm losses ‘could be expensive’

George Eustice said his department had looked into flagship insurance schemes operating in the US and Canada after the topic was raised by the National Farmers’ Union but it had found there are barriers to implementing a similar system here.

Administration costs alone would be prohibitive, he said, and would exceed the high cost of administration to deliver the EU’s Common Agricultural Policy (CAP).

In the US, insurers pay out to farmers if a farm’s revenue drops below a ‘moving’ average. Farmers pay into the scheme so that it is viable and it is part-financed by the US Government.

Canadian farmers pay a fee to access insurance for crops and livestock, while their government covers between 60 and 80 per cent of the costs. If a farm’s income drops below the average over the past five years by 70 per cent, the insurance scheme kicks in.

Speaking at the Northern Farming Conference at Hexham Auction Mart, Northumberland, Mr Eustice said such a scheme for the UK had been considered, and in the future it could be used as an “exit strategy” from the Single Farm Payment, a subsidy paid to farmers through CAP.

“The drawback is, in the US and Canada, there is no Single Farm Payment,” Mr Eustice said.

“A scheme (here) would have to be in place of the Single Farm Payment and some of these schemes are quite complicated and expensive in terms of administration.”

Such a scheme was “no panacea”, he added.

Risk and resilience was the theme at yesterday’s conference, the annual industry summit held jointly by the Country Land and Business Association, Strutt & Parker, Bond Dickinson, Armstrong Watson, Catchment Sensitive Farming, Hexham and Northern Marts and Gibson and Co Solicitors, and supported by the Agricultural Mortgage Corporation.

Mr Eustice also called for new entrants into farming during his speech: “We need to look at share options and share farming, which have been around, but not used enough. Also we need to look at increasing tenancies, both in land available and agreements being longer. Legislation could put farmers off leasing land so we are looking at ways to incentivise owners to extend tenancies.”

More than 300 delegates also heard from Guy Poskitt, the Goole-based farmer whose vegetable firm has grown over the past 40 years to become one of the country’s largest carrot producers and a major supplier to Asda.

He has managed risks to his business by expanding his operation throughout the country, from the north of Scotland to south of England as well as in Yorkshire and Lancashire. He farms across more than 6,000 acres in total.

“The differing climates extend the growing season for us but this can also bring additional challenges,” he said. “In Yorkshire there is the chance of drought and in Lancashire the opposite, but properly managed they can both work well. Farming 200 miles from home can also has problems – if you can’t find the right people you are in trouble.”