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Discussion Starter · #1 ·
This is basically how it got explained to me by latevo,not sure about price protection. If grain collapses like this year.

Is this similar to Canadian programmes? And farmer pays premium no help from Govt.

Farmer Joe has 2000 ha of wheat @ 2 t ha and $250 on farm = 1,000,000
Its cost farmer joe $150 per ha in direct costs plus another $100 per ha in interest and machinery repayments etc so $500,000 costs or 250 per ha cover.

A frost comes through and wipes out 60% of farmer joes crop hence his income is down to $400,000 latevo will pay out $100,000 in that scenario to get him back up to $500,000 his covered rate.

If 80% loss he has income of 200,000 latevo would pay out $300,000.

Common misconception is you don’t need fire/hail insurance if farmer joe has 1,000,000 crop in paddock a week before harvest a storm goes through and wipes out 20% of his crop a $200,000 loss his income is still $800,000 they would not pay a cent as his income hasn’t fallen below $500,000 income level.

The premium for above scenario in rough figures is $38,000 plus $5500 audit.

$5500 is paid up front.

Some banks for farmers who rent or lease a lot of land with little asset base for collateral are now being expeted to go with programme.

Another issue ive thought of is if govt get involved in paying premium does that mean price of land will artificially rise because of it? As houses did in building industry with all govt building grants.

And if a govt does get involved and new govt comes in a few years later and pulls the pin what happens then.

It a interesting concept but cant help being cautious is there some smoke and mirrors, do they actually pay as per the glossy brochures say or is it like all insurance companies will find a way out if possible?

Anyone using it or like me considering it?
 

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It would be best left in private sector, I would definaelty consider it but suspect the audit cost would make it unviable for me?

It should be used as a tool to have lower interest rates, so if you have this protection banks have lower risk and charge less, help off set the cost?

Ant...
 

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The whole premise of insurance is you hand over more than you receive, otherwise why would latevo and their underwriters get involved. Would have thought if you chucked your annual premium in the FMD system you'd come out in front.
If the gov decided to subsidise the premium in lieu of exceptional circumstances funding then it may be different. But yes, would imagine gov support would distort market prices for a range of things.
 

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Discussion Starter · #4 ·
x your correct in theory, banks have stated if a viable scheme was to be set up risk margins would be lowered.

And trev I believe that's one line grwer organizations are going down rather than ec money maybe a scheme to partly offset premium is warranted and no ec funding.

Im looking for intelligent rational comments got them thanks trev and x80
 

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I went to a Latevo"s presentation evening last year. The $5500 up front fee is a consultancy report to see if your viable and to set the margin rate. They wouldn't charge you the fee if you don't meet their criteria. Your insurance rate is then based on your management skills and your average return, rather then an area to area weather and fire basis. I had a yarn to a mate in Canada where the company originated from, He spoke positively of it. I certainly think it has merit. As your returns improve, expand, risks change etc the rate will change
 

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This maybe a bit irrational, but I think if they come down and audited me they would come to the conclusion I'm stark raving mad, I should have stock..would they consider clients who are working off farm and some things can't get done on time??

If it could be used as a bargaining toll at the bank to help offset cost, that would help, if you have already screwed the bank or like me operate with cash, would it be harder to justify?

Could the system be put in place as a national program and instead of the government giving drought assistance may be put some cash into the scheme, can it be linked to tax, so it would encourage farms to do there very best knowing it will help one day when needing access to scheme if they get some extra etc based on tax paid...I think for the size of the ag industry in AUS we should be able to come up with something...maybe to help young guys get into the game the govt could help them with the cost etc...like a grant...

Ant...
 

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The whole premise of insurance is you hand over more than you receive, otherwise why would latevo and their underwriters get involved. Would have thought if you chucked your annual premium in the FMD system you'd come out in front.
If the gov decided to subsidise the premium in lieu of exceptional circumstances funding then it may be different. But yes, would imagine gov support would distort market prices for a range of things.
Bingo, everything you say it true.

Governemnt intervention/subsidy will potentially distort management decisions, production and price. I am opposed to that.

Let it stand on its own feet, if it works it works. Do your due diligence on the company and be certain of its credentials. Scope out the directors, etc...
 

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This maybe a bit irrational, but I think if they come down and audited me they would come to the conclusion I'm stark raving mad, I should have stock..would they consider clients who are working off farm and some things can't get done on time??

If it could be used as a bargaining toll at the bank to help offset cost, that would help, if you have already screwed the bank or like me operate with cash, would it be harder to justify?

Could the system be put in place as a national program and instead of the government giving drought assistance may be put some cash into the scheme, can it be linked to tax, so it would encourage farms to do there very best knowing it will help one day when needing access to scheme if they get some extra etc based on tax paid...I think for the size of the ag industry in AUS we should be able to come up with something...maybe to help young guys get into the game the govt could help them with the cost etc...like a grant...

Ant...
Have you heard of FMDs there a means of putting money away for poor years. Self insure stick what the premiums would be into FMDs, sure your bank will take them into your risk profile to.
 

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I like the discussion. Interesting points by all. I've only been growing for 2 years and last year I enquired about this sort of insurance and was told I had to have been operating for atleast 5 or 7 years ( can't remember exactly).

I know there would only be a small percentage of new starters like me but it's in those first 5 years when you haven't had a "good" year to cover the bad that can send you out the gate. Out here you have lower cash costs but only get 1 in 7 good years and the other 6 flip a coin to whether you will make a loss or a slight profit. Throw in an uninsured (cause you can't get it) frost event and she's all over red rover.

I like those people on TV that have there rented house burn down and then they cry on TV that they lost everything in the fire and couldnt afford contents insurance. Then everyone gives them new Furniture and electrical goods. Lol. Hey you blokes will send me 1000t of wheat if my paddock burns and I didn't have insurance.....won't ya's...?? Lol
 

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Incorrect OZ...the farm is the ex wife's name who is not officially x yet!...I am the landlord...she is the farmer.

The ATO audit was for GST...nothing to do with FMD, unused at this point as well, or personal income...

Passed audit no worries...

Ant...
 
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