In his opening remarks, Wessel Lemmer, general manager at Agbiz Grain, noted that the insurance cost for silo operators escalated notably over the past decade. “The increase in insurance costs pertains to the cost at silo as well as for the grain during transport.”
During the panel discussion which was moderated by Kobus Truter, head of structured commodity finance at Absa, Truter said that comprehensive insurance for grain storage operators for any eventuality, including weather-related events or other unexpected accidents, was critical.
“You cannot be in the grain storage industry without insurance. You need a parachute. You do not want to jump without one.“
Sean Harper, national survey manager at Santam Insurance, pointed out that insurance was only part of the greater risk management process. He said legislation also impacted on risk assessment, and reminded the audience that risk was not only those things that you could see around you, but that it started with the decisions that individuals took with regard to their businesses.
Ebbe Rabie, managing director of speciality at Price Forbes said: “It is important to look for ways to minimise your risk and ask yourself what will happen if you do not address the risks. This is the basics when it comes to insurance.”
He added that it was important to know what type of risks the silo owner was prepared to include in his insurance. He pointed out that the risk profile of agricultural businesses changed over the past 10 years due to changes in the business and weather.
Regarding cost, Truter said: “You need to determine what type of insurance you need and also ask yourself if you want the best insurance or the cheapest.”
According to Gerard Ramage, safety, health, environment and quality manager at VKB Group, it’s important to conduct risk assessments as that also pertained to a farming business, the starting point in the value chain. “Effective risk assessments are important. If you implement certain control measures, you will be better off because these measures will mitigate risk. It is worth your while to get control in place.”
Another element added to the grain storage sector is on-farm silos, silo bags and bunkers. Farmers should ensure that they make provision for all the risks associated with grain storage as well as complying with building requirements.
According to Letisha van den Berg, director of the Aggregate and Sand Producers’ Association of Southern Africa, it is important to adhere to industry standards and requirements, even if these storage facilities are on-farm.
She said this was becoming an increasingly important part of insurance as more producers were making use of silo bags and bunkers on their farms. Silo bags are more cost-effective to set up, but it is critical to minimise the risks in terms of placement, safety and general site management.
Ramage said that Agbiz Grain was currently in the process of compiling specific criteria applicable to the grain industry.
“Insurance does not always understand the specific risks within our industry. In our criteria we wish to incorporate legislative requirements, common operating standards, and best practices that we want to manifest in the industry. If industry can follow these best practices, we will be able to measure ourselves against the criteria and direct the future of insurance in our industry.”
