New drought insurance for livestock farmers

Standard Bank and Agri-Risk Specialists (AR S) have developed the R aindex Field insurance policy, a unique solution that promises livestock farmers protection against their greatest risk – drought.

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“Insurance against a wide range of climate and weather factors has been available for almost every imaginable agricultural product,” says Bertie Smith, Director of Agricultural Banking at Standard Bank, and adds, “livestock and game farmers have been neglected for far too long, and we have attempted to address this through this new insurance policy.” Raindex covers livestock and game farmers against subnormal rainfall. Compensation is based on the production value and rainfall deficit over the previous 12 months, compared to the normal rainfall for the area.

The main benefit of Raindex is its flexibility. Stock farmers are free to use the payout as they see fit. Other benefits include a cash injection during drought. This can prevent farmers having to sell animals at a time when, because of the drought, they are not necessarily in top market condition. With payouts from Raindex Field, the farmer can buy fodder at strategic times and get stock market-ready more quickly, thus obtaining good grading and prices. Premiums are tax-deductible if farmers use the money to buy fodder. Raindex Field also ensures that the drought fund is not depleted before the drought ends, which is a real benefit since droughts often extend over several seasons.

“The combination of yield (production) and price (market) risk results in income instability and cash flow variability,” says Smith. But he adds that these are measures farmers can take to manage risk better. “Raindex has been developed with these risks and other stock farming challenges in mind.” Drought not only affects farmers, but almost every sector of the rural economy. R aindex can help communities overcome drought. – Chris Nel Contact Auriel Mitchley on (011) 889 0796 or e-mail [email protected]

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