There seems to be a lot of interest in what Santam Agri is, given the strong connection with the former Sentraoes. Santam Agri has a very proud crop insurance history in SA, stretching from as far back as 1929 when the Farmers’ Hail cooperative was established. It was the forerunner of Sentraoes.
Santam entered the agri-market with the merger of Sentraoes and the Commercial Union Agricultural Services into Agricultural Risk Services. Santam decided in 2007 that agriculture should be a core competency in the company and that we could serve the agricultural sector more efficiently by combining our crop and asset products. Consequently, Santam Agri was born.
We are certainly proud of our crop insurance history and look forward to expanding our involvement in the agricultural sector as part of the biggest insurer in South Africa. Why did you take the job and what is your vision for the company? It was a very easy decision to make, especially when approached by a Top 100 company to head up their very serious commitment to agriculture. Agriculture is in my blood and I look forward to taking Santam’s involvement in the agricultural sector to the next level. My vision is to be the risk management partner of choice by providing stability to farmers to ensure their sustainability. Combining that with our exceptional qualities and expertise, I believe we have a winning formula.
Santam holds more than 50% of the assets and crop insurance market. What benefit does that hold for the SA farmer? We can provide superior insurance products because we base them on excellent research done over many years. We are also backed by the systems and services of the biggest insurer in South Africa, Santam. We can provide dedicated and agricultural-orientated risk management solutions. By addressing a farmer’s complete risk management requirements, we will be able to reduce the complexities of insurance.
Most importantly, we have a great team that understands the business of farming and will design creative products for specific needs. You said you are looking forward to being part of the development of new and innovative products for the agricultural industry. What are these products? The first relatively uncomplicated product is a combination of crop and short-term insurance. It’s early days yet, but we’re working on a host of products that will revolutionise agricultural insurance. Do you make provision for the BEE sector in agriculture? Yes, very much so.
Every agribusiness in SA will have to deal with the reality of land reform and BEE. The way we do business will be fundamentally changed, and is being changed by the government’s objective of transferring at least 30% of commercial agricultural land to BEE. All of us have to assist and support land reform beneficiaries. It makes sound business sense to embrace the so-called emerging farmer and provide for his needs. Santam Agri is working on a number of products to address this sector’s needs and is committed to accompanying its BEE clients on the road to fully fledged commercial farming.
Agricultural insurance seems to be a complex business, given its dependence on and exposure to nature and the uncertainties thereof. Insurance is basically a risk-sharing mechanism. If, in theory, we know that a crop might be lost once every 10 years because of hail, we can pool the risk and share it among all farmers. The insurer is basically the manager of that pool of money. It’s also a very important form of capital. Planting maize is a risky enterprise.
The farmer must have the capacity to deal with possible disaster and that implies a chunk of cash in the bank or sufficient insurance with a reputable insurer. E ver-increasing input cost is a serious factor in commercial agriculture, resulting in smaller profit margins. Farmers claim insurance is expensive and they cannot afford it. Insurance is a form of capital and capital costs money. As with every financial decision, the farmer has to decide on the most appropriate form of capital. It might be a loan, shares, partnerships or his own capital.
The most important consideration for a farmer is whether he can afford insurance or whether he can survive a possible disaster. What does the future hold for agri-insurance? Agricultural insurance will become increasingly important in SA. We see ever-increasing input costs and the subsequent risk of exposure for farmers as well as the reality of land reform and the effect it might have on commercial agriculture as we know it. Santam Agri is committed to play its role as the farmer’s risk partner of choice in the agricultural market. Contact Santam Agri on (051) 407 3005.
