Agricultural risk management
No-one can escape the uncertainty of agricultural risks, but everyone can prepare for them
Participants in the agricultural supply chain
Crop shortfall, liquidity problems, and unfavorable markets are not just the fear of every producer, these agricultural production risks loom large over all players in the supply chain. Every participant from input supplier and agricultural machinery manufacturers to grain traders, logistics companies, and the food industry has much at stake in the event of extreme weather that results in crop losses.
Effectively managing agricultural risks starts with a proper appreciation of their scope. Let’s take a look at the broad risk categories affecting the agricultural sector, as well as outline the best ways to manage them.
Agricultural production risks
Agricultural producers might face the risk of drought, hail damage, flooding, frosts, unseasonal weather, crop destroying pests and diseases. This has been made worse by the already noticeable effects of climate change: Weather events such as drought, hail and torrential rain are likely to become more frequent, depending on the region.
In addition, producers might have to contend with possible loss of production due to failure of agricultural equipment.
Agricultural market risks
Agricultural financial risks
Managing the inevitable negative cash flows inherent in farming due to regular upfront input costs is vital to profitable operation.
Obtaining the necessary loans is needed to protect cash flow and productive assets. This is easier said than done if the right safeguards are not in place.
Additionally, the steady advances in smart agriculture, particularly with regards to precision farming, can necessitate costly technological upgrades.
Agricultural supply chain risks
Watch how global experience produces innovative agricultural risk management
How we help manage your agricultural risks
Benefit from Munich Re’s knowhow in structuring agricultural risk
Put our financial strength and global leadership in agricultural insurance to work for you in developing a comprehensive, innovative risk solution built around your specific needs and regulatory environment.
Our digital tools and unique approach, which includes the option to structure your risk transfer solution as insurance or as a derivative, will deliver a solution that is perfectly suited to your particular situation.