Why rising hay prices spell trouble for agribusiness

With the heavy rainfall over eastern Australia pulling hay prices up, agribusinesses are more at risk of underinsurance than ever – and at the time of the year when haystack-fire risk is also at its peak.

Specialist agricultural insurer Achmea Australia has released a statement encouraging agribusinesses to doublecheck their policies and ensure that their coverage reflects the market increases to the price of hay as the weather begins to turn for the hot and dry. General manager for client experience Danielle Whitelock (pictured) said market fluctuations ‘quite considerably’ affected agribusiness product values.

“If [the insurance policy] does not adequately reflect the true value, agribusinesses may find themselves underinsured and financially exposed if a major event happens like a haystack fire,” Whitelock said.

Gippsland, Victoria and the Bega Valley and North Coast of NSW all saw Lucerne hay selling for more than $500 a tonne late last November, the Australian Fodder Industry Association recently found. Elsewhere, the same report saw cereal hay prices shooting up by $40 in a single week.

Achmea Australia expected the demand for hay – and hay prices – to continue to climb in the coming months, doubling the risk of underinsurance just as the peak season for on-farm fires approached.

“Fires can cost upwards of hundreds of thousands of dollars in lost property, machinery, and other essential farming equipment – not to mention the possibility of causing serious personal injury,” Whitelock said. “Reducing on-farm risks can help protect yourself, your employees, and your business, so it is important to routinely review hazards and take steps to avoid losses before they occur.”

Achmea Australia’s tips and reminders to help agribusinesses reduce haystack-fire risk and damage include:

• Regularly maintain machines, clear the engine bay of any debris, and check for hot bearings. Harvest-related fires often start because of bearing failure or material build up on the header.
• Ensure hay has dried properly before baling to avoid the risk of spontaneous combustion. Whitelock added that hay should also be monitored post-baling and when for at least eight weeks after baling.
• Spread out risk. Limit the number of bales per shed to reduce the risk of losing all your hay in a single event.
• Avoid driving through crops during hot, dry weather. Hot exhausts and sparks can start fires.
• Maintain and remove long grass and debris around your house and farm buildings. Firebreaks are critical to slow down a fire.
• Ensure firefighting equipment are in good working order. Check that family and workers know how to use the equipment in an emergency.

“[Hay] farmers know it only takes one spark in hot windy conditions to ignite a haystack in just a matter of seconds,” Whitelock said. “The devastation caused by fires can be wide-reaching and potentially cost an agribusiness a lot of time and money. With an increase in the risk of haystack fires combined with the higher value of hay, now is the time for agribusinesses to contact their insurer to check they are adequately covered.”