Optimism in South Africa’s agricultural value chain has reached a six-year high despite the setbacks brought about by Covid-19.
Insurance company Santam business development manager Hanlie Kroese says this suggests that the agricultural industry is bouncing back, although the full impact of lockdown measures to curb the spread of infections is still coming to the fore.
She notes that farmers have adapted to a large extent to the new normal, but new and ongoing risks around theft and natural disasters, to Covid-19-linked crises remain. These include, for example, an excess of beer-grade barley because of alcohol sales bans.
Brewing giant AB InBev lowered its barley mandate by 70 000 t for this year. Farmers stand to lose between R1 500/t and R2 000/t should malting barley be used for feed instead.
To this end, insurance plays a pivotal part in proactive risk mitigation, with technology being all the more a catalyst for broader inclusivity, Kroese states.
She says the company is harnessing the power of technology and next-generation learning to ensure it sets the benchmark for agricultural insurance and industry understanding in Africa.
“Throughout this pandemic, we have seen many of our farmer partners pivot or deploy innovative strategies to survive – and enhance their offerings for the long term.
“As their risk profiles evolve, we’re committed to providing the right policies at the right price. Our aim is to use technology to extend our reach and support small farmers and new entrants to the industry.”
Kroese explains that a mixed bag of trends is prevalent in the agricultural sector at the moment, including consolidation, which has been hastened by liquidity issues at the Land Bank; export crops performing better as a result of the pandemic; continued uncertainty over land expropriation without compensation and more prolific rains this year than in the past six years.
She continues that dire economic indicators and the unpredictability of markets remain key challenges, but farmers and entrepreneurs are adopting platforms for trading and communication, undertaking online auctions and using more agri-tech for competitive advantage.
This kind of technology plays a big role in agricultural insurance, Kroese notes, adding that there is a significant digital divide between small-scale farmers and their access to commercial solutions, which needs to be bridged.
To this end, Santam is always looking at how it can optimise the Internet of Things, machine learning and data management to modulate a new generation of products for small-scale and commercial farmers.
“Investment in agri-tech is critical to risk mitigation and management. We expect to see more blockchain interventions, virtual price formulation and farmer-specific risk management. We are also likely to see commodity-specific interventions in the value chain being industry game-changers.
“Technological interventions for off-takers, agribusinesses and even retailers will be the future of insurance,” Kroese concludes.