The latest drought relief package could have been avoided - or at least reduced - if farmers, insurers and the Federal Government had negotiated a private insurance scheme beforehand, according to a former president of the SA Farmers Federation.

John Lush says a multi-peril insurance program would place more agricultural risk in private hands, keeping it competitive with the primary sectors of countries like the US and Canada.

He told Sunrise Exchange News the cost of the ongoing Australian drought should be a wake-up call for all stakeholders.

"We're getting behind technologically and in risk management," he said. "It's time to do some of the things that the rest of the world is doing."

The proposed multi-peril scheme would take regular contributions from farmers during good years. Policyholders would be able to choose when they required income supplements, but only in the knowledge that premiums would probably rise after a claim.

Mr Lush says farmers would use it as a last-resort income protection.

He says the federation mooted the plan in 2001, but few federal politicians or insurers seemed interested at the time. Now, with cost of drought relief packages exceeding $2.8 billion since 2001, he believes it's time to revisit a more cost-effective response to agricultural risk.

"You'd think they would have the willingness to try it now."

The Canadian model, which Mr Lush says would be most easily adapted to Australian conditions, involves a 50% government subsidy.