The NSW Government will spend $2 million investigating a national insurance scheme to protect the drought-hit farming sector from future dry spells.

“The best drought assistance measure a government can deliver is to help the agricultural industry to self-insure,” Minister for Agriculture Adam Marshall said. “As this drought rolls on, it’s obvious we need to be looking at ways to roll out a product that would cover all producers against the devastating loss of income that comes with drought and other natural events.

“This is something that has been called for by the agricultural sector for a very long time, but so far insurance products have largely been constrained to individual production sectors within the industry.”

The plan was unveiled last week at a bush summit in Dubbo, NSW.

Risk mitigation tools and comparable models used in other countries will be explored as part of the study.

The National Farmers’ Federation, which has long pushed for a national drought resilience plan, will be involved with the research.

“This investment by the NSW Government is a major contribution to developing innovative ways to manage drought and the radical swings in income that accompany it,” federation President Fiona Simson said.

The NSW Farmers group wants other states to support the project.

“NSW Farmers encourages other state and national farming organisations to call for each of the states and the Commonwealth to invest in this research and to progress a truly national risk insurance market for Australian agriculture,” grains committee chairman Matthew Madden said.