WTW is calling on the Queensland Government to pay part or all of the premium paid by sugarcane farmers for its parametric offer that covers yield shortfalls caused by reduced application of nitrogen fertiliser. 

Nitrogen run-off to local Queensland waterways is a cause of degraded water quality on the Great Barrier Reef. 

WTW says its parametric solution allows farming practices that benefit water quality by lowering nitrogen use while crop yield profits remain protected. 

A government $3 billion Reef 2050 Plan has listed priority action to safeguard the reef, including improving water quality by working with industry to reduce the impact of land-based activities.  

“Given the importance of the Reef, and the sugarcane industry to Queensland’s economy, concessional support for part or all the premium cost from the Queensland Government would have a net positive effect,” Brisbane-based WTW Account Director Russell Mehmet told a state parliamentary inquiry. 

“The government could take a leading role in environmental health by promoting the benefits to farmers in terms of the savings in nitrogen fertiliser costs, and the wider economic advantages.”  

This approach has been adopted in many other developed economies that have a strong agriculture sector, he says. 

WTW says Nitrogen Risk Insurance is a world-first parametric product underpinned by over 20 years of sugarcane production research by the CSIRO and developed in partnership with the Great Barrier Reef Foundation. 

“This project is creating a step change in water quality improvement and has the potential to create enduring impact on a scale never seen before,” the Foundation’s MD Anna Marsden said. "Nitrogen Risk Insurance enables Queensland farmers and the agricultural community to take this to the next level without risking their profitability.” 

Nitrogen Risk Insurance, underwritten by Liberty, was launched for the 2022 harvesting season and is now available to cane farmers in Mackay, Herbert, Babinda, South Johnstone and Tully. It comes after urea costs doubled in Australia in a year. 

Claim payments are based on simulated yield outcomes using Bureau of Meteorology measurements including rainfall, temperature and solar radiation. Each policy is tailored to location, soil type and crop start time, and farmers can insure one, some or all ratoon blocks.  

CSIRO Digital Innovations Group lead Peter Thorburn says water quality improvement costs taxpayers up to $200,000 per tonne of dissolved nitrogen.  

“If a farmer can achieve that using their own commercial programs the potential savings for the public are immense,” he said.