Federal Coalition backbencher Dan Tehan has described a forthcoming agriculture white paper as a “once-in-100-year opportunity” to create a drought insurance regime that gives farmers financial security and long-term certainty.

In an opinion article to be published in the Australian Financial Review this week and seen by insuranceNEWS.com.au, he suggests redirecting unspent drought support funds to create a multiperil crop insurance scheme.

“The Government’s agriculture white paper gives our agricultural sector the chance to reform our drought policy to make farming businesses sustainable and ensure events such as droughts are only a natural, not a financial, disaster,” he writes.

Mr Tehan is the MP for the Victorian seat of Wannon – which was once held by former prime minister Malcolm Fraser, who died last week. He is the chairman of the Coalition’s agricultural backbench committee.

Criticising the current system as “expensive” and “reactionary”, he says that in the decade to 2011 drought interest rate subsidies cost taxpayers $2.6 billion.

“While demand for sustainability is evident in farming communities, commercial viability and the access to multiperil insurance remains a problem. Both the variety of the products that farmers can buy and the amount of data needed to support these products is limited.”

Mr Tehan says an insurance scheme would save a farm’s income in a bad year and make rural towns more sustainable.

“With confidence in financial security year on year, farming families would no longer be constrained by having to self-insure by keeping large amounts of capital in reserve, instead spending on upgrading their business.”