Gallagher has launched a specialist Food Production practice as the risks associated with the sector become increasingly complex.
With Australia cementing its position as a top 10 global foodie destination and growing demand for high quality produce to fuel the dining boom, Australian food production is big business. In 2017 consumer spending on food and wine by overseas visitors surged by almost 40%, creating an additional $6 billion of income for government coffers.
National Head of Food Production, Stephen Elms (pictured), explains further: “In the midst of growing demand for Australian produce, the risk associated with production and manufacturing is increasing and becoming more complex. From extreme weather impact, through to food sabotage, product recalls and environmental risks, there are a broad spectrum of risks associated with this sector.
“Gallagher has more than 20 years’ experience in the food, beverage and agribusiness space and our client portfolio spans SME and corporate organisations looking to build the appropriate risk mitigation framework inside their business.
“Put simply, our Food Production practice looks at the ‘field to fork’ concept from an end-to-end insurance and risk perspective – developing a comprehensive insurance program to manage the supply side consideration, through to reviewing the bolt-on manufacturing and production capability such as irrigators, and ensuring waste water treatment and engineering works are appropriately managed.
“More stringent labeling requirements and quality standards have led to a number of product recalls in 2018. Food contamination and the hazard of chemicals leaching into the soil and water supply are also a concern.
“The recent strawberry needle contamination scandal hit suppliers hard with good quality produce being dumped by the truck load. Aside from the material cost of lost revenue and the challenges of a mass product recall, one often overlooked aspect is the reputational disaster this creates for the supplier despite the issue not being of their making. Reputational risk is a growing concern amongst Australian food producers and is something we are regularly discussing with clients.”
On the production and storage side, certain risks are being viewed with increased caution by underwriters, with some insurers backing out of the market altogether. For clients this can create an additional headache when coming to review their insurance program.
“In the transitioning market, harder to place risks such as expanded polystyrene (EPS) require an effective placement strategy and deep insurer relationships," Elms continued. "Where Gallagher differs from other brokerages is in that we deal directly with the underwriters to ensure the cover meets the specific needs of a business, rather than generic ‘wrap-around’ style coverage. I think this is important if you’re committed to getting the best outcome for clients.”