There’s little doubt that commercial UK horticulture has become more of a risky profession in recent years.

While always at the mercy of the elements, the increase in extreme weather patterns – as witnessed by the months of rain seen in 2012 – has made fruit and vegetable production more hazardous than ever before.

That has made having adequate insurance cover more vital, and insurers are unsurprisingly reporting an increase in requests from the trade. “Growers and packers have indeed been requesting higher levels of cover as a result of increased prices which have occurred predominantly owing to the erratic weather in 2012, not only in the UK but also abroad,” says a spokesman for insurance specialists Atradius and S-Tech.

“As demand has increased for less widely available products, so the prices have risen. Companies producing the same volume of product as last year have seen their exposure more than double in some cases owing to the increased prices. This in turn can therefore lead to cashflow problems among purchasers of their goods and a higher consequential risk of insolvency.”

That inevitably creates a dilemma for insurance companies themselves, who on the one hand must be tempted to increase premiums given the higher risk of crop and infrastructure damage and business failure, but on the other are keen to keep prices down and make sure clients can still afford to buy.

“Credit insurance remains a very competitive industry, however we have kept premiums at modest levels despite the uncertain economic climate,” says the spokesman. “The premium we charge – on average just 25p to insure £100 of trade – hasn’t risen as a result of the increased demands on cover because we are still ultimately assessing each grower’s customers on their merits and creditworthiness.”

And the weather hasn’t been the only headache facing insurers – fraud is also on the rise. The high-profile cases of illegal activity in the fresh produce industry this year – with several senior executives currently behind bars after being caught defrauding their employers – hasn’t helped, and insurers report a disproportionately high level of fraud currently taking place within the wider food industry.

More common than individual fraudsters acting outside of the law are companies that are on the brink of going bust and thus more likely to take risks by breaking the law. The three most common types of fraud currently being reported by insurers are falsified invoice discounting, whereby a business raises funds against alleged invoices which aren’t legitimate or raises phantom invoices to phantom customers and doing the same; borrowing against falsified stock levels; and impersonation fraud, which is to say ordering goods using a real company name but for delivery to a falsified address, after which the goods are never traced again. This is said to leave growers particularly vulnerable as one piece of fruit often looks much the same as another, so they are virtually untraceable.

In either case, according to Atradius and S-Tech, these actions merely delay the inevitable collapse of the business concerned. “We can’t stress strongly enough that growers should proceed with caution, watch out for warning signs and protect themselves in any way that they can,” the spokesman said. —

THE BIG PICTURE

At an EU level, growers have been using the budget negotiations to call for crop insurance to be firmly established within the European framework.

At last week’s ICOP conference in Brussels, Rudy van der Stappen, deputy head of the horticultural unit at DG Agri, said: “We’ve taken crop insurance, together with the whole crisis prevention and management issue, into our discussions. We will take it on board into our reflections.”

EU LAW BRINGS GENDER BALANCE

Next month changes to insurance rates mean farmers may have to re-evaluate their life cover to minimise premiums and reduce inheritance tax charges, according to financial specialists Old Mill.

From 21 December, new EU gender equalisation rules come into force, meaning that insurance companies cannot take gender into account when calculating premiums, explains Julia Banwell, director at Old Mill. “This means that life cover rates for women are likely to increase, while premiums for men should drop. We are already seeing companies changing their rates, so now is an opportune time to reflect on the cover that you have, and consider whether it remains appropriate and competitive for your needs.”