Following on from our first in our series ‘Managing Risk in Farming’, we look at the ongoing issues of climate change and the effects it is having on our agriculture sector. Lynne Owbridge, Account Director from our Dundee branch, gives her insurance perspective on addressing pollution risk:
Hectares of flooded prime agricultural land or sown fields left waterlogged after successive wet winters are becoming an increasingly common sight across the UK. Over the last decade, the real world impacts of climate change have become starkly apparent and have had dramatic impacts across farming communities.
It’s not just land and crops, of course. Extremes of weather cause loss of livestock, storm damage and more.
The costs of flooded fields, losses to stock, damage to buildings and machinery has been considerable over recent years – although the Farming Recovery Fund has had a positive impact. In 2019, Defra made up to £2m available for farming businesses particularly affected by flooding in Wainfleet and North Yorkshire.1 However, this wasn’t a localised issue. Businesses across South Yorkshire, Nottinghamshire, Lincolnshire, Worcestershire and Gloucestershire were also badly affected. Farming faced the same issues again in 2020. Coming off the back of the wettest autumn in living memory, a considerable amount of land across the UK wasn’t cropped at all – leading to considerable losses for farms.
Again, the FRF had some impact, but these financial aid programmes do nothing to arrest the trend of warmer, wetter seasons. But it’s not always a case of too much rainfall. Water stress in some areas – particularly in the South East and Midlands – will continue to create problems. While it may seem like a distant memory given everything else that’s going on in farming, the high temperatures experienced in the UK during summer 2018 – one of the driest on record – created a raft of problems from failed crops and fodder shortages to cash flow issues for many farming businesses. According to the Met Office, this century has been warmer than the previous three centuries, with nine of the ten warmest years having occurred since 2002.2 It seems increasingly likely therefore, that extremes in weather, either floods or droughts, will continue.
In efforts to combat change, the UK government has committed to reducing greenhouse gas emissions by at least 80% by 2050.3 UK farming is playing a key role with many communities already taking steps to reduce their impact on the environment.
Indeed, as part of the Agriculture Bill, it’s expected that farms will be rewarded through subsidies for developing a range of environmental support services including providing clean air, clean and plentiful water, flood protection and thriving wildlife. We have already seen a variety of industry-led initiatives, including the Farm Carbon Kit which provides information and advice for farmers and growers to reduce carbon emissions (through, for example, non-inversion that mitigates carbon release and reduces environmental impact), and increase carbon sequestration.
You can read an interesting write up of real world environmental experiences here.
Of course, we have also seen farmers come under fire from some quarters with (often inaccurate) perceptions around greenhouse gas emissions from cow and sheep grazing. What should be a more complex discussion about the environmental benefits of grazing, the suitability of land for arable use, and indeed the role of grass as a critical carbon store, all tend to get lost in ‘anti-meat’ opinions.
Ultimately, farm and agri-businesses are most impacted by climate change. Therefore, UK farmers have a vested interest in sustainable and responsible land management, and are playing a leading role in protecting environments in which we all live and work.
The insurance perspective: Addressing pollution risk
Aside from the considerable business interruption, livestock loss and soil damage experienced by farms up and down the country. Environmental impact becomes more marked, so do the potential issues (and consequences) of farm regulation and inspection. Defra believes some 50% of slurry storage arrangements are inadequate4 and farms risk fines or clean-up costs should ground or watercourses be affected.
The risks aren’t limited to slurry run-off. Other pollution events – from dairy and pig units as well as dirty water from silage clamps, leaking fuel tanks and the misuse or spillage of pesticides – can create environmental damage and leave farms exposed to regulatory action.
The Environmental Agency has the power to impose any clean-up costs upon farmers, including the costs incurred by their consultants or contractors – even if the event occurs on the farmer’s land. From an insurance perspective, while farms may have public liability cover under the farm policy, this could be limited and still leave farms exposed. Having specific pollution insurance in place to manage your environmental liability – alongside a variety of cover including hail and storm, flood, fire and business interruption due to weather incidents – is increasingly important and something that we can help with at Marsh Commercial.
In our next edition, we examine how Brexit could be the biggest shake up in farming for a generation. You can download the full report here.