MULTI PERIL CROP INSURANCE

How does the product work?

Due to the rising cost of production in the agriculture sector and the diminishing securities of producers, the need for Multi Peril Crop Insurance (MPCI) in South Africa has grown significantly. The product is essentially based on the producer's long term average yield (LAY) on his total farming unit, of which a certain percentage is then guaranteed.

In order to qualify for the product, producers have to submit the following documentation:

Production history per producer/farm regarding:

• Hectares planted
• Yields attained for at least the past five production seasons
• GPS measured farm maps showing all the individual lands, land numbers and various areas
• Soil analyses not older than two years and showing a land-farm reference.

To apply for MPCI, you can contact the nearest commercial bank, agricultural business or the SANTAM AGRICULTURAL relationship manager in your area.

All applications are subject to a selection process.

What is the difference in the product between the summer and winter rainfall areas? 

Summer rainfall area   

The MPCI for the summer rainfall area is always linked to a hail policy insuring the crop for a yield of at least equal to or more than the long term average yield of the producer on the farm concerned. 

The producer decides what percentage of damage he wants to carry regarding the hail risk through his choice of percentage franchise or excess, while all the insured input risks are pooled under a guarantee percentage for which the producer qualifies according to his coefficient of variation.  

Winter rainfall area

The MPCI policy for the winter rainfall area stands on its own and is not linked to a hail policy. Hail simply forms one of the insured risks and is therefore settled with the other risks according to the guarantee percentage for which the producer qualify according to his coefficient of variation.

Dry land Multi Peril Crop Insurance

Risks covered

The risks covered under dry land MPCI cover include the following:

Hail, fire, transit, frost, drought, excessive rain, water erosion, snow, cold, wind, hurricanes and any other loss due to adverse weather conditions, uncontrollable plant diseases, uncontrollable insect pests and wild animals. 

Farming practices

The cultivation practices of producers will be monitored throughout to ensure that sound farming practices are followed. This includes the following:

• Acceptable cultivation practices
• Moisture retention
• Weed control
• ARC/seed company's approved cultivars
• Planting dates - as prescribed by the ARC/seed company
• Proper spray programmes
• Marginal soil and problem lands not cultivated (shallow, wind-blown, waterlogged lands or lands subject to bird damage)
• Fertilisation vs soil analyses
• Herbicides not administered during sensitive stages.

Irrigation Multi Peril Crop Insurance

Risks covered 

The risks covered under irrigation include the following:

Hail, fire, transit, frost, excessive rain, water erosion, snow, cold, wind, hurricanes and any other loss as the result of adverse weather conditions, uncontrollable plant diseases and insect pests and wild animals.

Drought is not covered, irrespective of the cause thereof.

Farming practices

• Acceptable cultivation practices
• Moisture retention
• Weed control
• ARC/seed company's approved cultivars
• Planting dates - as prescribed by the ARC/seed company
• Proper spray programmes
• Marginal soil and problem lands not cultivated (shallow, wind-blown, waterlogged lands or lands subject to bird damage)
• Fertilisation vs soil analyses
• Herbicides not administered during sensitive stages. 

The above-mentioned requirements must be supported by:

• Perennial (permanent), stable water source - supplementary irrigation is unacceptable.
• Sound management system, comprising the scheduling of irrigation and use of a dissipation pan, etc.
• Irrigation equipment - one centre pivot system per land; movable centre pivot system shared amongst two lands are not acceptable. 

Determining insurance deficits

Mass deficits 

To determine whether there are any mass deficits on the total farming unit, representative strips are harvested with a combine harvester. Thus the real yield in terms of ton/ha is determined and compared to the allocated (guaranteed) ton/ha as insured.

Mass deficit, if any, is compensated at the insured value per ton. 

Grade loss 

In addition to mass deficit, grade loss, the values of which are specified in the policy conditions, is determined  by using the mass received and grading notes supplied by the buyer.

With this product the rise or fall of the crop price is not covered.

Which crops can be insured under MPCI ?

Producers have a choice to enter into contract insurance (floating policy) which binds the producer with a grain delivery contract with a contractor (bank or agri business), or individual insurance where there is no question of a compulsory grain delivery contract.

Contract insurance

* Winter rainfall - Cape

• Winter grain
• Dry land

• Wheat
• Barley
• Canola

* Summer rainfall - The interior

• Winter grain
• Irrigation
• Wheat
• Barley
• Dry land
• Wheat
• Summer grain
• Irrigation
• Maize
• Sunflowers
• Soya
• Dried beans
• Dry land
• Maize
• Grain sorghum
• Sunflowers
• Soya 

Individual input insurance 

* Winter rainfall - Cape

• Winter grain
• Dry land
• Wheat
• Barley
• Canola

* Summer rainfall - The interior

• Winter grain
• • Dry land
  • Wheat
• Summer grain
• • Irrigation
  • Maize
  • Sunflowers
  • Soya
  • Dried beans
• Dry land
• • Maize
  • Grain sorghum
  • Sunflowers
  • Soya