Long before the mega-farms of today, evidence points to the emergence of agriculture activity around 10,000 B.C., near modern day Iraq. In those days, as it is today, weather was the main risk that farmers faced. Get the right mix of rain and sun in your personal 50-mile radius, and you’re good to go. Fast forward 12,000 years. A modern grocery store now has around 40,000 food items sourced from perhaps 100 countries, and all of it relies upon an incredibly complex global food supply chain, with players up and down that chain facing countless complex risks beyond just sun and rain.
Food and Ag operators are currently sitting at the epicenter of the biggest global headlines. Pandemic-driven inflation remains persistent, squeezing margins as consumers push back on higher prices. Governments worldwide have attempted to reel in that inflation by raising interest rates, but those decisions will come with lagged-pain to both businesses and consumers, and odds are declining for a “soft” macro-economic landing. The war between Ukraine and Russia grinds on, the retail equivalent of closing the largest baking supply store in the world. Global energy prices are trending higher after years of underinvestment, effectively taxing both businesses and consumers, and possibly forcing interest rates even higher. Lastly, renewed tensions in the middle east are placing a stronger risk premium into all asset classes. For those tasked with managing these risks, the job has never been more challenging.
While many risks can be effectively mitigated with traditional insurance products, there is a new frontier of innovative and highly customized tools targeting these new risks facing the Food and Ag space. Navigating this landscape requires constant focus, and we are working every day to make sure our clients understand these risks and have the right tools and partners to succeed. It will take more than just sun and rain to be successful in this new high-risk environment, and choosing the right partners is a critical first step.
Are you working with the right insurance broker?
At Lockton, we understand that your risks go beyond just people and property. Markets and headlines are increasingly volatile, and it’s difficult to know where to focus your limited time. We can help. With a laser focus on industry and market trends, we have partnered with best-in-class specialty risk dealers to bring you a full toolbox of customized and innovative risk products. We bring creative thinking and an entrepreneurial spirit to the insurance business and are uniquely positioned to help you succeed. With Lockton, where others see risk, you will see opportunity.