Climate change, natural catastrophes, environmental risks, changes in legislation, and business interruption have been identified as the top five risks confronting the agriculture sector.
The Allianz Risk Barometer 2024 released yesterday, highlights the growing importance of addressing these risks to ensure business continuity and safeguard against potential disruptions, noting that addressing these risks was crucial for the sustainability and growth of the agriculture sector.
The annual business risk ranking is based on insights from over 3 000 risk-management professionals and business leaders.
Climate change was the top risk with 59% of respondents saying it remained the foremost risk for the agriculture sector, with rising temperatures, shifting weather patterns, and increased frequency of extreme weather events significantly impacting crop yields, and livestock health.
To mitigate this risk, the authors of the report said farmers and agricultural businesses must adopt sustainable practices, such as precision farming, crop diversification, and water-efficient irrigation techniques. They also advised that investing in research and development for climate-resilient crops and collaborating with governmental and non-governmental organisations to implement climate adaptation strategies are also essential.
Natural catastrophes included floods, droughts, and storms, as 57% of the respondents said these continue to pose substantial threats to the sector. These events could devastate crops, damage infrastructure, and disrupt supply chains.
To mitigate the impact of natural catastrophes, annual business-risk ranking said farmers should invest in resilient infrastructure, implement advanced weather forecasting systems, and develop comprehensive disaster preparedness plans. Insurance coverage tailored to agricultural risks could also provide financial protection and support recovery efforts in the aftermath of natural disasters, it added.
Environmental risks, such as soil degradation, water scarcity, and biodiversity loss have emerged as a new and significant threat to agriculture in third place, with 27% of the respondents citing it. According to the barometer, these risks could reduce agricultural productivity and sustainability.
To address environmental risks, farmers were advised to adopt conservation practices, such as no-till farming, cover cropping, and integrated pest-management. Governments and agricultural organisations were advised to promote policies and initiatives that supported sustainable land and water-management practices, as well as the restoration of degraded ecosystems.
Changes in legislation and regulations have also surfaced at number 4, with 22% of responses to become a new risk for the agriculture sector. The dynamic regulatory environment could impact everything from land-use and environmental standards to trade policies and subsidies.
To navigate these changes, agricultural businesses were advised to engage with policymakers, participate in industry associations, and stay informed about legislative developments. Implementing robust compliance-management systems and seeking legal advice could help ensure adherence to new regulations and minimise potential disruptions, the Barometer advised.
Business interruption has moved down to fifth position with 16% of the responses. However, it remained a significant concern for the agriculture sector. Disruptions were said to potentially result from various factors, including supply chain issues, labour shortages, and equipment failures.
To mitigate the risk of business interruption, Allianz said agricultural businesses should develop comprehensive business continuity plans, diversify their supply chains, and invest in modern, reliable equipment. Regular maintenance and contingency planning were said to be crucial for minimising downtime and ensuring operational continuity.
Meanwhile, yesterday the Human Sciences Research Council (HSRC) released the National Food and Nutrition Security Survey for the province of KwaZulu-Natal. To measure the various aspects of food and nutrition security, a list of internationally recognised food security indicators was used, including the Household Food Insecurity Access Score (HFIAS), Household Hunger Score (HHS), Food Consumption Score (FCS), and the Household Dietary Diversity Score (DDS).
BUSINESS REPORT