Optimal solutions offer comprehensive protection for wine producers

Agriculture

Optimal solutions offer comprehensive protection for wine producers

Published: 08 March 2022

The 2021-‘22 wine grape season has been a successful albeit expensive one thus far. Production is expected to be somewhat lower than last season’s almost 1,46 million tons, but still above the five-year average of 1,34 million tons. This is according to Conrad Schutte, Vinpro’s consultation service manager.

According to Schutte, wet spring and summer conditions in various regions delayed the application of fungicide spray programmes to vineyards, resulting in severe mildew infestations on some farms. Schutte says the extent of any losses will only be known later in the season. 

Producers also reported supply chain disruptions due to the COVID-19 pandemic, an increase in production costs by approximately 15%, and a shortage of packaging materials, including labels and bottles.

On the brighter side, the news that international production will be falling by 4% due to unfavourable weather in Europe, creates an opportunity for local wine exporters to fill the gap, says Schutte. Wines of South Africa (WoSA) reported that wine exports grew 22% to a volume of 388 million litres between January and October 2021, while the total value of exports grew to R10,2 billion, compared with 2018, when a total volume of 420 million litres fetched only R9,1 billion. Siobhan Thompson, CEO of WoSA, said she expected this growth trend in volume and value to continue in 2022.

Protecting your crop and value chains

With the expected increase in the overall value of crops, yet with weather as unpredictable as ever, wine and grape producers are particularly exposed when it comes to fire, hail, wind, excessive rain and frost that could potentially damage fruit, says Hanlie Kroese, head of Segment Solutions Agriculture.  She cautions that, in addition to natural disasters, wine producers and farmers should also ensure their plant material, trellis, fencing and irrigation systems are adequately insured. 

“It normally takes about five years for new grape-vines to deliver an acceptable standard. This is where Santam Agriculture steps in to ensure producers and farmers are covered during this vulnerable stage to protect their income by means of the Business Interruption section.”

Wine producers are also known for their excellent integration into the agricultural value chain. For many wine farmers, a significant portion of the industry’s value-added chain is tourism and catering, which has become a financial lifeline for many. Santam offers farmers with guesthouses and bed and breakfast establishments a comprehensive product with a number of specific extensions to further enhance the insurance offering.

Don’t forget your assets

Owners of cellars also need special insurance to guard them against losses, which could be substantial in some cases, says Kroese. “Contamination, accidental loss of or damage to aged wines, malicious damage to wine, as well as the collapse of bottles, wine barrels, shelves and attachments to the tanks (catwalks) are all risk that could potentialy cause liabilities costing millions of rands while Accidental Damage Cover can provide indemnity for these losses or damage.”With our export market predicted to grow due to the global shortage it makes sense to take out the necessary insurance to protect products and goods against damages or losses to countries abroad. Farmers and producers who export their fruit and wines to the European Union countries are covered against liabilities, but they can also take out an additional extension on the policy to protect their goods being exported to the USA and Canada.

Wine is a very fragile product that can be damaged by heat, light, physical damage to bottles, or even during the bottling process itself. Moreover, wine and grape producers and farmers may from time to time need to recall certain products. With product recall insurance in place, producers are covered for:

  • Formal correspondence and advertisements in the media to communicate the recall;
  • Transport of the recalled products to the insured’s property;
  • Investigations; and
  • Sorting and/or abolishing of recalled products.

“Today’s progressive farmers need insurance products that cater for all their crops and assets against the perils of modern farming. Santam Agriculture offers farmers and producers specialist knowledge, continued research into the science of crop damage, and has knowledgeable brokers to sell and advise clients on world-class products to ensure prosperity for years to come,” says Kroese.