Agribusiness Agribusiness Market Outlook

Agribusiness

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What to Expect in 2024

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What to Expect in 2024

Rising costs for labor, farm inputs and insurance will continue to affect profits for farms, food production, and forestry and wood manufacturing. Continued labor shortages will force agribusinesses to get creative with benefits, focus on training and increase automation. Active risk management and adequate insurance will be essential to harvest a successful 2024.

Explore our key takeaways to protect your profits and drive organizational vitality and resilience...

Higher input costs and insurance premiums will pressure profits in 2024.

The cost-related pressures that have squeezed agribusiness profits the past three years will not abate in 2024. Rising input costs, high interest rates, a tight labor market and damage from extreme weather events have hurt the bottom line of farms and food processors alike, not to mention forestry and wood manufacturers. Input costs have slammed agribusiness the past three years, as the COVID-19 pandemic nearly broke the supply chain and the war in Ukraine reduced fertilizer and wheat production. The cost of raising crops and caring for livestock will reach $460 billion in 2023, an all-time high and a 28% increase from 2020. Elevated input prices are expected to continue through 2024, affecting all agribusinesses, not just farms. Insurance costs also are cutting into profits. Stock throughput insurance, which covers a company’s goods through the supply chain and is essential for food producers and warehouses, is difficult to obtain.

The cost and diminishing availability of insurance are likely reasons only 14% of agribusiness respondents to the HUB International 2024 Outlook Executive Survey have sufficient insurance to protect their profit margin. At the time of this writing, agribusiness was awaiting passage of a farm bill that would fund federal crop insurance. It may be difficult for agribusinesses to lower input costs, fight the effects of high interest rates or combat weather events. However, working with a broker to lower insurance costs through alternative risk management vehicles and taking on more risk will help improve profits in 2024.

Vitality

Resiliency

Preparedness

Resiliency

Profitability

Automation won’t solve the labor shortage by itself — personalized benefits will be key.

All sectors of agribusiness, from farm to table or forest to finished product, will continue to feel the effects of a nationwide labor shortage in 2024. Across the country, 1.4 million fewer Americans work today than in February 2020. Farmers still struggle to hire workers, including short-term laborers to pick crops and long-term workers to operate and maintain equipment. Warehousers and shippers can’t find enough employees to keep operations running smoothly. Labor shortages and even walkouts have beset food and beverage makers, while higher wages in other industries needing manual labor have siphoned workers from forestry and wood production. Clearly, the industry is aware of the problem: About 70% of agribusiness respondents to HUB’s Outlook Executive Survey list talent recruitment as instrumental to the vitality of its workforce; the same number cite training and employee “upskilling” as equally important.

While automation has long been touted as a way to help solve the labor shortage, particularly in food and beverage, where much of the assembly lines are automated, it is not a panacea. Some companies are reverting to human labor because of the issues with automation, including costs, product defects and lower overall production compared with human workers. All sectors of agribusiness have been searching for creative solutions through benefits. The industry will see the greatest boost to the vitality of their workforce through personalized benefits informed by data analytics. Personalized benefits that speak to individuals will deliver quality employee experiences (QEX), which will engender increased employee loyalty and attract workers to an industry in desperate need of them.

Preparedness

Vitality

Profitability

Agribusiness will leverage creative solutions to stay resilient.

All agribusiness sectors will struggle to manage risk in 2024, but emerging insurance solutions will help ensure their resiliency. Weather-related threats have increased in frequency and severity. Droughts, record heat, massive wildfires, windstorms and flooding have diminished farm yields, hampering food processors’ ability to procure raw materials and making logging and wood production a perilous proposition. With agribusinesses’ reliance on automation, malware and ransomware attacks are more serious and costly than ever. Beyond the immediate financial toll, there’s reputational damage as well. Add supply chain disruptions, global conflict and labor shortages to the mix, and it equals difficult realities for agribusinesses on insurance renewal. Agribusiness insurance rates are expected to rise across the board in 2024. Crop insurance premiums, based on commodity prices, are likely to increase as much as 10%. Stock throughput coverage will climb as high as 15% for perishable goods.

High property rates will burden food and beverage manufacturers, who will see premiums rise as much as 30%; forestry and wood products operations will see similar increases. Increased insurance premiums will require agribusinesses to implement novel, specialized insurance solutions to provide a backstop against risk. For instance, parametric insurance policies pay out after a qualified weather event, regardless of an insured sustaining actual damage. Consulting with their insurance broker will help agribusinesses determine the best solutions, whether it’s modifying limits in existing policies or turning to a layered insurance program, captives or self-insurance.

Resiliency

Vitality

Profitability

Thoughtful risk management will help agribusiness combat new and familiar dangers in 2024.

In an industry full of unknowns, agribusinesses have a clear picture of how to prepare for 2024. In addition to severe weather, cybercrime and supply chain woes, agribusinesses will need to consider worker safety, product recall risk and manufacturing plant maintenance in their 2024 risk management strategies. Ensuring all stakeholders conform to the risk management plan won’t be easy: Only 47% of agribusiness respondents to HUB’s Outlook Executive Survey align risk mitigation strategies with organizational goals, 40% maintain an effective facilities risk mitigation plan and just 22% say they foster a culture of risk awareness, preparedness and mitigation. But filling these gaps in preparedness is essential to long-term stability. For instance, while weather dangers cannot be avoided, farms can reduce the effects of drought through improved resource management, and wood mills can improve safety measures to protect employees and property from wildfire risk. Agribusinesses can lean on catastrophe (CAT) modeling to develop risk management and business continuity plans.

Cybercrime has emerged as a threat, with disproportionate weight on food and beverage production. A data breach at produce giant Dole in February 2023 briefly stopped production and cost the company $10.5 million. Agribusinesses can prepare for cyber threats with multi-factor authentication, endpoint detection and response and education to shore up employee defenses. Food recalls remain an ever-present risk, particularly for allergens: Of the nearly 400 recalls in the first three quarters of 2023, approximately 28% were due to contamination from allergens or ingredient mislabeling. Strong product oversight, including periodic audits, will help minimize food recalls, most of which occur due to employee error.

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HUB agribusiness insurance, risk management and employee benefits specialists will work with you to develop a tailored strategy to protect your bottom line, support the vitality of your workforce and build resiliency for 2024. Here are some initial considerations:

Thoughtfully lean into risk.

Risks in agribusiness have increased — and so have insurance premiums. Consider taking a higher deductible on some coverages, which reduces premiums and improves experience rating, or think about alternative risk transfer vehicles to lower costs. Ask your broker what kind of insurance strategy meets your risk profile and budget.

Increase workforce engagement through benefits.

Re-emphasize safety.

Be transparent with your broker.

Re-emphasize safety.

Understand your loss trends.

Thoughtfully lean into risk.

Employees expect you to support their health, safety and wellbeing. A benefits strategy based on personalization and fostering quality employee experiences (QEX) will boost engagement, recruiting and retention and lower risk.

Increase workforce engagement through benefits.

In an era of labor shortages, stringent regulation and greater litigation, keeping employees safe and healthy is essential. Train and onboard employees to understand expectations and commit to maintaining a safe work environment.

Re-emphasize safety.

Thoughtfully lean into risk.

Increase workforce engagement through benefits.

Understand your loss trends.

Understand the root cause of your large losses and explain to carriers what you’re doing to prevent future losses. Develop a strategy with HUB to determine the best time and frequency to review alternative markets.

Understand your loss trends.

Thoughtfully lean into risk.

Increase workforce engagement through benefits.

Re-emphasize safety.

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When you partner with HUB, you’re at the center of a vast network of experts who will help you improve your profitability, enhance the vitality of your workforce and remain resilient into the future. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB agribusiness advisor. We’re here to help.

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1. U.S. Senate Committee on Agriculture, Nutrition & Forestry, “USDA Says High Farm Production Costs Not Easing In 2024,” July 13, 2023.

5. The Hill, “Jobs in the Woods Act addresses workforce challenges of forestry,” September 10, 2023.

Profitability

Vitality

Resiliency

Preparedness

5,6

Understand your loss trends.

Be transparent with your broker.

Understand your loss trends.

Let your broker know what changes you’ve made to the business, so there are no surprises at renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options.

Be transparent with your broker.

Re-emphasize safety.

Increase workforce engagement through benefits.

Thoughtfully lean into risk.

Be transparent with your broker.

2. Successful Farming, “Drought conditions impacting crop insurance costs,” October 2, 2023.

4. The Texas Tribune, “Delayed passage of farm bill stirs uncertainty for Texas agriculture,” September 27, 2023.

6. Food Industry Executive, “A Multistage Approach to Solving the Labor Shortage in the F&B Industry,” November 6, 2022.

7. U.S. Chamber of Commerce, “Understanding America’s Labor Shortage,” October 16, 2023.

8. Cybersecurity Dive, “Dole says February ransomware attack breached data of almost 3,900 US workers,” June 22, 2023.

9. Food Safety Magazine, “Cyber Threats Impacting the Food and Agriculture Sector,” August 8, 2023.

Record high input costs in 2023 are expected to continue through 2024, affecting all agribusiness, not just farms.

Crop insurance has grown prohibitively expensive. Some underwriters have pulled out of the market altogether, with capacity particularly limited in areas suffering from prolonged drought. Business interruption insurance policies are often extremely costly.

Umbrella and excess liability insurance rates will likely increase 10% to 20%, with lower limits. Commercial auto premiums for fleets of five or more vehicles will jump as much as 15%, in part due to the labor shortage making it difficult to hire qualified drivers.

Increased insurance premiums will require agribusinesses to implement novel, specialized insurance solutions to provide a backstop against risk.

10. Food Industry Council, “2023 Recalls,” accessed October 3, 2023.

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3. HUB’s 2024 Outlook Executive Survey polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.