Agribusiness
With improved risk management, food and forestry production will produce stronger results.
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What to Expect in 2025
Runaway costs and labour shortages will challenge profitability across food and beverage production and forestry and wood manufacturing in Canada. The industry will also face risk management challenges in the form of climate change, cybercrime and tough underwriting standards. However, industry leaders who embrace forward-thinking strategies can succeed through sophisticated risk management to help manage costs, data analytics to improve benefits engagement and retention and smart use of automation to drive productivity.
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1
Profitability
How will agribusiness deal with increasing costs and outsized risks? Strong risk management.
2
Vitality
Using data analytics to develop personalized benefits will boost productivity, recruiting and retention.
3
Resiliency
Risk management solutions will boost resiliency and protect the bottom line.
4
Preparedness
Risk management strategies will help businesses stay prepared to deal with the worst.
How will agribusiness deal with increasing costs and outsized risks? Strong risk management.
1 | Profitability
80%
of agribusiness respondents to HUB International’s 2025 Outlook Executive Survey1 say they don’t have enough insurance to protect profits.
Using data analytics to develop personalized benefits will boost productivity, recruiting and retention.
2 | Vitality
Agribusinesses’ resiliency will depend on understanding and dealing with issues before they happen.
Risk management solutions will boost resiliency and protect the bottom line.
3 | Resiliency
Cost pressures will continue in 2025, and agribusinesses are feeling the pinch.
Increasing labour costs2 and changing weather patterns3 are affecting the bottom line. Energy prices are also rising, as power needs are expected to increase faster than inflation. And at the same time, commodities prices are falling, especially for corn, wheat and soybeans.4 While many large food and beverage conglomerates are highly profitable, it’s more of a mixed picture for smaller companies.
In the forestry and wood products sector, profits are often dependent upon the construction industry, which has struggled with high interest rates, although the outlook for construction is cautiously optimistic. Lumber prices, which have fluctuated wildly in recent years, have stabilized.5
Not all of these challenges are surprising to the industry. According to the HUB International 2025 Outlook Executive Survey,6 65% of industry respondents listed greater expenditures as a top concern for 2025 profits, the reason chosen most, ahead of cybercrime, business operation disruptions and climate change.
In the face of these concerns, all agribusinesses will need to take risk mitigation and cost-saving measures to increase profitability. For example, sophisticated inventory management
— knowing how much inventory to keep and when to reorder — can make a significant difference in cash flow and profits.
Food and beverage manufacturers can take traditional measures such as futures contracts to help ensure a steady supply of raw materials at a reasonable cost. Forestry operations and wood products manufacturers can improve their risk profiles to cut insurance costs.
And when it comes to insurance, many agribusinesses are underinsured: Eight in 10 agribusiness respondents to the HUB survey say they don’t have enough insurance coverage to protect against risks that could hurt profits. This is likely because of the rising costs of coverage and its shrinking availability. Working with an experienced insurance broker in the agribusiness industry can help mitigate premium hikes, secure the right coverage and help boost profits.
Case Study
A HUB client, a food manufacturer, needed to streamline its insurance purchasing. To do so, HUB actively marketed the company’s insurance coverages. The result: The manufacturer reduced the number of its underwriters from 25 to 15 — and HUB was able to deliver approximately $200,000 in savings.
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The labour shortage is hitting agribusiness particularly hard. With job vacancies rising, 15% of food and beverage manufacturer workers are classified as temporary foreign workers (although the Canadian government may change legislation related to this program).7 Food and beverage manufacturing will need to improve recruiting if it wants to find domestic workers to fill those jobs and boost productivity in light of labour shortages.
The story is similar in forestry and wood products: Roughly 40% of logging workers are over 55, and the number of younger people looking to enter the industry is shrinking.8
What's more, agribusiness jobs can be physically challenging and sometimes dangerous, making it difficult to recruit and retain employees. Increasing wages is only part of the solution, and even then, it doesn’t always produce new employees.
Automation and artificial intelligence (AI) can streamline repetitive tasks on production lines, while helping increase
productivity. But while automation and AI are improving, it’s not always as efficient or accurate as human labour.
In addition, the expense of automation and AI puts it out of reach for many agribusinesses, which have slight margins and little budget for maintenance and repair.
According to the HUB survey, two-thirds of agribusiness industry respondents listed productivity as a top HR priority for 2025, the most commonly selected option.
Agribusinesses can find creative solutions around engagement by leaning into data. Food and beverage production has different challenges than most manufacturers, as turnover can be high and the work seasonal. That demands personalized benefits that produce quality employee experiences (QEX), which helps attract new workers and improve productivity.
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For agribusiness, staying resilient against the complex challenges of climate change, market fluctuations and global disruption is not just a matter of short-term survival, but thriving in the long term.
Climate change is the most obvious culprit. Catastrophic weather events racked up more than $5 billion in damages across Canada between January and August 2023.9 Four of those major storms hit during July and August, leading to a 400% increase in claims over the 20-year average,10 which will hurt agribusiness along with other industries.
Not only does climate change harm agriculture, but it also puts pressure on food and beverage companies to protect their employees, supply chain, buildings and equipment. Wildfires directly affect forestry and wood production, burning trees and threatening wood mills and other facilities.
Insurance carriers are becoming more stringent on agribusiness underwriting, demanding insureds produce business continuity plans and mitigation strategies before offering coverage. While rates for catastrophic loss are unlikely to come down in disaster-prone areas, operations that take risk management seriously are likely to secure better coverage.
Commercial auto for both small and large fleets in agribusiness will rise in 2025, and coverage for unprotected frame properties will remain challenging.
There are positive signs. Companies diligent with risk management will have only slight rate increases or declines for commercial property coverage. General liability coverage rates have moderated while excess liability rates should remain flat for 2025 renewals. Rates will rise slightly or decline for stock throughput coverage, as more underwriters have entered the market.
Overall, the limited number of carriers for food and beverage manufacturing means capacity will be reserved for best-in-class risks. Forestry and wood production rates have stabilized, though operations located in disaster-prone areas will have challenges in securing full coverage.
With chaotic weather and new risks emerging, agribusinesses’ resiliency will depend on understanding and dealing with issues before they happen. This has made enterprise risk management (ERM) extremely important.
Whether it’s a meat packing plant, logging operation or bottling factory, agribusinesses need to manage and assess potential risk to stay resilient — working with a broker with wide industry expertise and strong carrier relationships will help develop comprehensive ERM programs and make enterprises far more insurable, safe and resilient.
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According to the HUB survey, there’s wide recognition on the importance of preparation: 67% of agribusiness respondents say their objectives are aligned with risk management and insurance strategies.
However, that doesn’t mean the industry is not without challenges. As automation grows — one in five food and beverage jobs will be automated within the next decade11 — it has brought up new issues for which businesses need to prepare. And artificial intelligence (AI) to increase efficiency12 is rife with both opportunity and risk.
With automated systems that run production lines, mix ingredients and assure quality control, a breakdown can lead to shutdowns, tainted output and subpar products making it to consumers. In addition, much of the automation in food and beverage manufacturing runs on legacy operating systems, putting them particularly at risk. Reducing that risk requires strict maintenance and upgrading operating systems when necessary.
Bad actors have targeted Canadian agribusiness, with 13 ransomware incidents on the sector in the first part of 2024.13 And the industry's automation is often vulnerable to sabotage.
Agribusinesses can help combat cybercrime through multifactor authentication (MFA) and endpoint detection and response. Educating employees about how to recognize phishing and spoofing attacks is essential.
Supply chains are still fragile, with potential problems coming not only from political unrest and shipping issues14 but also from severe weather. Agribusinesses can take advantage of CAT modelling to develop business preparedness plans in case their supply chains are interrupted.
Food recalls are another area that represent an ongoing double risk. Not only does it affect the bottom line but also threatens a food manufacturer’s reputation. Health Canada reported more than 200 recalls in 2023, and 2024 is likely to match or exceed that number.
A significant number of recalls are due to allergen and bacterial contamination. Although automation can reduce the risk of recalls, it cannot remove it entirely. Organizations need strong product oversight that includes audits to minimize the risk and have a food recall plan when it does happen.
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Risk management strategies will help businesses stay prepared to deal with the worst.
4 | Preparedness
Navigating Your Next Steps
HUB agribusiness insurance specialists will work with you to develop a tailored strategy for 2025.
1
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 engagement through benefits.
2
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.
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.
3
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.
4
Be Prepared
Download our 2025 Agribusiness Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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Meet the Experts
National Practice Lead
Agribusiness Practice
Marc Chouinard
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Practice Leader, U.S.
Josh Smart
Agribusiness Practice
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Risk Advisor
David Laks
Agribusiness Practice
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Practice Leader
Ryan Matthews
Agribusiness Practice
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Jacques Gagnon
Agribusiness Practice
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Brad Borle
Agribusiness Practice
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HUB Agribusiness
When you partner with us, you’re at the centre of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB Agribusiness insurance specialist.
About Us
$1.5B
in commercial insurance premium brokered by HUB
38,800
agribusiness clients
84,000
insurance policies managed
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Related Resources
3. CTV News, “From farm to table: How extreme weather affects prices along the food supply chain,” August 12, 2024.
4. Euromonitor International, “Commodity Market Outlook Q2 2024: Pressures Have Eased But Geopolitical Flareups Drive Market Volatility,” May 30, 2024.
5. Canadian Forest Industries, “Lumber supply and demand stabilize: Madison’s,” September 10, 2024.
6. HUB’s Outlook Executive Survey polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.
7. FCC, “Food and beverage sector performance a mixed story: 2024 mid-year update,” September 25, 2024.
8. Government of Canada Job Bank, “Forestry, Logging, Fishing, Hunting and Trapping: Ontario 2022-2024,” accessed October 31, 2024.tempo.
9. The Weather Network, “2024 confirmed as costliest year on record for weather disasters in Canada,” September 11, 2024.
10. Global News, “Fires and floods: Four disasters across Canada led to record number of insurance claims in 2024,” September 4, 2024.
11. The Conference Board of Canada, “The Next Frontier in Canada’s Agri-Food Sector: Technology-Driven Labour and Skills Transitions,” July 31, 2024.
12. ForestNet, “Artificial Intelligence (AI) is Already at Work in the Forest Industry,” April 25, 2024.
13. CBC News, “Canada’s food supply – under threat? A string of ransomware attacks, many linked to Russian groups, is worrying farmers,” August 10, 2024.
14. The Food Institute, “5 Supply Chain Concerns to Watch in Late 2024,” August 2, 2024.
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1. HUB’s Outlook Executive Survey polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.
2. Agribusiness Global, “‘The Great Reset’ in Global Agribusiness: 9 Black Swan Events to Watch in 2024,” January 1, 2024.
Over 55 years
The average age of a logging business owner.
0%
Supply chains are still fragile, with potential problems due to weather, political unrest and shipping issues.
0%
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