Over the past decade, Kiwi farmers have had to get their heads around a movable feast of regulations.

These regulations cover everything from workplace health and safety, effluent management, animal welfare, environmental care, and stock movement.

All require a great deal of time from farmers to make sure they are up to date with the rules and following them correctly — a process complicated with numerous agencies administering regulations as opposed to one central point of contact. The industry acknowledges that good governance is vital but, for some farmers, it can sometimes feel like the agriculture sector is over-regulated and profitability being restricted as a result.

While it can feel like a burden to keep up with all the compliance practice and paperwork, the costs for failing to do so can be crippling. Those who get it wrong can find themselves facing large legal expenses, significant fines, loss of stock, and even prison sentences in extreme cases. Examples of poor farming practices resulting in prosecutions have been widely publicised.

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Prosecution for breaches of statutory obligations are hugely disruptive to any business, and farming is no exception. Time is money and both can be sucked up in significant quantities when a regulatory body is investigating a problem.

Total compliance is the best preventative measure but sometimes mistakes happen — things get overlooked, or shortcuts that seem like a good idea at the time are made. When these breaches occur, the farm business not only faces a financial risk but also a loss of reputation.

Like any risk, this can be managed. Crombie Lockwood Insurance Brokers rural sales manager Brett Borrell says that most cases of unintentional non-compliance can be covered by insurance.

"Statutory Liability cover has been available in New Zealand for 20 years or so and, although it took a while to see the value in it, it's now more or less standard in any commercial or rural insurance package," he says. "In saying that, policy-holders need to be aware that this isn't a get-out-of-jail-free card."

Statutory liability cover provides protection for unintentional breaches only. If a breach is proven to be premeditated or intentional, the claim won't be covered, Borrell says. Repeated prosecutions for the same offence would also most likely result in cover being withdrawn.

Many issues can jeopardise compliance. Dairy farmers in particular are exposed to Resource Management Act consent issues due to concentration of the dairy herd in relatively small areas. By comparison, dry stock and cropping operators are more likely to encounter issues related to machinery, more challenging terrain and therefore need to be aware of their health and safety obligations. Generally, he says, animal welfare prosecutions are infrequent.

Running a business these days is so involved that "it's relatively easy for something to be overlooked". Farmers provide their staff with safety gear, but they also need to make sure they are trained and use it. A system breakdown which goes unnoticed for a day or two can result in stock effluent in waterways, which is a major issue so robust inspection, maintenance and reporting regimes need to be in place.

"There's a pretty thin line between a greenfield and a minefield. What we do as risk managers is help the client identify hazards and through discussion figure out ways to reduce them," Borrell says. "Insurance is about assigning risk externally if it's not feasible for the business to manage it internally. It's a balancing act; our job is to find the balance between the cost of laying a specific risk off, and the exposure in retaining it.

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"Ideally of course compliance is the most painless option and businesses should always plan to comply with their legal obligations. Insurance cover is a means of providing security when something unexpected and unforeseen interferes with that."