Navigating Agribusiness Challenges in 2025

Construction Agribusiness Construct a resilient future using a strong risk With improved risk management, food and forestry management approach as a blueprint for success. production will produce stronger results. Risk & Insurance | Employee Benefits | Retirement & Private Wealth Risk & Insurance | Employee Benefits | Retirement & Private Wealth

What to Expect in 2025 What to Expect in 2025 Adic to consed qui volorio voluptatus est, int, id mo iuntusa ndent. Runaway costs and labor shortages will challenge profitability across food Et quis aut dolor aut apicidemquis eum solenti con pores sumquas and beverage production and forestry and wood manufacturing. The industry pedionsequia doleste veliquae et aliquis de sit laut quia dolorunt, will also face risk management challenges in the form of climate change, conemol orruptatem et, occuptamus repelignam, omnis de in cust cybercrime and tough underwriting standards. However, industry leaders vellam volupitia non corerro bla ditest que elicilisto quis maxim who embrace forward-thinking strategies can succeed through sophisticated nonecto eossitiures nobit, simet ullab incium, ulla volest ofÏctur? risk management to help manage costs, data analytics to improve benefits engagement and retention and smart use of automation to drive productivity. Profitability 1 vellam volupitia non corerro bla ditest que vellam volupitia non corerro bla ditest que bla ditest que vellam bla ditest que vellam $6.6 trillion $7 trillion Estimated size of global food and Estimated size of global food and Vitality vellam volupitia non corerro bla ditest que vellam volupitia non 1 beverage market in 2023 beverage market in 2024. 2 corerro bla ditest que bla ditest que vellam bla ditest que vellam 1. The Business Research Company, “Food and Beverages Global Market Report 2024,” January 2024. Resiliency 3 vellam volupitia non corerro bla ditest que vellam volupitia non corerro bla ditest que bla ditest que vellam bla ditest que vellam Sustainability 4 vellam volupitia non corerro bla ditest que vellam volupitia non corerro bla ditest que bla ditest que vellam bla ditest que vellam 22

Profitability How will agribusiness deal with increasing costs and outsized risks? Strong risk management. Cost pressures will continue in 2025, and agribusinesses are feeling the pinch. 2 3 Increasing labor costs and changing weather patterns are affecting the bottom line. Energy prices are also rising, as power needs are expected to increase faster 4 And at the same time, commodities prices than inflation. are falling, especially for corn, wheat and soybeans.5 While many large food and beverage conglomerates are highly profitable, it’s more of a mixed picture for smaller companies. Forestry operations and wood products manufacturers In the forestry and wood products sector, industry profits can improve their risk profiles to cut insurance costs. are often dependent upon the construction industry, which has struggled with high interest rates, although the And when it comes to insurance, many agribusinesses outlook for construction is cautiously optimistic. Lumber are underinsured: Eight in 10 agribusiness respondents prices, which have fluctuated wildly in recent years, have to the HUB survey say they don’t have enough insurance 6 coverage to protect against risks that hurt profits. stabilized. Not all of these challenges are surprising to the industry. This is likely a result of rising costs of the coverage and According to the HUB International's 2025 Outlook shrinking available coverage. Working with an experienced 7 insurance broker in the agribusiness industry can help Executive Survey, 65% of industry respondents listed greater expenditures as a top concern for 2025 profits, mitigate premium hikes, secure the right coverage and the most commonly chosen reason, ahead of cybercrime, help boost profits. disruption to business operations and climate change. In the face of these concerns, all agribusinesses will 2. University of Illinois Farm Doc Daily, “Rising Overhead Costs Driven need to take risk mitigation and cost-saving measures to by Labor and Interest,” December 19, 2023. increase profitability. For example, sophisticated inventory 3. Green Money, “Weather’s Impact on Investing in US Agriculture: Navigating the New Normal,” May 2024. management — knowing how much inventory to keep and 4. Utility Dive, “US electricity prices rise again as AI, onshoring may when to reorder — can make a significant difference in mean decades of power demand growth: BofA,” July 8, 2024. cash flow and profits. 5. Euromonitor International, “Commodity Market Outlook Q2 2024: Pressures Have Eased But Geopolitical Flareups Drive Market Food and beverage manufacturers can take traditional Volatility,” May 30, 2024. 6. Cision, “US Housing and Lumber Prices Update – July 2024,” July measures such as futures contracts to help ensure a 19, 2024. steady supply of raw materials at a reasonable cost. 7. 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. 3

Vitality Data analytics to develop personalized benefits will boost productivity, recruiting and retention. The labor shortage is hitting agribusiness particularly hard. With manufacturing overall adding approximately 8 3.8 million positions between now and 2033, food and beverage manufacturing will need to improve recruiting and productivity to keep pace. The story is similar in forestry and wood products: The average age of a logging business owner is over 55, and the number of younger people looking to enter the 9 Agribusinesses can find creative solutions around industry is shrinking. engagement by leaning into data. Food and beverage In addition, these agribusiness jobs can be physically production has different challenges than most challenging and sometimes dangerous, making it difÏcult manufacturers, as turnover can be high and the work to recruit and retain employees. Increasing wages is only seasonal. That demands personalized benefits that part of the solution, and even then, it doesn’t always produce quality employee experience (QEX), which helps produce new employees. attract new workers and improve productivity. Automation and artificial intelligence (AI) can streamline repetitive tasks on production lines, while helping increase 8. Deloitte, “US Manufacturing Could Need as Many as 3.8 Million productivity and fill the need for some positions. But New Employees by 2033, According to Deloitte and The while automation and AI are improving, it’s not always as Manufacturing Institute,” April 3, 2024. efÏcient or accurate as human labor. What's more, the 9. The Hill, “Jobs in the Woods Act addresses workforce challenges of forestry,” September 10, 2023. 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. 4

Resiliency Risk management solutions will boost resiliency and protect the bottom line. For agribusiness, staying resilient against the complex challenges of climate change, market fluctuations and Case Study global disruption is not just a matter of short-term survival, but thriving in the long term. A HUB client, a food manufacturer, needed Climate change is the most obvious culprit. From January to streamline its insurance purchasing. To do through August, 19 weather disasters causing at least $1 so, HUB actively marketed the company’s billion in damages hit regions across the U.S. The disasters insurance coverages. The result: The manufac- 10 included convective storms, tornadoes and hail. And turer reduced the number of its underwriters Hurricanes Helene and Milton, which hit the Southeast in late September and early October 2024, each caused from 25 to 15 — and HUB was able to deliver 11 and will affect many damages that could cost $50 billion approximately $200,000 in savings. industries, including agribusiness. Not only does climate change harm agriculture, but also puts pressure on food and beverage companies to protect their employees, supply chain, buildings and equipment. Overall, the limited number of carriers for food and Wildfires directly affect forestry and wood production, beverage manufacturing means capacity will be reserved burning trees and threatening wood mills and other for best-in-class risks. Forestry and wood production rates facilities. have stabilized, though operations located in disaster- Insurance carriers are becoming more stringent on prone areas will have challenges in securing full coverage. agribusiness underwriting, demanding insureds produce With chaotic weather and new risks emerging, business continuity plans and mitigation strategies before agribusinesses’ resiliency will depend on understanding offering coverage. While rates for catastrophic loss are and dealing with issues before they happen. This has made unlikely to come down in disaster-prone areas, operations enterprise risk management (ERM) extremely important. that take risk management seriously are likely to secure better coverage. Whether it’s a meat packing plant, logging operation Umbrella and excess liability policies in agribusiness will be or bottling factory, agribusinesses need to manage and up as much as 10% in 2025, and commercial automobile assess potential risk to stay resilient — working with a coverage is expected to increase as much as 15%. broker with wide industry expertise and strong carrier relationships will help develop comprehensive ERM There are positive signs. Companies diligent with risk programs and make enterprises far more insurable, safe management will have only slight rate increases or and resilient. declines for commercial property coverage. General liability coverage rates have moderated and should rise only 5% to 10% for 2025 renewals. Rates will rise slightly 10. PropertyCasualty 360, “U.S. logs 19 billion-dollar climate disasters so far in 2024,” September 10, 2024. or decline for stock throughput coverage, as more 11. AP, “Helene and Milton are both likely to be $50 billion disasters, underwriters have entered the market. joining ranks of most costly storms,” October 16, 2024. 5

Preparedness Risk management strategies will help businesses stay prepared to deal with the worst. 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 — 60% of food and beverage businesses use technology to help track and 12 — it has brought up new issues manage inventory for which businesses need to prepare. And artificial intelligence (AI) to increase efÏciency13 is rife with both opportunity and risk. Food recalls are another area that represents an ongoing double risk. Not only does it affect the bottom line, but it With automated systems that run production lines, mix also imperils a food manufacturer’s reputation. Between ingredients and assure quality control, a breakdown 2020 and 2023, the number of FDA and USDA food recalls can lead to shutdowns, tainted output and subpar rose 20%, and 2024 is likely to match or exceed the 547 products making it to consumers. In addition, much of recalls in 2023. the automation in food and beverage manufacturing runs on legacy operating systems, putting them particularly at Nearly 40% of recalls are due to allergen contamination, risk. Reducing that risk requires strict maintenance and while bacterial contamination accounts for more than 16 Although automation can reduce the risk of recalls, upgrading operating systems when necessary. 20%. it cannot remove it entirely — organizations need strong The agribusiness industry is also vulnerable to cybercrime, product oversight that include audits to minimize the risk with 167 ransomware attacks in 2023, with a similar and a food recall plan when it does happen. 14 And the industry's automation number trending for 2024. is often vulnerable to sabotage. Agribusinesses can combat cybercrime through multifactor authentication and 12. Grassi, “Food & Beverage Manufacturers and Distributors Drive endpoint detection and response. Educating employees Profits Through Technology & Automation,” June 6, 2024. about how to recognize phishing and spoofing attacks is 13. ForestNet, “Artificial Intelligence (AI) is Already at Work in the Forest Industry,” April 25, 2024. essential. 14. The Record, “Food and agriculture sector hit with more than 160 ransomware attacks last year,” April 16, 2024. Supply chains are still fragile, with potential problems 15. The Food Institute, “5 Supply Chain Concerns to Watch in Late 15 2024,” August 2, 2024. coming not only from political unrest and shipping issues but also from severe weather. Agribusinesses can take 16. TraceOne, “States Most Impacted by Food Recalls in Recent advantage of CAT modeling to develop plans in case their Years,” July 29, 2024. supply chains are interrupted. 6

Navigating Your Next Steps Navigating Your Next Steps HUB construction insurance, risk management and employee benefits HUB agribusiness industry insurance, risk management and employee benefits specialists will work with you to develop a tailored strategy that will protect specialists will work with you to develop a tailored strategy to protect your the bottom line, support your workforce and build resiliency for 2025. Here bottom line, support the vitality of your workforce and build resiliency for are some initial considerations: 2025. Here are some initial considerations: Making risk management a pillar of your organization’s culture Risks in agribusiness have increased — and so have insurance can help identify exposures and develop response plans in case Develop a premiums. Consider taking a higher deductible on some of any type of incident, whether that is a weather-related event, Thoughtfully coverages, which reduces premiums and improves experience 1 comprehensive a threat of physical safety or a cyberattack. Make sure your 1 lean into risk. rating, or think about alternative risk transfer vehicles to lower risk plan. broker understands how to approach risk and can identify gaps costs. Ask your broker what kind of insurance strategy meets in insurance that could disrupt your daily operations. your risk profile and budget. To compete for a shrinking pool of skilled labor, personalized benefits Create a Employees expect you to support their health, safety and wellbeing. Increase based on HUB Workforce Persona Analysis and data analytics can personalized A benefits strategy based on personalization and fostering quality engagement help your company differentiate itself from the competition. Creating 2 benefits employee experiences (QEX) will boost engagement, recruiting and 2 through a quality employee experience (QEX) will boost engagement, improve strategy. retention and lower risk. benefits. recruitment and retention and promote worker wellbeing Remain Safety is already the focal point of your operation, but with Understand the root cause of your large losses and explain to focused on an influx of new and less-experienced workers, injury risks 3 Understand your carriers what you’re doing to prevent future losses. Develop a 3 workplace increase. Work with a risk professional to review your safety loss trends. strategy with HUB to determine the best time and frequency safety. program at least annually and address any issues. to review alternative markets. Stay in contact with your broker and let them know about Let your broker know what changes you’ve made to the business, so Be transparent changes to the business to eliminate surprises at renewal. Be transparent there are no surprises at renewal. Review exposures and insurance with your Review exposures and insurance needs at least 90 days prior 4 with your needs at least 90 days prior to policy renewal, so your broker can 4 broker. to policy renewal to allow your broker to find the optimal broker. identify the best options. coverages for your organization. 7 7

Agribusiness Rate Guide — U.S. HUB International’s rate guidance comprises an analysis of proprietary national survey data and interviews with HUB commercial insurance brokers and risk services consultants who specialize in the Agribusiness industry. On average, rates for middle- to upper-middle-market companies are experiencing rate increases for nearly all coverages as carriers need additional premium to support increased losses and expenses. Below are projections of rate increases that we anticipate in 2025. It’s important to discuss your business’ exposure with your insurance broker and understand what to expect well in advance of your next renewal. Coverage 2025 Agribusiness Insights Rate Guide Loss trends are increasing because of distracted driving and social inflation. Rate increases persist to counterbalance rising costs — labor, vehicle replacement (new), and technology-enabled Commercial Auto +5% to 15% replacement parts. Some carriers may offer more attractive terms in a multiline primary casualty program that includes workers' comp. Carriers are scrutinizing exposures specific to coverage for hired and non-owned auto, especially for accounts with claims activity. Property-casualty insurance is expected to be profitable, so the General Liability +5% to 10% overall trend in GL is stable. Carrier positions vary, and results may be different where warranted by loss experience or program design, but most clients will see modest rate increases. Workers Workers’ compensation remains highly profitable, but workplace Compensation -3% to +3% violence and classification of workers as either employees or independent contractors are possible factors for rate changes. Although rates are moderating for most clients, carriers continue to feel pressure and are reducing limits offered at renewal, Umbrella & Excess Flat to +10% necessitating that some clients seek additional carriers to secure Liability the same level of coverage. This is increasing the overall insurance spend on excess liability, especially as primary limits are also being reduced, thereby pushing more risk into the excess layers. Package +5% to 10% Insurance packages tend to be more stable because of the bigger pot of premium, with one carrier offsetting losses on any one line. Results reflect market recovery and depend heavily on account metrics (occupancy, business class, loss control, catastrophic exposure, claims history, etc.). While property premiums have stabilized, more carriers are increasing deductibles to $100,000 to $250,000 per occurrence offset losses. Commercial Property -10% to +5% Expect to see fewer carriers in the layer (i.e., more deployed capacity per layer) and more capacity lower in the tower which drives down the expense. For dairy risks, $25M is the average cap on loss limits, requiring insureds to build towers to secure adequate coverage. 8

Agribusiness Rate Guide — U.S. Coverage 2025 Agribusiness Insights Rate Guide Capacity between carriers for D&O placements remains strong. D&O -10% to +5% Underwriters are aggressively cutting premiums, giving automatic renewals and awarding two-year policies to maintain business. Premiums for cyber liability insurance are expected to continue to fall. Breaches and outages of significant service providers (i.e., Cyber -10% to Flat breaches at Change Healthcare and Crowdstrike) haven’t led to rate hikes yet but may point to harder market conditions in the first half of 2025. The marketplace for Ocean Marine, Cargo, Inland Marine and Stock Throughput has softened and more capacity is available every day. Stock Throughput -10% to +5% Controls and account makeup really effect the structure of deals and therefore pricing and limits. Expect to see fewer carriers in the layer (i.e., more deployed capacity per layer) and more capacity lower in the tower which drives down the expense. Crop premiums are determined by current and future commodity Crop Flat to +10% prices. The continuation of a limited supply chain and other factors will result in rising rates for corn, wheat and soybeans during the 2025 harvest. 9

Agribusiness Businesses — U.S. Coverage Insights Due to the limited number of carriers, capacity is being reserved for best-in-class risks. While state-of-the-art technology is paving Food & Beverage the way for future advancements, it can also cause production delays if issues arise. It’s important to discuss business interruption coverage with your broker to ensure there are no gaps. Underwriters remain focused on proper valuations, driving increased costs for some insurance programs. Severe convective Farm & Ranch storms and wildfire continue to be significant underwriting concerns — be prepared for decreased capacity and increased deductibles per location. The wood products property insurance market in the U.S. has stabilized for most classes of business with flat renewal or slight reductions. Expect higher rates for those in catastrophic prone areas, even clean accounts. Locations in wildfire prone area continue to experience tough property rate increases and, in some cases, non-renewals due to local wildfire activity. Forest & Timber The wood products casualty insurance renewal rates have also stabilized for most classes of business except for auto, as most niche insurers experienced profitability issues in 2024. In addition, locations in wildfire areas face difÏculty finding options for “Loggers Broad-Form coverage” in general liability policies. The excess liability market continues to be careful when deploying capacity with high majority of insurers providing $5M to $10M limits. NOTE: Rate is typically defined as the amount of money necessary to cover losses and expenses while providing an insurance company with a profit for a unit of exposure. Exposure refers to a business’ or individual’s susceptibility to various daily risks. Carriers evaluate the level of risk an insured faces in calculating insurance premiums. 10

HUB Agribusiness When you partner with us, you’re at the center 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 specialist. $1.5B in commercial insurance premium brokered by HUB 84,000 insurance policies managed 38,800 agribusiness clients Stay up to date Subscribe to receive risk and insurance insights and event invitations throughout 2025. Subscribe hubinternational.com