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Understanding and Addressing Property Risks in Agricultural Processing Facilities

Agricultural processing facilities play a crucial role in ensuring that food is processed and packaged in a way that makes it safe for consumption. However, these facilities are not without their risks. Property risks, in particular, can be significant, and agricultural processing facilities need to take steps to mitigate these risks to ensure that they can continue operating efficiently and safely. In this blog post, we'll take a closer look at some of the most common property risks that agricultural processing facilities face and what can be done to mitigate them.

Collage of 4 agricultural processing accounts insured by Agribusiness Risk Underwriters

Fire Risk 🔥

One of the most significant property risks that agricultural processing facilities face is the risk of fire. These facilities often contain flammable and combustible materials such as grains, dust, and incendiary liquids, as defined by NFPA. Any one of these materials can easily ignite, causing a fire that can spread quickly. Fires in agricultural processing facilities can be devastating, causing significant damage to the property, loss of inventory, and, in some cases, injuries or fatalities.

For example, during daily cotton gin operations, cotton lint and waste material can accumulate and settle on various surfaces within the building, such as walls, roofs, furniture, fittings, and fixtures. This debris can also land on electrical machinery, floors, pneumatic pipes, suction pipes, and fans, which are rated as hazardous. These deposits have a high flammability and can not only potentially lead to a fire, but can also accelerate the spread of fires once ignited.

To mitigate the risk of fire, agricultural processing facilities should invest in fire suppression systems such as sprinklers, fire extinguishers, and fire alarms. They should also have a process for handling and storing flammable and combustible liquids.

The National Fire Protection Assication (NFPA) code 30 includes a system for categorizing liquids as being flammable or combustible. These classifications are used for determining the various fire protection requirements for the storage and use of flammable and combustible liquids referred to in the NFPA 30 codes and standards. The classification system is based primarily on the flash point of the liquid.

Hazard Classification for Flammable Liquids

Table of Hazard Classification for Flammable Liquids

Hazard Classification for Combustible Liquids

Table of Hazard Classifications for Combustible Liquids

Hazardous liquids don’t burn or explode by themselves. Heavier-than-air vapors from liquid evaporation often settle on the floor. These vapors can flow along the floor for long distances, ignite at some remote point and flash back. This is one reason why specially designed storage cabinets and rooms must be used for flammable liquids, such as paints, solvents and thinners.

According to the NFPA code 30, all flammable liquids up to 15 gallons must be stored in safety cans. Amounts from 15 to 60 gallons must be stored in a standard, flammable liquid storage cabinet that meet the specifications of the NFPA Code 30. Flammable liquid storage cabinets can be found in any safety equipment/supply store and must adhere to the following guidelines:

  • Do not store more than 60 gallons of flammable liquid per small containers in a flammable liquid storage cabinet.

  • Cabinets must be Underwriter Laboratory (UL) approved.

  • The cabinet top, doors, and sides must be made of 18 U.S. gauge sheet steel and double walled with tight joints.

  • The door must have a three point latch with a sill raised to at least 2 inches above the bottom of the cabinet to retain spilled liquids.

Facilities should also ensure that they have a formal emergency action plan (EAP) that adheres to NFPA 2800 & OSHA Standard 1910.38 to ensure all employees are prepared in case of an emergency.

Water Damage 💦

Another property risk that agricultural processing facilities face is the risk of water damage. This risk can arise from a number of sources, including floods, leaks, and burst pipes. Water damage can cause significant damage to the property and equipment, as well as potentially contaminate food products, leading to significant financial losses.

To reduce the risk of water damage, agricultural processing facilities should ensure that they have appropriate water management systems in place. This includes regular maintenance of pipes and equipment to prevent leaks, as well as installing flood protection measures such as sandbags or barriers.

Electrical Hazards and Failures ⚡️

Agricultural processing facilities utilize specialized equipment that require an adequate power supply and safe installation. Electrical accidents happen frequently; however, there are ways agribusinesses can reduce the occurrence of these accidents and protect personnel from the physical, financial, and statutory consequences.

The National Fire Protection Association (NFPA) Standard 70E provides a reference for facilities to meet the requirements of electrical workplace safety, while Recommended Practice 70B outlines the best practices for setting up and maintaining an Electrical Preventive Maintenance (EPM) program. Electrical inspections and testing are crucial components in maintaining an electrical safe workplace and should be performed regularly.

The most common warning signs of faulty electrics are the following:

  • Buzzing Noise – Anything from loose outlets to frayed wiring can cause electrical systems to give off a buzzing sound, which is a key sign that you need to contact an electrician. Electricity should always run smoothly and quietly, so if you notice any changes, its time to take action.

  • Electrical Shocks – This indicates that there is a problem with either the appliance you are plugging in or the mains outlet. To check which of the two is faulty, try plugging something different into the outlet. If you still feel a shock, then it is the outlet, and if not, it is the appliance.

  • Burning Smell – One of the initial signs of an electrical fire is a smell similar to burning plastic. This smell is an urgent hazard that should be seen to immediately.

  • Flickering Or Dimming Lights – Issues with the reliability of lights can be caused by faulty wiring on an overloaded circuit. However, if the light is flickering or dimming in only one room it is likely to be the light itself.

  • Frayed, Damaged Or Exposed Wiring – With age, wire covers can begin to deteriorate and often result in fraying. When wires become exposed, it is vital to resolve the issue as it becomes a fire and shock hazard.

Qualified, licensed electricians are obligated to follow a number of electrical standards to guarantee the safety and reliability of their work. Refer to local building codes, NFPA 70E or the National Electrical Code (NEC) to ensure electrical safety.

Structural Damage 🏚️

Agricultural processing facilities are typically large, complex structures that require ongoing maintenance and repair to keep them in good condition. Over time, wear and tear can lead to structural damage, which can compromise the safety of the facility and its employees.

These facilities should invest in regular inspections and maintenance to minimize the risk of water damage. This includes regular inspections of the roof, walls, and foundation, as well as ongoing repair and replacement of damaged or worn components.

Equipment Damage 🚜

Equipment used in agricultural processing facilities can be costly and essential to operations, and any damage can result in significant financial losses and downtime. Common causes of equipment damage include wear and tear, mechanical failures, and accidents.

To mitigate the risk of equipment damage, agricultural processing facilities should invest in maintenance and repair. This includes regular inspections, cleaning, lubrication of machinery, and replacement of worn or damaged parts.

OSHA (Occupational Safety and Health Administration) does not specify a set frequency for inspections or maintenance of agricultural processing machinery, however, OSHA does require employers to maintain their machinery in a safe condition and conduct regular inspections and maintenance to prevent accidents and injuries.

The frequency of inspections and maintenance may depend on various factors, including the type and age of the machinery, frequency of use, and manufacturer's recommendations. It is the employer's responsibility to establish a regular maintenance schedule and ensure that the machinery is inspected and maintained by qualified personnel.

It is also important to ensure that all employees are trained in equipment operation and safety protocols to reduce the risk of accidents and misuse. Facilities should also consider investing in backup equipment or contingency plans to minimize downtime in the event of equipment failure.

Security Risks 🔐

Finally, agricultural processing facilities also face security risks such as theft, vandalism, and sabotage. These risks can be particularly significant in rural areas, where facilities may be located far from law enforcement agencies.

To mitigate security risks, agricultural processing facilities should invest in appropriate security measures such as surveillance cameras, access control systems, and security personnel. Facilities should also ensure that all employees are trained on security protocols and that these protocols are regularly reviewed and updated.


Agricultural processing facilities play a vital role in ensuring that food is processed and packaged in a way that makes it safe for consumption. However, these facilities are not without their property risks. By taking proactive steps to mitigate these risks, agricultural processing facilities can ensure that they continue to operate safely and efficiently, minimizing the risk of financial losses and disruption to their operations.

Insurance is a crucial component of risk management for agricultural processing facilities. While risk mitigation measures can help reduce the likelihood and severity of property risks, accidents and incidents can still occur.

By investing in appropriate insurance coverage, agricultural processing facilities can have peace of mind that they are protected in the event of an incident or accident. Agricultural processing facilities should work closely with their insurance providers to ensure that they have adequate coverage for their specific needs and risk profile. These specific needs vary greatly depending on the type of agricultural processing facility which is why it’s important to find coverage from experts who understand the niche needs of each operation.

Agribusiness Risk Underwriters (ARU) specializes in providing coverage for “hard-to-place” farm and agribusiness property risks including agricultural processing facilities, cotton gins, grain elevators, livestock confinement, warehouses, commodity storage, and much more with Flex.

These “hard-to-place” accounts are typically large and complex structures that require deep capacity and niche expertise to insure. With $15M TIV limits (3 times the limits of most of our competitors), ARU provides the capacity agribusinesses desperately need. Schedule a call today to learn more about our coverages and see if your accounts qualify!


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