What you may not know about crop insurance
Crop insurance programs have some significant differences from one Prairie province to the next. Plus, there are a number of important details many producers don’t know about the programs.
You never really know an insurance program until you use it and since I farm in Saskatchewan that’s the program I’m most familiar with. While on a speaking tour in Alberta, I was surprised to find that a contract price option is not available to Alberta producers.
Contract price option
Many Saskatchewan farmers are probably unaware of it as well. On a selected number of crops, a producer who has a price locked in for some or all of their production can use that information to increase their insured price.
Last year, for example, I grew some high-erucic acid rapeseed. The Saskatchewan Crop Insurance insured price for IP canola/rapeseed was $11.22 a bushel. My flat pricing contract was for $14 a bushel. By providing a copy of that contract to crop insurance I was able to change my insured price to $14, greatly increasing my coverage and thereby taking some risk out of growing the crop.
In cases where you have only a portion of your production locked in, they will blend that information with their insured price to provide improved price coverage.
In the past, the contract price option has only been available on a few crops. It should be available on many more.
However, in Alberta there were only blank stares at meetings where I mentioned the contract price option. This is something Alberta growers should lobby for. It isn’t a big program change and it makes a lot of sense.
Earlier details in Manitoba
Meanwhile, I’m always envious of Manitoba where the crop insurance program details for the upcoming year are typically announced at Brandon’s Ag Days in January. In Saskatchewan, we usually have to wait until the first part of March.
The announcement always includes the insured price levels for the various crops. Saskatchewan uses a January estimate of crop prices for the upcoming year. Manitoba must use a December estimate to allow the earlier program announcement.
Test your knowledge
Here’s a quiz for you. Saskatchewan farmer John Doe grew a 50-bushel-per-acre crop of durum in 2016, but it was heavily damaged by fusarium. After quality factors were applied, John Doe’s durum yield for crop insurance purposes was factored down to just 10 bushels per acre. Which yield will be used in John Doe’s long-term average-yield calculation for future coverage – 50 or 10 bushels per acre?
I was surprised to learn that 50 would be considered John Doe’s yield for 2016. Yield averages always lag a year, so 2018 coverage will include 2016 yields for the first time. And that most recent year is weighted at 10 per cent in the long-term yield calculation.
Having crop insurance use 50 rather than 10 bushels per acre no doubt seems like a good deal for producers. However, I would argue that it sends an unfortunate signal. If your durum crop is regularly downgraded by fusarium or other factors, maybe you’re in an area that shouldn’t be growing durum and maybe that fact should be reflected in your long-term yield average.
Some bad policy
There is one commonality between the three crop insurance programs in Western Canada. As far as I know, none are being used as a tool to discourage bad canola rotations.
Provincial agriculture departments preach against seeding canola on canola stubble. It’s widely considered a ticking time bomb from a disease point of view. Meanwhile, crop insurance programs have no qualms about providing coverage with government-subsidized premiums even if a producer seeds canola on canola on canola year after year.
Crop insurance should not be encouraging unsustainable practices.
We should be debating these sorts of issues and requesting crop insurance changes that make sense. And we need to take the time to understand what the program can and can’t do for our farming operations.
Kevin Hursh is an agricultural consultant, journalist and farmer. He has been an
agricultural commentator for more than 30 years, serving as editor for Farm Credit Canada’s national bi‑monthly magazine AgriSuccess, and writing regular columns for Canada’s top agricultural publications. Kevin is a well-known speaker at agricultural conferences and conventions. Kevin and his wife Marlene own and operate a grain farm near Cabri in southwestern Saskatchewan, growing a wide array of crops.