Cattle Price Insurance Program (CPIP)

[charliep]

Alberta started offering a price insurance program for finished cattle yesterday. a similar product for feeders is being developed.

[URL="http://alberta.ca/acn/200909/268469FB3F2C4-A66F-55E6-D73762A4C118F04F.html"]CPIP[/URL]

An interesting concept that could be extended to crops.

[kato]

Also an interesting concept that should have been brought in by the Feds and applied to all provinces. Ya gotta love that old level playing field, eh?

The Manitoba government has brought in a price insurance program that consists of a kick in the bum, and the good wishes not to let the door hit us on that same bum as we walk out the door.

End of rant.

On the bright side, if the Alberta feedlots can manage risk better, maybe they'll be more willing to buy feeders from us poor slobs in Manitoba. ;-)

[grassfarmer]

Personally I'm underwhelmed by this development - never have been a big fan of insurance preferring to take my chances with the robber wearing a mask than the one wearing an insurance brokers pin-stripe suit. What does this really amount to anyway? the chance to lock in the currently prevailing crappy commodity prices? I'll be interested to see how it is expanded to feeder cattle - my guess is that it will not be workable on quantities smaller than load lots of same weight, same sex animals and how many producers in AB can fill those criteria?
I would much rather see the Provincial and Federal Governments tackle the underlying problems of the sector and then there wouldn't be the need for this kind of program. A bonus would be this could be done with the use of political will very little, if any, financial resources. Surely that alone should be making politicians think given current budgetary concerns?
One question I have on this Charlie - is this Government subsidised insurance or is it offered on a "for profit" basis?
I'm also not overly happy that AFSC are involved - in my experience that dooms the program to be poorly run, behind schedule and riddled with mistakes.

[perfecho]

A guaranteed price on "finished" cattle......how many grass roots producers finish cattle? Who contols (owns/contracts) most of the fed animals in Alberta?
Who gets the premium for 'age verified" beef?
Am I missing someting?

[perfecho]

After visiting the website:
The "spin" meant for consumers from the AB goverment website......
"The Cattle Price Insurance Program is designed to provide Alberta cattle producers..... " (sounds wonderful)

The reality from the AFSC website.....
"Heifers and steers that are at least 500 lbs. when the policy is purchased, are intended for slaughter by the Insured, and must reasonably be expected to yield Grade A or better at the time of slaughter." (Counts me out...but the voting public doesn't know most producers don't slaughter their own cattle)
Could someone enlighten me as to the percentage of cattle that will be "slaughtered" by anyone other than Cargill and Nilsson's? 90%?
So, lets say Cargill's feedlot division buys inusrance, but takes a loss when selling to Cargill's processing..........
Someone please tell me what I am missing here?

[smcgrath76]

My understanding is that a product is
coming for the cow/calf level but that
it is quite complicated and will take
much more development time. In the
meantime CAIS will protect us.
I think improving feedlot risk
management could be beneficial, but this
is a sector that already has hedging
tools and contracts available to it to
some degree.
I suspect price insurance for the
cow/calf level will have some hefty
premiums and complex paperwork, but I
hope I am proven wrong. I wonder if a
derivative of the futures could be made
to work, although the time frame could
be too long on the C/C side.

[kato]

Ahhh yes......... I forgot about the fact that CAIS will protect us! Silly me!

[blackjack]

If the govt can insure I get 1200 dollars for my 9 wt grass yearlings...I'm in

[smcgrath76]

even if it costs you $1300?

[grassfarmer]

I see I'm not the only cynical one, lol. Get the terminology right though - its AgriStability that is to be our savior - not CAIS!

[blackjack]

There is the problem with insurance programs smcgrath...where would the fair ballpark figure for production costs be set at for us cow/calf operators whether we sell them as calves or background them for grass.Just been following the TEAM this morning and once the prices are set for the day there is little variation.Take this price cause this is what we're paying.So that would be my worry the level of protection would at a point where the program would be useless to me.

[jensend]

i'm sure the packers can get this structured to their advantage. another transfer of equity.

[smcgrath76]

Sorry GF. The acronymns have been
changing so fast of late. Just in time
for another election, and rebranding of
what the bureaucracy wants to do anyway.
I wonder about the premiums as well, and
am pretty sure they can't insure based
on cost of production as it would in all likelihood be countervailable.
I think any insurance program at the CC
level would likely result in declines in
calf prices (anyone recall the set aside
program?). I think ideas like the NWCBP
program at the CC level may hold more
promise for like minded producers.

[PureCountry]

We have another band-aid for a wound that needs intense medical attention. Wow, I'm overflowing with joy.

I just can't figure this crap out. We have an Ag Minister who has shown us he's not afraid to rock the boat, but now he seems to be trudging ahead with his ALMA Strategy whether it kills us all or not. So much potential, so much money and effort being spent, and the cow-calf landscape will come out looking the same or worse than it did pre-Groeneveld.

Makes me more and more confident in our decision to diversify, and put less faith in the "You gotta produce what the market wants" cow-calf fairy tale.

[burnt]

I went to FCC today to discuss a loan and we agreed that there isn't much use on counting on any support programs for bankable income . . . . wow.