Alberta Participants - Thoughts, Questions, Concerns AFSC Spring Price Endorsement

[charliep]

Albertans - Will you take SPE?

[Ooofty]

Hi Charlie, I am not sure if I will take it. It worked out good last year but there is no way that will repeat again

[katoe]

Our farm is taking it on acouple crops

[lnewman]

Wheat and barley don't pencil at all. Canola I am on
the fence . $9.06 price guarantee. Canola has to get
to $8.16 approx. for it to trigger. My premium is $9/
acre for the SPE. So with crop insurance and hail rider
my premium is close to $40 /acre.

[poorboy]

I think it is a great tool for price risk. With the Cdn $$$ so strong and what appears to be an excess of grains in the world, it would appear that the downside risk in commodities is high.

Farmers being eternal optomists, we all think that prices are going up, but if we forget the real high prices of the last few years, the prices offered by the SPE are not too bad.

Take lentils for example. You could contract say a 1/3 of your crop with full act of god for say 22 cents/lb and take the SPE for 22/lb and cover the other 2/3 of your production. That way you have your full crop priced, with upside potential on 2/3 of the crop and basically full act of god on the production side.

Could do the same with cwb wheat. Take the fpc with full act of god and the crop ins with spe and you have got full minimum price for your crop. In my area it will cost about $7-10/acre to do so. A 50 bus wheat crop would only have to drop 20c/bus to have cost $10/ac.

It is not a perfect hedge on crop prices, because if they do not drop in value by 10% there is no payout. I plan on taking it on my canola crop and locking in a good basis only contract for fall delivery. The SPE will be my price lockin for 70% of average crop and I do not plan to lock in the futures until I have the grain in the bin. It is usually easy to get out of a basis contract if you have a good basis locked in and you have a drought/hail/frost etc and don't have the grain.

I hate to pay the premium, but I will sleep better at night not worrying about pricing a crop that I have not harvested yet.

[poorboy]

lnewman,

Did you take off all of the deductions available when calculating your premium. Mine appeared very high also, but once you start to take the ductions (insure all crops/continuous coverage/size of farm/early pay/good claims discount/etc) it can make the $40/ac number much smaller.

It is still a huge number. Used to be that crop ins was a minor cost, not it can cost almost as much as fertilizer.

[jethro456]

The canola looks like it might be good protection and I will being using it on my flax acres

[dfarms11]

just to clarify, all the deductions you are elegilble for only come off of the production side NOT hail end or SPE. Just had this clarified by AFSC.