Crop Insurance to help all farmers

[Steve]

dfarms11

You are missing the point and trying to call crop insurance--- Income insurance.
You and the Kernel are proposing a guarantied Income insurance plan that can be milked.

[Steve]

Steve, I think you're right on that one and every time payouts are made the assistance gets capitalized into land prices because the more efficient farms just have that much more money for expansion to test the limits of the economies of scale.

[Steve]

Steve: I don't think dfarm11 and I are proposing to milk the system. Lets go through it slowly so even you and jend can understand this one. Governments don't subsidize farms and corportations, they subsdize jobs and consumers. As and industry we pay a huge amount of taxes, 40% on fuel,fertilizer, chemical and machinery. Employees have unemployment insurance which is self suffient and corporations have publicly traded shares and other markets to raise capital and protect their investment.
Now what we propose is a crop insurance that will protect to a more realistic value of input cost.
I believe that the governments are putting a very small amount into are present crop insurance. The acre coverage is some were between $60 and $100. I BELIEVE THIS IS FARMER PREMIUM SUSTAINABLE. If not sustainable then half of Western Canada better give up grain and oilseed farming today and you can decide which half.
What we are saying let us pay a premium to cover our direct input cost (fert. chem and seed), say up to $100 per acre but you must produce receipts for this coverage. Added this coverage to our present program.
This insurance would help good managers through bad times. I don't think it going to help the poor manager who doesn't help himself in being a progressive farmer.
My farm has been grossing between $225 and $350 per acre for the last few years I can stand a bad year but I have to young farmers farming with me that need a premium paid protection or they could be done in one bad year. My program is not milking the system in my estimation but it will make a sustainable industry for young farmers.

Otherwise get a job in the service industry, can everybody eat that stuff?

The Kernel

[Steve]

Kernel then the answer is simple. Set up revenue insurance and make the premiums sustain the program. If you want subsidized premiums (which we already have) then you are looking for a bigger handout. I don't necessarily disagree with that but let's be clear on the objective and the mechanics.

[Steve]

Kernel

I understand your proposed crop insurance plan ( guarantied income )but maybe you should slow down and read my proposed plan, because it accommodates most of your ideas with more stopping blocks for fruad.

I am having a problem with my computer and as soon as I fix it (*%#(^$@9%^ I will write more.

Regards Steve.

[Steve]

Sorry boys there is no subsidy in our crop insurance now according the the figures I have seen since 1990. The government does pay for the administration of the program and farmer premiums are making the pay outs and as of right now are operating at a huge surplus. I think we can afford the administration also. Where's the subsidity boys. I think the government has all of you believing that they are making a huge hand out to farmers through crop insurance. The crop insurance meetings last winter stated that premiums were covering the payouts and a surplus of 100's of million of dollars was being created. Farmers at the meeting were asking for their moeny back.

Don't tell me I'am asking for a guaranteed income I asking for a guaranteed cover your ass cost insurance which can be premium sustainable. This is a good mangement program not whinning for a hand out.

You boys check some figures at crop insurance and see what you think.


The Kernel

[Steve]

Sorry Kernel but when I looked at my crop insurance summaries for the '90's the fed and Alberta governments were subsidizing my crop insurance premiums. In fact most years if I took the early pay discount they were paying more than me. What you're asking for is so close to GRIP there isn't a lot of difference and that was an expensive (in terms of premiums) and unsustainable program. It was also ineffective because it used the usual Canadian moving average concept and this becomes useless after three bad years because then you need more help, not less. If you want help you're going to have to tie it to the cost of production (as you say) but forget about doing it through insurance because it's an oxymoron to assume that as your revenues drop you will have money to spend on premiums that will have to go up as your revenues continue to drop. This is the Catch-22 that has plagued all Canadian insurance programs from the start. By the time you really need it the coverage has dropped to where it isn't enough. I have been carrying crop insurance for about 30 years and it is only good for disasters as far as production go. Revenue and profit insurance are non-starters economically and you would be right back to where only the big guys would benefit and your young starting farmers couldn't afford a premium that would carry the program.

[dfarms11]

One small question you guys, what is your opinion of todays crop ins program? do you think its worthwhile?

[Steve]

Kernel



One basic thing that your proposed payout is missing is long term stability, because band aid quick fix has proven to be a disaster in the past.

Any insurance has to have a surplus in order to keep the premiums at realistic levels.

I know what you will say, we made this surplus and we need it now to survive and my reply, farmers say that every year and they are still farming.

Just like you said on another thread slow down the sky is not falling down yet, buy rubber boots because it will rain.

So let’s not clean the pot out for all the wrong reasons, by opening lope holes so some unscrupulous farmers can milk the system.

That is the reason I proposed the two parts system, because in the first part you insure what you have and get paid if you lose it. ( that is like car insurance and there is less room for fraud if there is a cap on input costs )

The second part is not any different than hail insurance, because you have the option to insure up to the average yield that your land can produce. Also partly closes the door on fraud.

Maybe we should have a third option and can insure the price of different grains or use
the Nesa program.

That’s the reason I suggested all these options because we are all individuals and want to manage our own farms.

All these options should have their own pot of money to operate on, and that would govern the premium rate for individual farmers.

Today’s farmers are talking about their knowledge on farm management skills now lets practice what you preach, because farming is a business. Most young farmers use all their money in the good years to expand and don’t have a plan how to pay their bills if the income drops in the poor years. ( where is this so called good management. )

There are too many people in this world should get their head out of the sand and realize its not what you want to do but can afford to do.

I know this is a repeat of what was said before but it may clarify some parts.

Regards Steve

[Steve]

Jend: I believe your summaries are stating that if the province had a complete crop failer that the governments would be paying such and such for a premium. But we in Alberta or anyother province has not had a complete crop failer.
Therefore farmer premiums have been creating the surpluis not government premiums. This is the information that I have.

We never had a program where input cost receipts had to be produced to collect insurance. The biggest reason the grip program failed was because farmers milked it big time and it was done Western Canada wide instead of regionally. Grip was also calculated on gross income and not on proven direct input cost insurrance only.

You keep stating that I want revenue or income insurance. Far from it I just want to insure my cost.

Dfarm11: the present crop insurance program is basicly useless, I take it for the Hail rider. I ask the crop insurance meeting last winter if the hail premiums covered the hail payouts or did they have to take premium money from the crop insurance to meet the payment and the answer was no that it paid for itself. My next question was why done we raise the coverage on hail insurance than. Charlie Mayor said they would consider that.

Jend: You have been fairly negative on any proposals. Do you have one that we might consider or should everyone just fend for him or herself. (notice the gender consideration here 'A').

My proposal is just a idea I had but maybe I should just stick to toiling in the soil. The Kernel

[Steve]

Kernel, I went to my Alberta crop insurance bills and if you take out yours for any year I looked at it shows that in the early nineties and the government diddled it a bit when they gave us a premium reduction of 30% ( and reduced the coverage as well) the farmer paid from 1/3 to 1/2 the total premium to provide the coverage and the two governments split the rest of the premium.It might say Net All Risk and Hail Endorsement Premium and give you payable but then there are two lines which tell you what the Feds and Ralph kicked in to reflect the true cost of the policy. It varied from year to year but in 1998 the farmer paid 43% of the total premium cost. In the early nineties we paid 1/3.

For GRIP we didn't have to produce receipts but we did have some choices as far as coverage levels went which is less cumbersome than producing receipts. Of course farmers milked GRIP. Every program gets milked whether its farmers or anybody else. In fifty years you learn farmers are no more noble than anybody else. I say that you want revenue insurance because the only way to cover costs is to insure your revenues are high enough to cover your expenses.

Am I negative? On stuff like this I am but after thirty years of farming where the production risk and costs are both high we took our capital out of Alberta and moved where it could wqork harder for us. I have never worked so hard in my life or had so much fun either. Going through this whole experience and having travelled somewhat tells me that Canada doesn't want to and probably can't do much for Western farmers so I'm on my own. That's a tough proposition for anybody but where I used to farm in high land prices and drought it made it doubly tough so we decided to give ourselves a different option. So yes I am negative on programs (I farmed through thirty years of them and only the dairy and poultry boys are guaranteed a good living and a profit at my expense and they could then afford to buy up the land) because unless something is self-sustaining it is at risk. When I read the other threads about land use, etc. I agree with a lot that is said but I know if it comes to paying for something the squirming starts. I guess that I believe I do have to fend for myself and if any of my kids want to farm they will have to realize how things work (global markets, richer governments, different attitudes in other countries) and decide if it is really anything they want to do. The problems of Western Caanadian farming are not going to disappear; the Europeans don't want to reduce farm support and could care less what Canada thinks. I said elsewhere that Lyle Vanclief is a gelding and he is politically, both domestically and in world context. The Americans haveno intention of trading fairly and demonstrate it regularly. Canadian grain farmers really don't have a voice in trade discussions because we're too small and the rest of the country doesn't swing much weight outside our borders either. Having said all that, I love farming and will continue to give it my best shot for hopefully another twenty years. It got a lot easier to get enthused when my wife and I decided to take control of our own situation and lay out a plan because a realistic plan almost always works.

[Steve]

Kernel, I went to my Alberta crop insurance bills and if you take out yours for any year I looked at it shows that in the early nineties and the government diddled it a bit when they gave us a premium reduction of 30% ( and reduced the coverage as well) the farmer paid from 1/3 to 1/2 the total premium to provide the coverage and the two governments split the rest of the premium.It might say Net All Risk and Hail Endorsement Premium and give you payable but then there are two lines which tell you what the Feds and Ralph kicked in to reflect the true cost of the policy. It varied from year to year but in 1998 the farmer paid 43% of the total premium cost. In the early nineties we paid 1/3.

For GRIP we didn't have to produce receipts but we did have some choices as far as coverage levels went which is less cumbersome than producing receipts. Of course farmers milked GRIP. Every program gets milked whether its farmers or anybody else. In fifty years you learn farmers are no more noble than anybody else. I say that you want revenue insurance because the only way to cover costs is to insure your revenues are high enough to cover your expenses.

Am I negative? On stuff like this I am but after thirty years of farming where the production risk and costs are both high we took our capital out of Alberta and moved where it could wqork harder for us. I have never worked so hard in my life or had so much fun either. Going through this whole experience and having travelled somewhat tells me that Canada doesn't want to and probably can't do much for Western farmers so I'm on my own. That's a tough proposition for anybody but where I used to farm in high land prices and drought it made it doubly tough so we decided to give ourselves a different option. So yes I am negative on programs (I farmed through thirty years of them and only the dairy and poultry boys are guaranteed a good living and a profit at my expense and they could then afford to buy up the land) because unless something is self-sustaining it is at risk. When I read the other threads about land use, etc. I agree with a lot that is said but I know if it comes to paying for something the squirming starts. I guess that I believe I do have to fend for myself and if any of my kids want to farm they will have to realize how things work (global markets, richer governments, different attitudes in other countries) and decide if it is really anything they want to do. The problems of Western Caanadian farming are not going to disappear; the Europeans don't want to reduce farm support and could care less what Canada thinks. I said elsewhere that Lyle Vanclief is a gelding and he is politically, both domestically and in world context. The Americans haveno intention of trading fairly and demonstrate it regularly. Canadian grain farmers really don't have a voice in trade discussions because we're too small and the rest of the country doesn't swing much weight outside our borders either. Having said all that, I love farming and will continue to give it my best shot for hopefully another twenty years. It got a lot easier to get enthused when my wife and I decided to take control of our own situation and lay out a plan because a realistic plan almost always works.

[Steve]

Jend: Your right, the last part of your last comment is very true. I also have farmed for 30 years have collect hail insurance a few times but over all it would not of made any different in what has happened to me as a farmer.

My attempt at creating a better crop insurance program will fall on deaf ears and light no lights in the political brains of this country.

What discourages me is the continual whinng a complaining by some farmers and farm groups.. This attitude has created a horrible image in our industry. You hear it from everyone in our society about our unprofessional attitudes.

I'am normally a fun loving guy and always try to find something humorous about any situation. I have sworn to keep a positive non whinning disposition about my challenges in my choosen profession.

But this website will sure keep you running for the anti-depressants bottle.

The kernel ( I give up on trying to help the disadvantaged).

[Steve]

Kernel:
Your right about the anti-depressants, I stay out of the coffee shops. The best remedy for depression is a sharp pencil. There are things that work but you have to find them and have to be willing to change the way things are done. The other thing to remember is that even though cropped acres around the world have been expanding, demand is also expanding and there hasn't been any significant crop failures in the world for a few years. Two years of short crops in S. America would kill a lot of market bears. There won't be a replay of the 70's even though many producers are waiting for a return to the good old days. Marketing is the key and there are and will continue to be opportunities. As charliep said at a management seminar a couple of years ago, "If the rate of change outside your enterprise is greater than the rate of change within your enterprise you're likely falling behind."

[Steve]

Jend: Hey farmings great in my part of the country lets give up on whats wrong with it and talk about what is good about it. Yields were good and prices are reasonable. In thirty years I have turned $20,000 into $2 million.
Two sons are farming with me and both of them have assests around the 1/2 million dollars already and their in their early thirties. I have no complaints about my lot in live. And Hey my daddy only gave me a chance to go farming I paid for everythink else including land at market value. My boys are doing the samething and thats the way they want to do it to. Pride and your own work makes the pencil sharper.
Now marketing: My idea of selling commodities as a producer are. Sell very little unless you have the product in the bin. Done sell by way of options(calls and puts) hedges, bases contracts or on 90 day storage tickets. All of the above insures a supply of grain for the grain company therefore keeping the market satisfied as to price. Sell only with a grain pricing orders which stipulate the price you want plus the time you will deliver. If more farmers would price this way the grain companies would bid higher to insure a supply of grain.

I have tried most of the above marketing forms and find the GPO is my best marketing choice to get close to the price I want keeping in mind a reality check with the prices on the commodities market. I may never hit the top of the market but I come away satisfied with the price that I obtained. You will be susprised how often you come close to the top of the market with out exposing any risk. Don't let grain companies tie you in to their price and delivery date, tell them your price and when you want to deliver.

The kernel