Dont understand Canadian Crop Insurance

[malleefarmer]

Here in australia we can insure against fire and hail that is all and it about 1.5% of crop value.

If crop fails or doesnt yeild as expected,prices collapse tough titties the farmer wears the cost.If it to dry to seed and crop doesnt get planted again bad luck.

Reading posts from last week it seems you can insure against a range of problems plus any acres you dont seed you get paid a amount as well.
What is the premium for such a luxury and is it compulsary.

I know this may cause a stir but seems you guys will never miss out wether its wet dry burnt hailed or other wise.

Id like something like it here in australia

[riders2010]

If you have had bad weather and or poorer years of yield you get punished big time. This year some guys paying 28 bucks an acre for 160 bucks an acre coverage, yet other guys paying 12 bucks for over 300 an acre coverage.

For 160 bucks you are paying 2.40 an acre but not covered against many things or are those the most prevalant losses for you guys?

Do they take your yield history there or do you buy a certain dollar value?

[riders2010]

Forgot to mention we can insure for the following things that are covered under one package, you cannot choose which things, wind, frost, hail, drought, too wet, crop quality losses, accidental fire, hurricane, tornado.

Our coverage is based upon 10 years of averaging your bushels produced per year. Bad part about that is areas like us that have had 4 wipeouts in last 6 years those poor yields hit our average hard for a long time, plus if you claim you get dinged premium surcharges. If your country goes for expansion do not go to this kind of formula, unless disaster years are dropped out of the equation. Don't suppose you get the Western Producer but good article by farmer pissed at how his average was arrived at and how he was treated.

For example if you normally grow 40 bushelsacre per year but have had 4 wipeouts your average is 24 bushel coverage and you can only insure 80% of that or about 19 bushels of what your farm on a average year can and needs to produce.

The price is an estimate taken by crop insurance of forecasted prices, or variable market price or a contracted price for certain crops.

You are only guaranteed the bushel part so you have to be below the bushel guarantee to have the price applied to the loss.

[malleefarmer]

i put in expected crop yields to insurance company and a expected price,which gives dollars per acre then premium is basically 1% of that figure. If no fire or hail dead money, if crop is over insured ie crop doenst yield to expectations and you have hail storm your over insured as they pay out on the low yield and vice versa if crop yields better that expected they still only pay out on agreed yield, so companys win in big years.

Or you can insure on your delivered tonnes and price. But many rort that system.

[malleefarmer]

ok i understand better now its actually quite a hefty premium and some years you will not claim obviously.

Can you elaborate on the payment to non planted acres payment?

And is this a govt initiative or private insurance companies run it?

[charliep]

Crop production insurance is a government program with the farmer paying 40 % of premiums and the remaining 60 % covered by the federal government. Private insurance for specified perils does exist (hail, lack moisture, excess moisture, temperature, growing season days, etc) but are relatively new.

Should note there are differences in the programs between provinces.

A description of the Alberta program is below. Will leave others to comment on specifics around things like unseeded area benefit etc.

[URL="http://www.afsc.ca/doc.aspx?id=4489"]alberta production insurance[/URL]

[Lifer]

Why does the federal government subsidize crop insurance?

[charliep]

Actually need to correct myself. The provinces also fund crop insurance I think under a 60 % (federal government) and province (40 %).

A good question as to why government involvement in crop production insurance. Has been a long history of it in Canada. There are private sector products (eg. hail insurance) and are showing the beginning of weather risk products. Private sector products around yield and grade have not been offered.

[riders2010]

Just to clarify a bit the 28 dollars an acre that supposedly is 40% of the total cost, in other words that is what guys actually are out of pocket. The gov part is 42 bucks or a total of 70 bucks an acre for 160 dollar coverage.

As you can see if you go to the alberta, saskatchewan, manitoba insurance sites you will see a whole mess of numbers crunched, deadlines this, that, everything else. Massive cost to run not to mention best wages and pension in the country for workers there and for areas like ours a big premium for next to nothing, once you have disasters close together particularly in years occurring.

The unseeded part has it's premium included in the total package of premiums. There are deductions based upon how many acres that you normally seed and insure that effect your payout.

In sask. the province is divided into geographical risk areas, each risk area has a designated time limit so to speak as to how late you can seed certain crops before crop insurance considers it too late to seed without normally suffering loss due to frost in fall. For example some places 5 june is last day to seed argentine canola. So if the ground is too wet to seed canola up to the 5th of june you are intitled to the unseeded benefit minus your seeding acreage intensity.

the current crap insurance system distorts the market place because since the price of canola has gone up coverage for it has gone up. So guys that normally don't grow the crop are which could cause a major shift in acres that normally wouldn't occur. Also some guys just gonna muck it in to collect higher coverage, guys with lower coverage screwed either way. The way the program is set up it not only helps those that need it most least, it punishes them further because premiums and coverage are ridiculous.

Just curious would you buy insurance for 28 an acre for 160 coverage?

So for your insurance does your premium rate ever change due to years you collected? And you can pick what ever level of bushel coverage you want?

Basically I gather that your insurance covers you for the actual crop that is in the field ie if there is 50 bushel wheat that is what is covered? Is it per field or per farm total acres of each crop?

I think we should scrap crap insurance here, go to a weather based insurance, the money saved on all this administration would cover most of the premium, simple no hastle. Then if they wanted keep agri-instability but use formula where disaster years do not hurt your margin.

[Lifer]

Rider

Are you saying one of the reasons for government subsidy of crop insurance is to create jobs to administer the program?

[riders2010]

For areas where the program in not doing what it is supposed to, the jobs for those people working there become the only positive for the area. All gov. or private business create jobs. Their effectiveness determines whether those jobs are justified or not.
We have some farms in other areas gonna get big bonuses for last years loss and this year also, while others get nothing at all, something is wrong.

What is the ultimate goal of these programs? employment or what any insurance is supposed to provide?

I see that former political hacks from liberals and sask party conservatives are using margins as criteria if they will buy your land and rent it back using investment companies. These are the same people some of which say they don't believe in government programs? So the expansion of family farm takeovers is being funded by the gov of Canada for the rich connected political hacks in some ways. Do you think that is right?

[stubblejumper]

mallee google sask crop insurance to get info on saskatchewan's program. one of the biggest problems is producers do not take the time to see how the programs work. rider for instance doesn't have a clue how the program works. it is more of a stabilization program than an insurance program.