Variable price option

[sewen]

I sure wish the Alberta crop insurance would have set their variable price for wheat now instead of the end of July!

[TOM4CWB]

Sewen;

I understand AFSC has sent out more money to date than they did all together last year...

I see the "production insurance" side is turning out to be expensive in real disaster years...

Hopefully we can convince crop insurance people that coverage for costs on a prorate basis, like hail insurance, is a reasonble alternative.

I think next years coverage levels will be high, with high grain prices and the one year lag on production added to the average (this 2002 crop disaster won't affect averages till the 2004 crop)next years coverages should be quite good!


It is simply amazing why the CWB second guessed the market... the July PRO was really far low... it is obvious the Sept PRO was still playing catchup from July... almost makes you wonder, doesn't it? Instructions from the Feds???

[sewen]

It's making me wonder, with this Liberal gov't anything is possible and it wouldn't surprise me if they did do something along those lines!!

[charliep]

Just looking for follow up on crop insurance comments. Changes are being considered. An example is moving the variable price option setting back to October. This has implications for timing of payments (almost need to even more go to initial claim based on winter high price option) and a Nov./Dec. one for variable price portion (if this occurred).

Another factor is that in normal years, the fall is the lowest priced period of the year - when things are done on a set date, there is always the risk that things may not reflect the whole year.

There are also suggests for going with a spot price (eg. might be monthly average futures price adjusted for basis in October). Similar processes could be used for CWB crops (ex durum and malt barley) versus relying heavily on CWB PRO forecasts. Pulse crops/other present a problem/challenge.

What are peoples thoughts if you had the ear of AFSC?

[TOM4CWB]

Charlie;

1. Get the CWB out of input loop on setting prices, they don't know anything more than anyone else, which is obvious from mistakes made in the spring of 2002.

2. Crop Insurance cannot please everyone all the time, so please don't try... it is impossible.

3. The August 7th date that was picked this year, was good, and obviously on the feed grains that you took the lead on making the decision on, was a good decision... Thankyou for doing a good job on those crops.

4. Don't second guess the market... It is obvious the CWB did on their grains and your process did on Canola. Canola was trading at $405.00/t on July 30th, yet with zero basis levels avaliable widely, somehow the price ended up at $385.00/t $20/t below the market. Obviously this second guessing caused over a 5% low coverage for Canola.

As you have pointed out, the US crop insurance, and Ontario crop insurance offer a stabilised price, minimum income program as options.
These type of programs would be good options to add to our risk management tool box, but make sure these are optional, not manditory.

Keep up the good work, you have a difficult (impossible)job being a accurate price forcaster, especially this year! The only way to know the price in the future, is to be able to see the what future will bring.

I guess you will need a time machine for this, so let me know when you find one.

One Final point, share the price forcasting responsibility with farmers in commodity organisations who have a responsibility for these organisations. They just could add light to the subject, and spread your risk out as decision makers.