Sask. Crop Insurance

[skhadenuf]

Any one hear of what the changes proposed to next year's crop insurance? Apparently we are being to told to bite the bullit on $20.00 per acre premiums, until next year's changes will occur. I's like to see it privatized and become more efficient. Punt the top they like the former gov have been in too long and hold the archaic views, time for a new dynamic program but that won't happen from political appointees that have been happy to screw farmers every chance they got. Would like to see similar things to other provinces with financial programs etc. Individual yield has to be redone otherwise scrap it totally doesn't work at all when you have several disasters in a row, those low yields haunt your average for 10 years, that's riciulous in the same way CAIS is only good for the pencil pushers spending oodles of hours calculating something useless.

[stubblejumper]

How can individual yields be anything but fair, they are your own yields. The 10 year average was re-done a few year ago to help compensate for disasters. Before that 1 year was added and subtracted each year to make up the 10 year average. Crop insurance as it is now is not an income stabilization program, it only compensates for lost yield. Both the Federal and Provincial Government are being lobbied to include cost of production in the formula. If this does happen our cost of insurance will increase.

[skhadenuf]

Your own yield is great during those times that you have maybe one crop loss in ten, but when you go through 2 years of drought, next year great crop but hailed out, then a decent year, then 22 inches of rain in the fall and crops rotted over winter, then the next year seeded into mud and ended up with poor yields, then this year why is there no grain around too wet early and fried during summer. Those facts I am sure crop insurance can verify is over a very wide area. That's give or take 5 out of 6 years no or very low yield in your average. Let's give the benefit of doubt and say 4 years lost. Therefore your 10 year average is only 60% left of what your farm can grow. You can only insure 80% of that 60% yield which gives you 48% of what you can grow. What home owner insures 48% of their house! That 48% is going to stay with you for the next 5 years until those low yield years drop off. If you are in an area that's not in that kind of situation good for you but there are many many farms in that situation or I likely should say aren't here any more because you simply can't survive on 48% if you have a loss during that time. That long term yield should be a general guide of what you can grow in a normal year. It should be the top 5 years of your 10 and in those years if you grow 60 bushel acre average great obviously you are putting in the inputs to make that 60 so why should you be covered for 48% of that 60 which is just under 30 bushels per acre. I can't for the life of me figure out why some people think we need these other such complicated programs other than government jobs. In fact if the feds and provincial government were serious about a good program, do as I mentioned give us the top 5 years not at 80% either do it at 100% and get rid of all that administration for the new CAIS what ever the hell it's called today. That admin money and the money paid out from that program would easily fund this better option, and it is something you could take to the bank. As far as premium going up there is no cost of production in crop insurance this year and I can't verify yet for sure but I've heard premium for wheat in that 16 to 20 buck per acre range which is fine if prices stay up and you get a crop but if they drop and you are only at slightly around that 48% coverage I talked about, crop insurance instead of being something you can sleep better by having it will actually be a major cause of the problem. People need to wake up and not only demand end to the wheat board we need some programs that are effective. No one can tell me our programs to date have been effective just try if you can count how many have been sent packing down the road in the last 10 years to think other wise is ridiculous.

[jensend]

i don't see how you can say your individual yield history isn't fair. it's probably the most accurate assessment of management expertise and production risk you can have. you're still rewarded for better management and practices and whether you like it or not the average does truly reflect the weather, pest and other risks producers face. i know producers like to ignore the years they don't think were 'normal' but the good and bad years establish normal. potential isn't the measure; production is.

[TOM4CWB]

skhadenuf,

There are new weather insurance products, and area average insurance proxy options, in the works.

Increased risk because of bad weather... means higher premiums. Unstable weather is VERY frustrating for any grower that is hit by many different problems... making it almost impossible to adjust practices to compensate.

We are still a couple of years away... but good progress is being made.

Here is a press release from last fall in Alberta. Manitoba is about to adapt this system and develop it for themselves, Ontario and other provinces are looking at it.

This tool is much closer to a 'Hail Insurance' Specified peril.... rather than a farms own record of production.

Here is the News Release:

News Release





October 3, 2007



Technology drives new agriculture risk management tool
Alberta producers will soon be able to customize area insurance to their farms using the internet
Red Deer… The prototype for a new and innovative risk management tool for agricultural producers will be unveiled during the Red Deer Agri-Trade Exposition in November, thanks to four Alberta producer groups and financial support from the federal government.



This risk management tool allows producers to tailor a weather and/or area-yield based insurance policy to their own farm needs using interactive internet-based technology. The prototype was developed by Wild Rose Agricultural Producers in cooperation with the Alberta Canola Producers Commission, the Alberta Pulse Growers, and the Canadian Hay Association, with funding through Private Sector Risk Management Partnerships (PSRMP), a division of Agriculture and Agri-Food Canada.



When introduced, the web-based tool will provide producers and processors of agriculture commodities with a unique opportunity to address their primary production-related risks by allowing them to customize an insurance policy that incorporates several weather perils or production results from their local area. The web-based tool is designed to be accessed directly by the user or through an insurance agent who can provide assistance.



A demonstration of this interactive web-based tool will be held at the Capri Hotel and Convention Centre, 3310 – 50 Avenue, Red Deer, as part of the upcoming Agri-Trade Exposition. Two open meetings are planned for November 9, 2007 with the first scheduled from 10:00 to 11:30 am and a repeat meeting from 1:30 to 3:00 pm. Producers who are interested in attending should telephone 1-888-616-6530 to reserve a seat.







Media enquiries may be directed to:

Rod Scarlett, Executive Director

Wild Rose Agricultural Producers

780-416-6530
Rick McConnell, Consultant

DYMAC Risk Management Solutions

403-782-5277




Backgrounder


--------------------------------------------------------------------------------

Interactive Internet-Based Agriculture Insurance
Why has this insurance product been developed?

While current government-sponsored multi-peril production insurance programs (MPPI) cover many situations and crops, some gaps do exist. This insurance product is intended to complement and enhance existing MPPI in situations like:

· production losses for minor crops (e.g. horticulture, cereals/oilseeds, forages) either not covered at all or not covered effectively under MPPI;

· quality loss for forage crops, which is difficult to assess under a traditional insurance design;

· increasing coverage protection beyond limits available under the basic MPPI protection;

· grade- and/or trait-specific crop varieties that are considered to be risk splitting under MPPI;

· coverage for partitioned insurance units (fields, crop varieties, etc.) which is considered a risk splitting feature under basic MPPI; and

· disaster protection for feed shortages for feed lots and livestock producers.

How does the web-based tool work?

The web-tool is designed to guide the user through a series of interactive computer screens to tailor-make an insurance policy. The user starts by entering their farm/business location by township, meridian and range, followed by the crops and acreage to be insured, the dollar coverage sought, and the insurance option being selected.

What insurance options are available?

Three insurance options are available in this new product:

Weather-based - this option allows the user to develop an insurance policy based on as many as three of the 111 weather stations in the eligible provincial network that record daily precipitation and temperature (additional weather stations will be included in the eligible network as they are added to the grid). Users can build an insurance policy with combinations of up to five weather perils that include: excess moisture, too little moisture, excess heat, freezing temperatures or insufficient growing degree days. For each peril chosen, the user can select the time period for the insured event as well as the trigger point and full payment point for the insurance policy.
Area-yield - this option allows the user to tailor an insurance policy based on the production results of three major crops (wheat, barley and canola) in their local area, not on their own farm. The production results are based on the accumulation of the individual production records of producers insuring under the multi-peril production insurance program (MPPI) provided by AFSC in Alberta. To respect producer privacy, there needs to be at least five MPPI insured producers to define the size of the local area for this insurance option. Users can choose up to three of the major crops on which to base their insurance policy.
Combination - this option allows the user to combine the two previous insurance options into one insurance policy. In this case, the user can assign a percentage of the insurance coverage to the weather-based option and the remainder to the area-yield based option.
What happens after the insurance option is selected?

Once an insurance option is selected, the web-tool automatically guides the user through the decision-making process as they develop their own insurance policy. The user can even test and refine their insurance product by simulating results from the past.

How far back can the insurance design be tested?

Fifty years of daily precipitation and temperature weather data allows the user to see how a weather-based insurance option would have performed over that time period. MPPI records dating back to the mid-70s allow the user to select a particular year of interest to simulate results from the area-yield option. The simulation process allows users to tailor-make an insurance policy, see what it will cost and make alterations prior to a purchase decision.

How soon will the web-tool insurance product be available?

PSRMP funding for this project was limited to designing the insurance prototype. Development of the administration processes for distribution is still required. Distributor interest is currently being assessed and the project producer groups are hopeful the product will be available in the near future.

- 30 -

Media enquiries may be directed to:

Rod Scarlett, Executive Director

Wild Rose Agricultural Producers
780-416-6530
Rick McConnell, Consultant
DYMAC Risk Management Solutions
403-782-5277

[skhadenuf]

In a perfect world where you don't have several disasters that nearly totally wipe you out what you are saying is true. Not trying to be miserable but how many in the last 10 years uncontrolable disasters have you had on your farm let's say for argument 5 bushels or less per acre. Because I know for a fact I had this very conversation with the in-laws by Saskatoon. They were used to loosing maybe one crop in 10 and farmed for over 35 years, they told me that individual yield was the real thing and under that situation it was. In the last 5 years however they have lost 3 crops twice to hail and one to flood. Now all of a sudden there at 70% X 80% or 56% of what they are used to. And I can tell you their tune has changed more than just mildly. Yes it reflects your production but you shouldn't have to continually pay the consequences for 10 years when an area wide disaster strikes. And as I said the numbers of farmers that had to leave or left on their own are proof what we had just didn't cut it. And finally can you tell me when as a couple of years ago I had 45 bushel to the acre canola crop ready to swath and we had 22 inches of rain, had to get a back-hoe to dig the combine out, ended up an average yield of 7 bushels to the acre how I could have managed that better, perhaps a rain dance on some other area to attract the rain may have worked. And as far as saying it's not the potential, like hell it isn't, I put the inputs in I want the crop to say you have to average the yield sounds like a cwb argument average all the shit prices in to end up with crap in the end it's the same principle.

[skhadenuf]

Tom4CWB, thanks for the info, sounds interesting I just know that what we have obviously isn't working.

[TOM4CWB]

skhadenuf,

There is a really good reason that grain prices are high.

You have explained why we are at record low carry out levels this year.

Every projection on the 2008 crop... is for 'average' production in the upcoming crop tobe harvested.

For us to have an average crop... in times like these... in the Global context... has been an uncommon event in the past 5 years.

Folks can feel it in their bones.

If the US had a 30% production decrease... off trend yeilds... the grain markets would go into orbit.

Without food... the world becomes a grumpy place... in a very big hurry!

Many folks I talk with... are VERY concerned... that 2008 will not be anywhere close to an 'average' year for production in western Canada. DRY DRY DRY.

The Chinese are masters at getting us to sell a crop that does not yet exist... because they themselves are short... and need the grain that is in our bins.

That is what many of us are feeling... deep down in the marrow of our bones!

Are we right?

Selling something we do not have... can be a very dangerous game... when starving people are knocking at our door asking for their food... that we sold them!

[jensend]

and if you figure crop insurance is supposed to be actuarially sound and the two levels of government each pay about the same premium as you do (sorry tom it's a subsidy) it might give you some idea of the risks of grain farming. how many times has any farmer said, 'it would have been a great crop if.....'? well, if my aunt had nuts she'd be my uncle and that about sums it up.

[stubblejumper]

To move to an area based yield from an individual yield is a step backwards unless you produce less than average yields and are just farming the system.

[skhadenuf]

Area yields aren't going to help our situation because it was a wide area that had the same disasters, even though crappy my yields were at or above the area. The same abuses can occur in individual yield if you have had no bad disasters and therefore a good average you could simply stop the inputs for 4 or 5 years and claim every year but those who would do that are the same ones that would under the area yield scenerio. The day I had to resort to that I'd call her a day and pack it in, there is no business sense to it I suppose unless you are about to retire, but mainly lacks a thing called self-pride. Picking our top 5 or 6 or 7 yields for that matter excludes the 2,3, or 4 natural uncontrollable disasters that killed our average. I am still putting all the imputs to the max needed but as stated earlier am insured at 48% of what my level of inputs can produce on a normal year of production.

[TOM4CWB]

Wouldn't lower costs for insurance, a coverage level you need being an option you select yourself... and weather event coverage... like hail insurance...

What is this subsidy thing you are talking about?

I am requred to subsidise the railways, the fertiliser & Oil co's... the elevator co's the banks... every time I turn around someone is taking a huge chunk out of my bottom line... without competition,,, collusion and anti-competitive structures are now normal in our economy.

And the Governments rake in the taxes from absurd profits... and don't even blink.

EDC is used to help our industry... the least our overnment can do is help us deal with weather disasters... That is basic infrastructure required to have a stable agricultural economy.

If support on Crop Insurance is a 'Subsidy' then so to is driving down the paved roads... using our utilities... and health care in Canada.