Alberta Farmers - Review Your Crop Insurance Decisions

[charliep]

Albertans

Review your decisions about spring price endorsement/revenue insurance in view of the changes. Get your calculator out and re-run the numbers on premium cost versus risk/reward analysis. The balance has shifted to where it may be worthwhile for many Alberta farms.

I will clip the relevant information out of the press release.

Edmonton... Recognizing the severe impact of high input costs and low commodity prices on Alberta's crop sector, the province has reduced premiums on one production insurance option and increased benefits on another. Alberta producers have until April 30 to purchase coverage.

Doug Horner, Minister of Agriculture, Food and Rural Development announced that the producer's share of the Spring Price Endorsement (SPE) premium will drop from 50 to 30 per cent. As well, benefits producers could receive under Revenue Insurance Coverage (RIC) will increase from 50 to 70 per cent.

"Crop producers face a double jeopardy of high input costs and low commodity prices this year," said Horner. "We're hoping cost reductions will help producers get their crops in the ground this spring and allow more of them to take advantage of this price protection coverage."

SPE and RIC are specifically designed to address price risk, an important factor for producers facing increased costs. Producers who purchase SPE are automatically eligible for the benefits under RIC at no additional cost.

[wd9]

Still no human pea coverage. The AB Pulse growers have done all they can and yet AB crop ins fails to provide realistic coverage for how the majority of peas are grown in AB. Disappointing.

[charliep]

The question has be asked again by Alberta Pulse Growers and discussion is taking place. I think they are looking at something similar to what Saskatchewan has (a blended price of feed and human food). No guarantees.

I also highlight the suggestions over time to use new crop actual contracted prices for insurance coverage. This would apply the same way to specialty canola as to edible peas or what ever the crop.

Neither of these things will happen this year but are worth pushing for if you believe they will improve the Alberta crop insurance system.

[charliep]

Trying to breath life into a dead horse but will try again. Maybe you all are aware of the programs but is still important.

I would at the least be calculating breakeven payouts. That is, take your spring price endorsement premium (need it for revenue insurance) at the coverage level you have selected for crop insurance, dividing it by your coverage yield and adjusting for the fact the revenue insurance component pays out 70 %.

Example 2CWRS low protein (made up so numbers may not be 100 %). SPE premium $6/acre. Crop insurance yield at 70 % cover equal 30 bushels/acre. After adjustment for the fact revenue insurance only pays 70 %, breakeven price claim is 29 cents/bu or 2CWRS prices this fall (based on October methology) would have to be below $3.66/bu (RI guaranteed price of $3.95 minus breakeven payout). Price using methodology today (US $3.40/bu Dec. Minneapolis spring wheat futures converted to Canadian dollars/tonne using .81 exchange rate and a $45/tonne basis deduction) is just under $3/bu.

Without getting too personal, would be interesting to run through some of your calculations using real numbers. Alberta guys only.

[crusher]

Charlie,

Without getting too personal, please post your email address and I will send you my crop insurance quote. Your respond will force me to look at it more indepth!

[crusher]

I knew wheat prices were in the tank but $3 for HRS. Took a second look and I think you forgot to add in the $24 positive basis.

[charliep]

Thanks Crusher

charlie.pearson@gov.ab.ca