SPE and feed peas

[jgstuart]

Charlie....with Oct drawing to a close, its seems apparent we are looking at payouts for both wheat and barley...but what are your thoughts with regards to feed peas?

[charliep]

Feed peas will be tight with the general indication it won't payout. The calculation is the average of weekly Alberta Grain Commission feed pea prices (mid point of the range). Crop insurance level is $160/t with a trigger of $144/t.

As a note for Albertans, I would be pushing AFSC/crop insurance to change the insured grade for peas to 2CW versus feed. My thoughts are the majority of marketed peas are sold into the edible market versus feed. More peas are fed but the vast majority of these are used by the farmer who grew them in their pig rations. I would be much easier to come up with a consistent edible price.

[wd9]

Here in Alberta, we need to keep asking the Alberta Pulse Growers and even other commodity groups to continue lobbying that 2cw (human) is insurable within crop insurance. I agree Charlie. The coverage of feed peas is quite low. Maybe this is not worth the effort since CAISP will almost completely replace crop insurance. Are there any thoughts on this? Will we even need crop insurance in the future?

[charliep]

On your last comments, I would hope and with some confidence can indicate that crop insurance will be around for a long time. The Ag. Policy Framework (both the federal and Alberta government) commits to both income stabalization (CAISP) and production insurance (crop insurance). What you may see if a tie between crop insurance and CAISP. That is, you may be deemed (even if you made the decision not to enroll) to have taken crop insurance at a certain level in the margin calculations.

With regards to my comment, I hope goverment and private industry can offer farmers a number of risk management products (pricing tools, income stabalization, disaster offset, etc.) that a farm manager can choose from based on their own individual situation and risk tolerance/ability to take. Hopefully, government doesn't get into cookie cutter /one size fits all programs for everybody.

[wd9]

The tie between the two remains to be seen. Provincial and federal programs working together are always tough to figure out. Caisp does not cover a negative margin. However, CAISP also is a 1 premium for life or until you use it form of insurance. If you feel you do not need neg margin coverage, why would you even consider the expense of crop insurance? Talk about over-coverage.

[charliep]

Again, agree with your comment that crop insurance will cover negative margins (CAISP does not cover). May mean some opt to take lower cover (i.e. take 60 % coverage versus 70/80 % normally) to keep premiums down.

The other issues are the fact CAISP is whole farm whereas crop insurance can cover production/income risk on individual crops. Cash flow issues also kicks in - crop insurance will pay quicker than CAISP. Finally, the Alberta programs can be used to offset production risk in the case of forward pricing (variable price benefit) and some move into price risk (Spring Price Endorsement).