Alberta Minister of Agriculture and Irrigation Nate Horner was joined by Emmet Hanrahan, vice president of product innovation at Agriculture Financial Services Corporation, for a roundtable discussion with rural media outlets on Thursday, March 9, 2023.
“The point of this roundtable today,” said Horner, “is to continue clearing the air on some claims that were made last Friday around crop insurance. This is a very important program for Alberta farmers and we want to ensure the proper information gets out.”
Last Friday, the claim was made that crop insurance premiums would be raised by 60 per cent and Horner said it was inaccurate. However, there will be increases in some crop insurance premiums, which will reflect the rise in value of the specific crop or commodity being grown.
The fund has depleted over the past two years but the AFSC is not attempting to recover losses in the short term.
“We’ve seen crop insurance go through a lot in the past two years. The program has changed dramatically. It’s paid out $4.1 billion combined in the past two years, about $2.8 (billion) the year previous and we look like at we’re about $1.3 billion in payout for last year,” continued Horner.
The drought in 2021 led to substantial indemnity payments with some areas of the province, such as southeast Alberta, still experiencing drought conditions. Even though last year was above the five- and 10-year averages for yield there were still some high claims due to hail in central Alberta. Also the cool, dry spring and other issues with canola led to unexpected yields in some areas of the province.
“The insurance rates are increasing. Our budgeted expected average is about 22 per cent, and that will look different depending on where you are at and what you are growing. That’s an estimated average but nothing like the 60 per cent we heard,” Horner said.
Insurance premiums will increase at about the same rate as the coverage. Horner explained it was a non-profit insurance program that is actuarially sound and audited.
“They look at a 25-year lend so they can control increases in premium rates. There really is no alternative and I would remind everyone that this program is 60 per cent subsidized by two levels of government, so the producers are only paying for 40 per cent.”
Most mainstream crops are covered by the program.
Hanrahan stated, “If we have some specialty crops we have a program called the New Crops Initiative that will provide some support and coverage. The province is split up into what we call risk areas, and in some of those risk areas you aren’t able to get insurance for crops if it’s agronomically too risky to grow them there, but they are few and far between.”
Premiums paid by a producer are very individual and would depend on the specifics of what they are growing and if they have paid premiums without receiving an indemnity or have had successive years of losses. Year-over-year crops seeing an increase include hard red spring wheat at 17 per cent, barley at 9, yellow peas at 2 and canola at 12.
Hanrahan stated it’s very individualized and there could certainly be some producers who don’t experience a premium increase depending on their circumstances.
By SAMANTHA JOHNSON, Local Journalism Initiative Reporter
Original Published on Mar 10, 2023
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