Cattle Producers Call For Price Insurance Coverage

“This is an area where we’ve been short every time.”

– MARTIN UNRAU, MCPA

Canada’s free-enterprise cattle producers have taken a radical step in risk management by asking for a government-run price insurance program.

The Canadian Cattlemen’s Association recently called for a national cattle price and basis insurance program to guard against drastic dips in market prices.

The CCA board of directors approved the request the day after its domestic agriculture policy committee unanimously voted for it during the association’s semi-annual meeting.

It is a remarkable move for cattle producers who have traditionally seen themselves as fiercely independent and market driven.

But market signals don’t work properly in a post-BSE environment and producers need protection against price fluctuations beyond their control, the committee meeting was told.

It’s now up to CCA to develop a framework for the program which so far has no definition besides its name.

It won’t be like the former tripartite stabilization program, with its support levels and payment triggers. It may or may not be like crop insurance for grain farmers. It may not even be like Alberta’s own Cattle Price Insurance Program (CPIP), scheduled to come into effect later this summer, said Bob Ivey, CCA’s domestic agriculture committee chair.

“It’s wide open,” said Ivey, a producer from Ituna, Saskatchewan.

But cattle producers need some kind of price insurance to put them on an equal footing with grain farmers, said Martin Unrau, a Manitoba Cattle Producers Association representative on the CCA board.

Grain growers can take their crop insurance contracts to the bank as collateral for operating loans. Livestock farmers can’t do that, so they’re always at a disadvantage, said Unrau, a producer from MacGregor, Manitoba.

“This is an area where we’ve been short every time.”

Ivey said the program will not guarantee producers a profit. But it will give them a tool to stay in business when times get tough, as they are now.

Canada’s cattle producers have never fully recovered from the price collapse and trade disruption resulting from BSE in 2003. Added financial pressures since then include rapid feed price increases, a fluctuating Canadian dollar and the U. S. country-of-origin labelling rule.

“These major risks manifest themselves as price and that’s what producers are trying to protect themselves against,” Ivey said.

Canada’s livestock producers have a national production insurance program – at least on paper. It would insure producers against lost production, primarily mortalities.

But it has yet to be implemented because bureaucrats cite difficulties in developing a program for livestock with a low enough risk level to be viable.

Ivey said CCA’s version might be easier to sell because the real issue is not production – it’s price.

“I think we’re finally getting that message through to people.”

CCA views livestock price insurance as one more program in Growing Forward’s so-called “suite” of business risk management programs for farmers, Ivey said.

It’s not certain what would happen to Alberta’s CPIP if a national price insurance program came about. CPIP protects against a drop in Alberta’s beef cattle prices, but only for feeder cattle.

The committee heard that Saskatchewan is also exploring the feasibility of a livestock price insurance program to include the cow-calf sector.

A Saskatchewan government official said it could be a model for a national program but it’s much too early to tell.

Travis Toews, an Alberta delegate, urged caution in developing a new program. He said Alberta Beef Producers originally funded the development of a CPIP model, only to see the province grab it and implement it.

“The last thing we need is another program that doesn’t work,” Toews said. [email protected]

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