Manitoba’s Excess Moisture Insurance (EMI) program has a $236-million deficit after 15 years of operation, but it’s not under threat of being scrapped.
“We know we’re going to have to review it and possibly make some tweaks in the way it works, but there’s no panic at our end,” Craig Thomson, Manitoba Agricultural Services Corporation’s (MASC) vice-president of insurance, said in an interview last week. “We’re not going to say, ‘we’ve got to drop the program.’ That’s not the case at all. We look at it the other way — it is working. People have collected from it because there have been some wet springs.”
Earlier this month a report released by the Agriculture Risk Management Review Task Force flagged the EMI deficit, stressing EMI is important to Manitoba farmers and that the federal and provincial governments that help fund it must look at ways of ensuring it’s sustainable.
The task force was appointed by Agriculture Minister Ron Kostyshyn a year ago to look at ways to mitigate the impact of climate change on farm support programs and on farmers.
EMI is an insurance-based program — part of AgriInsurance in Manitoba — and must be actuarily sound. When deficits grow, normally premiums rise and coverage falls. But the task force noted higher premiums might discourage farmers less prone to excess moisture from using the program, which according to the task force “is not viable without universal participation.”
“Are there methods of dealing with that? That’s what we’re challenged to come up with so it doesn’t put a huge burden on producers and government to bring the deficit into a more acceptable number,” Thomson said.
Most of the 10 last years have been wet in many parts of the province. A couple of dry springs would shrink the deficit, Thomson said.
Last year $6 million was the payout under EMI on 6,700 acres (after the deductibles were applied). That’s down significantly from 2014 when $63 million was paid on 755,000 acres too wet to seed.
The record was 2011 when $162 million was paid on 2.7 million acres, Thomson said.
The final figures haven’t been calculated, but Thomson said lower crop insurance payouts in total in 2015 will add to the program’s surplus.
Although there were $63 million in reseeding payouts on a million acres — mostly on canola frozen May 30 — post-harvest claims were well below the 10-year average “so we will have a surplus to add to the fund balance,” Thomson said.
In 2014, MASC paid out $170.2 million in claims resulting in $32.1 million being added to the program’s reserve fund, he said.
When the reserve fund is above the target range of one to 1.5 times pure premium MASC reduces the premium rate, which lowers the producer premiums, which is the case in 2016, Thomson said