Editor’s Take: A tale of two programs

It’s clear there’s going to be a big crop insurance payout this year, even if nobody’s exactly sure how big.

Crop and beef farmers across the province have faced the same challenging times this year but when it comes to being backstopped by support programs, there are some sharp differences.

Early reports suggest many grain farmers are seeing yields in the 60 per cent of normal neighbourhood on their cereals.

Some have, of course, done better or worse, depending on local weather conditions, a timely rain here and there, and so on.

It’s clear there’s going to be a big crop insurance payout even if nobody’s exactly sure how big. But to give you an idea of the sort of figures being talked about elsewhere, Alberta’s provincial program is suggesting it could reach $1 billion this year.

That’s a good-size safety net, and while it’s clear no program is perfect, Canada’s crop insurance system bears all the hallmarks of a well-designed and prudently operated program.

Following several excellent harvests in much of the province, coverage is high enough that it will take a lot of the sting of this year’s drought away for producers, as will high prices for what crop they do get.

Key to its utility for farmers is its generally predictable nature. While some will no doubt have issues around the margins of the program, at its heart it does what it sets out to do: protect farmers against the vagaries of Mother Nature. Whether or not it pays out is determined by a predictable formula and in a year like this, most farmers can assume there will be a payout.

Contrast that to the situation beef producers find themselves in, with scant insurance coverage available, or at least not at an affordable price.

There’s the Western Livestock Price Insurance Program or WLPIP. Participating producers pay a premium to receive forward price coverage in a select time frame. If during that time market price falls below the coverage level, the producer is paid out.

But it’s long been criticized as unaffordable, in no small part due to the fact its premiums aren’t subsidized like crop insurance premiums are. The province has resisted any calls to subsidize it, at least so far.

Producers who do use the program have said the premiums are the second-largest cost for their operations.

There’s also forage insurance, but here producers have been voting with their feet again in recent years, as participation has fallen to historic lows.

Our Alexis Stockford reported in March of this year that just under 18 per cent of Manitoba’s forage acres were insured as of 2019 and just 26 per cent were covered in 2020.

She also reported a forage insurance review, published in June 2019, included recommendations for changes, some of which were adopted for the 2021 season.

Whether or not that was enough to entice producers to the table isn’t clear, but anecdotally there doesn’t appear to have been a stampede to pick up coverage.

It’s this lack of affordable insurance offerings tailored to their sector that have left livestock operators in an uncomfortable position.

More than any other sector they find themselves at the whims of the AgriRecovery disaster ‘program.’ I use the quotation marks after due consideration, because it’s not really a program at all.

A program would be funded, and have clear-cut triggers that cause certain actions to be taken.

Instead, what it really is, is the old ad hoc approach that crop producers are all too familiar with, and with all the inherent weaknesses.

It’s unreliable and producers can’t plan on a payout or, worse yet, find themselves hoping and planning around a payout that never comes.

It’s a political football, batted around between the federal and provincial governments, as we’ve seen in some of the pre-election grandstanding.

And worst of all, it’s applied inequitably across the country, as agriculture-heavy provincial economies are very reluctant to request the program, leaving their farmers at a disadvantage to producers in wealthier jurisdictions.

It bears all the hallmarks of the sort of ‘program’ that should be hauled out behind the barn and dispatched.

We’re in the midst of the latest round of negotiations for the next federal-provincial agriculture policy framework. As a shared jurisdiction between the feds and the provinces, this is a once-every-few-years opportunity to reconsider the direction of the nation’s farm policy.

I would suggest to political leaders that it’s time to finally decide if they’re going to allow the livestock sector to be placed on equal footing with their colleagues in other sectors.

That starts with well-designed programs that are supported in an equitable way. At a bare minimum, they should receive the same kind of support for insurance premiums.

And they should know that when the next disaster hits, they’ll be able to count on the timely support of their governments.


For more content related to drought management visit The Dry Times, where you can find a collection of stories from our family of publications as well as links to external resources to support your decisions through these difficult times.

About the author

Editor

Gord Gilmour

Gord Gilmour is Editor of the Manitoba Co-operator.

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