With another dry spring in the offing, it might be time to reconsider forage insurance in view of recent program changes.
Those changes follow a forage insurance review completed last year. The province had announced the review in late 2019, following critically poor hay yields and widespread reports of feed shortfalls. The shortfalls led to calls for government aid, both from industry and local government.
At the time, Agriculture and Resource Development Minister Blaine Pedersen noted the historically poor uptake on forage insurance, and argued that better participation on insurance was needed rather than ad hoc aid programs.
Only about 18 per cent of Manitoba’s forage acres were insured as of 2019, MASC has said. Those numbers increased last year. Even with the jump however, just over a quarter (26 per cent) of forage acres were covered in 2020.
The review, published in June 2019, included recommendations on price discovery, changes to make insurance less sensitive to poor yield years, easier farmer reporting, more education on available insurance options and coverage based on individual yields rather than area averages.
The province later announced that producers would see some of those changes in MASC’s programming for 2021.
New this year, MASC has introduced yield cushioning, something it argues will take the sting out of declining coverage following a disastrous hay yield.
It removes the highest and lowest yields when reporting forages, “bringing it up to 70 per cent on the bottom end and up to 160 on the top end,” producers heard during an MASC webinar in mid-March.
Those numbers are for insurance on alfalfa, alfalfa-grass or sweet clover, while the floor for coarse hay comes in slightly lower, at 60 per cent.
Reimbursement for transportation also got a shot in the arm. Transportation allowances for select and basic hay policies doubled under the changes (from $8 to $16 a tonne), while allowances under the hay disaster benefit jumped from $20 to $24 a tonne.
Tyler Fulton, president of the Manitoba Beef Producers, said changes to the disaster benefit are among the shifts that address specific concerns brought forward by industry.
“We know that transportation costs go up when there’s a drought because there’s a shortage of trucks and there’s a shortage of hay that needs to be moved… on a percentage basis, they made such a significant improvement to that,” he said, noting the increase might drum up interest from producers who otherwise would not consider insurance.
The benefit triggers automatically when over 20 per cent of insured producers fall below half of their normal long-term forage yield. When active, producers with forage insurance get $44 for every tonne of yield shortfall.
The hay disaster benefit triggered for the second year in a row in 2019, cumulating in $5.3 million worth of payouts and about 1,500 claims. The previous year, MASC paid out $3.2 million through the benefit.
MASC has also said that efforts are underway to streamline administration, while a pilot project is also in the works with Alberta and Saskatchewan to bring satellite-based imaging into MASC’s programming. The 2020 review argued that indexes based on satellite imaging would lead to more accurate production information.
Likewise, Fulton said, he is optimistic about the development of index-based product, although that avenue is still “a work in progress.”
“I think that it’s going to result in possibly making indemnity calculations just less subjective and more equitable across all producer groups,” he said. “We’ve got producers who are doing and trying stuff that nobody else is really doing or trying, and then we’ve got other groups that are more traditional.”
Producer needs are also increasingly moving past the forage program proper, Fulton said.
In particular, he noted changes to corn insurance promised an IPI for silage corn for 2021 — a longtime ask from beef producers — as well as wildlife damage insurance for standing corn, a potential boon for anyone hoping to winter their cattle with corn grazing.
Others, such as better options for polycrops destined for feed, are still in development, he said.
“I do understand that they’re in a tight spot,” Fulton said. “How do they come up with a program pre-emptively when there are a lot of guys doing stuff that is pretty innovative and how do you kind of stay ahead of that?”
MASC is currently exploring the idea of forage establishment insurance that would cover polycrops. The Keystone Agricultural Producers launched a producer survey on the topic earlier this year, in the hopes of gathering farmer feedback.
The biggest current barrier to uptick, Fulton noted, might also lie with the producers themselves.
Beef producers generally have a culture of self-reliance, he noted, and are more likely to buffer their risk through practices like stockpiling feed or animal marketing.
“We went so long where there wasn’t any programs that worked in the same way that crop insurance has worked for crop producers, that we’ve just developed ways to manage our own risk on the farm,” he said.
He used to be among those reluctant producers, he noted, although he said he has since found that siphoning some of that risk through insurance has emboldened him to take more chances on new management practices.
Fulton says he has heard no hard evidence to suggest more producers will be buying insurance this year, although he is “pretty optimistic” that there will be an uptick, given both increased outreach by MASC and the looming dry spring.
Producers have until March 31 to enrol or change their forage or pasture insurance.