Forage insurance review offers hope to producers

Issues with the program prevented widespread adoption, but that could now change

The first word is in on possible forage insurance changes, and it largely reflects concerns voiced by producers.

On June 19, Manitoba Agriculture and Resource Development released the findings of the awaited forage insurance review, announced last fall in the wake of critically low hay harvests.

The report called for a hard look on how coverage shifts from average yield in an area to individual yield. Producers with above-average yields are hurt by coverage based on an area average since they, “in essence, have a larger deductible, have less of their shortfall covered and are overcharged for the premium,” the report noted.

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Coverage is also too sensitive to disaster years, the report said, and reduced coverage in the years following a short hay crop may make insurance less attractive.

Why it matters: The province hopes that changes coming out of its forage insurance review will make underused programs more attractive and usable for producers.

Price discovery, likewise, earned a place in the spotlight. Coverage prices do not reflect the higher feed price of the last two years, the report noted. The review suggested that the province take a leaf out of Saskatchewan’s book by working with a third party (such as the Manitoba Forage and Grassland Association, which already tracks hay prices) to gather data.

Other suggestions included making producer reporting easier, looking at insurance indexes based on weather and satellite technology (which would theoretically lead to more accurate production information), and engaging more with industry or financial institutions.

The province has said that, “immediate action items will be undertaken by MASC prior to the next insurance year.”

The impact of disaster years on coverage level, coverage determination for new policies, values that better match market prices, program burden on the producer, promotion of available insurance products and weather and satellite-based indexing are among those action items, the province has said.

A spokesperson from Manitoba Agriculture and Resource Development said the review, “provided a good mix of recommendations, including achievable steps to improve the program in the short-term, as well as longer-term initiatives and ideas that will help inform how we might offer forage insurance in the future.”

The department has held preliminary talks with the Manitoba Forage and Grassland Association, “to determine the availability of pricing information,” although, “there is more work to be done in establishing the right framework to get industry input on an ongoing basis.”

The department says work is also underway for a pilot project looking at weather and satellite technology based indexing, and hopes to have more news on the pilot in the coming months.

Industry response

The Keystone Agricultural Producers, Manitoba Beef Producers and Manitoba Forage and Grassland Association have all welcomed the results of the review.

Dianne Riding, Manitoba Beef Producers president, noted that their organization has pushed for a forage insurance review, “for some time.”

Riding has previously argued that current insurance programs, while better suited for alfalfa, are less effective for native hay and lesser-value forage crops and also fail to recognize the volatility of crop grown on more marginal lands.

“Beef producers have often raised concerns about gaps or challenges with the current forage insurance offerings that limit their responsiveness and which discourage them from taking out policies,” she said. “This review was a valuable opportunity for MBP as well as our members to provide feedback on what is or isn’t working with the existing insurance offerings, as well as what would be valuable in terms of program changes.”

In particular, the Manitoba Beef Producers has argued that available insurance must change as production changes and farmers turn to different crops or practices.

Riding added that her organization will be working with both the province and MASC moving forward.

Bill Campbell, Keystone Agricultural Producers president, commended both the province and Manitoba Agricultural Services Corporation (MASC) on undertaking the review, “and for releasing the full contents of the review publicly.”

“The contents of this review will help government better understand risk management behaviour and insurance purchasing decisions of Manitoba forage producers,” he said.

KAP has also noted low participation levels in current forage insurance. The organization has argued that current coverage levels are insufficient, timing of payments does not match the realities of farm cash flow, and that current programs offer only limited options on crop quality.

The organization has tagged several areas it hopes to tackle as MASC moves ahead with the forage review, including less red tape, an updated timeline for payments, a revamped method of assigning coverage levels, more integration of weather technology and programs that better reflect the forage choices of dairy operations.

Larry Wegner, Manitoba Forage and Grassland Association chair, echoed Campbell’s praise of the review and said the association, “looks forward to working with MASC and other agricultural groups working toward the report’s recommendations for the benefit of the Manitoba producers.”

About the author

Reporter

Alexis Stockford

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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