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Manitoba Holds Back On Cattle Price Insurance

“We want all producers to have equal

access to programs across Canada.”

– JOE BOUCHARD, MCPA

The Manitoba government is in no hurry to follow Alberta’s recent lead in providing price insurance for cattle producers.

The province will wait to see how the new Alberta program works out before even considering a similar one, said Joe Bouchard, Manitoba Cattle Producers Association president.

At the same time, the NDP government hasn’t quite closed the door on the idea, either, said Bouchard.

“They are warm to the idea if it’s something that works. However, my impression is the government doesn’t have a big appetite to be the guinea pig on this program. They want to see if it works in Alberta. We’re told if it works, then it’s something they would seriously look at,” he said.

The Alberta government last week rolled out its long-awaited Cattle Price Insurance Program (CPIP) which offers price and basis insurance for the province’s feedlot sector. The program is the first of its kind for beef producers in Canada.

Manitoba producers have sharply mixed feelings about the program. On the one hand, they fear it will put them at a price disadvantage to Alberta producers. On the other hand, it could establish a beachhead for a national cattle risk management program, Bouchard said.

“If this gets up and running in Alberta, Manitoba producers, who can’t use it, are going to be at a disadvantage because (Alberta producers) will have the ability to insure the basis and/or insure the price on their fat cattle,” he said. “We want all producers to have equal access to programs across Canada.”

CPIP sets a guaranteed price for fat cattle intended for sale 12 to 36 weeks from the policy purchase date, according to Alberta’s Agriculture Financial Services Corporation, which runs the program. Premiums and coverage levels vary daily according to markets. Policies are settled against a provincial average cattle price index. Producers pay the full premium.

The voluntary program aims at helping producers manage the risk of volatile market price swings and basis (the difference between U. S. and Canadian cattle prices minus freight costs).

Bouchard said basis is a huge factor for Canada’s beef industry, which exports a lot of fat cattle to the U. S. When the basis widens because of a weaker Canadian dollar and other uncontrollable factors, producers’ financial margins take a hit.

MCPA will watch the Alberta program closely to gauge its success, said Bouchard.

A critical factor will be how many producers participate in the program. Right now, premiums may be too expensive to encourage a high sign-up rate, said Brad Wildeman, Canadian Cattlemen’s Association president.

Premium rates vary daily and depend on coverage levels and the insured period. Last week, premiums ranged all the way from 70 cents/cwt to $30/cwt on a 1,400-pound animal, depending on the coverage.

“We question whether this is affordable. But let’s see,” Wildeman said.

CCA at its recent semi-annual meeting called for a national cattle price and basis insurance program but has yet to spell out details for it.

Wildeman stressed the program must be affordable for producers to participate.

Wildeman said he, too, has mixed feelings about Alberta going it alone on cattle price insurance. But it may give Ottawa and other provinces the push needed for a national program, he said.

“It’s another benefit to Alberta producers the rest of us don’t get. But I think if they hadn’t done it, I don’t think the other governments would even consider it.” [email protected]

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