Pork Package Creates Livestock Insurance Precedent

Aproposed model to insure pork producers against death losses in their herds could be a long-awaited breakthrough for livestock production insurance in Canada.

The Canadian Swine Health Board hopes to have an all-peril mortality insurance product ready for producers in 2011.

The package would cover death losses from disease, fire, equipment failure, adverse weather or other unforeseeable events.

It would be first available in Manitoba, Ontario and Quebec. But the industry expects other provinces will eventually use it, too.

“This will be a model for the rest of Canada,” said Andrew Dickson, Manitoba Pork Council general manager.

The federal government previously gave the Canadian Swine Health Board $400,000 to develop the concept.

Production insurance for livestock farmers has eluded the industry for years, even though the AgriInsurance business risk management program provides for it.

INSURANCE OPTIONS

Logically, producers could insure livestock either against death losses or for pounds of gain. Animals that die from disease or fail to grow properly would be covered.

But livestock are not like crops, which are easily insured against weather-related disasters. If animals do poorly, the reason could be bad management, not natural disaster. For that reason, insurance companies view livestock insurance as too high risk for them.

However, this model is different because it contains checks and balances needed to make it actuarially sound, Dickson said. It is handled by a British firm with extensive insurance expertise and reinsurance backing.

Deborah Whale, insurance committee chair for the Ontario Livestock and Poultry Council, said this program could break the livestock insurance logjam that governments have unsuccessfully hammered away at for nearly 10 years.

“I personally think this is a win-win for producers, for government, for taxpayers,” she said.

“It will definitely go a long way in managing risks, increasing biosecurity and food quality.”

SOME DISEASES

The product will insure against some diseases but not others. For example, it may not cover Porcine Reproductive and Respiratory Syndrome (PRRS) because the viral disease can become endemic in swine herds. But it will cover circovirus, as long as pigs are vaccinated against it, said Dickson.

The package will cover losses caused by equipment failure (e. g., exhaust fans) but only if the producer has a backup generator. It will not cover losses from business interruption or market collapse. Nor will it insure against a reportable disease for which there’s federal compensation.

To qualify, producers must be enrolled in Canadian Quality Assurance, an on-farm food safety program for swine producers. Among other criteria, CQA requires producers to follow industry codes of practice.

Separate insurance products will be available for sows, grower and finisher pigs.

The swine insurance program is modelled after a similar package for avian influenza developed for the poultry industry and available in British Columbia and Ontario.

Manitoba, Quebec and Ontario will present the proposal to their respective provincial crop insurance agencies. If accepted, it will then be offered to producers through the agencies. This ensures governments will cost share premiums.

“We’re confident it will pass all the tests,” said Dickson, adding 30 per cent of Manitoba’s pork producers could sign up for it in the first year.

Having insurance products for swine and poultry sets a precedent for more products covering a wider range of risks for other livestock producers, Whale said.

“We’ve done it more than once now and so we know that we can do it again.” [email protected]

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“ThiswillbeamodelfortherestofCanada.”

– ANDREW DICKSON, MPC

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