Cattle price insurance looks likely

Western Canada | Price insurance designed to help revive the industry and build the cow herd

Industry leaders in Manitoba are confident that the federal and provincial governments will unveil a cattle price insurance program for Western Canada, possibly next year.

Manitoba Beef Producers has spent the last few years lobbying for cattle price insurance similar to an existing program in Alberta. The lobbying has paid off because government officials are now publicly backing the proposed program.

“I feel pretty confident about it,” Manitoba agriculture minister Ron Kostyshyn said during a media scrum at the Rancher’s Forum held in Brandon in late November.

“They (producers) feel this is the way we have to go, as far as the viability of (the industry),” he said.

“Our livestock numbers (in Manitoba) have dropped so drastically in the last number of years. We have to have some bankable options for the producers.”

Alberta introduced a price insurance program in 2009 to help producers manage the price risk of feeding cattle. It guarantees producers a floor price on insured cattle.

The proposed program will be available to cattle producers across Western Canada if it comes together, said MBP general manager Cam Dahl.

“My understanding is that this will be a western Canadian offering,” Dahl said.

Government representatives support the price insurance program, he added.

“I would say absolutely that the players involved are committed,” he said. “We’re talking to MAFRI (Manitoba Agriculture) on this subject already and looking at mapping out a plan moving forward.”

Dahl said the program will be based on the Alberta model.

“There will be some tweaks along the way. What exactly those are going to be is what we’re going to be talking about over the next few months.”

Producers have suggested the premiums in the Alberta program are too high, and Dahl said the issue will be part of the negotiations for the proposed western Canadian program.

“Looking at ways to reduce the premiums is one of the things that needs to be worked on.”

Canadian Cattlemen’s Association president Martin Unrau said Manitoba producers in particular need price insurance to revive the industry. The provincial cow herd dropped to 495,000 in 2012, the lowest figure since 1994.

“Our cow herd is down from 670,000 a couple of years ago to just under 500,000 now,” he said at the Rancher’s Forum.

Janet Honey of the University of Manitoba said in a 2012 report on Manitoba’s cattle industry that 25 to 33 percent of calves are fed to slaughter weight in the province.

Unrau said the feedlot industry would rebound if producers could manage price risk.

“If we had a price insurance program in Manitoba today, we would finish cattle, even with no (slaughter) plant … because we could then guarantee the end price,” he said.

MBP president Ray Armbruster agreed.

“It gives producers marketing options,” he said from his farm near Rossburn, Man. “Producers, instead of just selling calves, may decide to background.… I see producers being able to think about retaining cattle and retaining ownership.”

“For the fall of 2013, I would hope that we’re in a position to start taking advantage of a program like that,” said Armbruster.

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