The Alberta government’s agricultural disaster declaration won’t bring the rain, but it will unlock the vaults for speedy crop insurance payouts.
The declaration allows Alberta Financial Services Corp. to access its reserve funds to pay out farmer claims quickly.
Farmers paid $613 million in crop insurance premiums this year, but based on early yield estimates, AFSC expects to pay out $700 to $900 million in claims, said Merle Jacobson, chief operating officer with AFSC.
“By doing this disaster declaration, it means there is no hold up at all in us paying out client’s claims as they come in.”
Yields are expected to be 25 to 30 percent lower than average, based on an estimated harvest potential.
Jacobson expects more farmers to submit claims as harvest continues and they know more closely if yields are below their insurance guarantee.
The average payout for the past five years was $350 million.
Large payouts were last made in 2009. That year, AFSC collected $490 million in premiums and paid out $543 million in claims.
Jacobson said claims seem to be coming from across the province.
“It’s pretty much every area has stuff that is not very good, and stuff that is not too bad, plus in the areas that were pretty good, we had quite a bit of hail,” said Jacobson.
“It is really a combination of drought and the hail that has driven the claims up.”
The dry weather was like a steady drip wearing away crop yields. There was no single event or area of the province that was totally wiped out.
Alberta agriculture minister Oneil Carlier said declaring an agricultural disaster across the entire province was a “bit of a challenge” because of the uneven crop yields.
“Even some counties, one end of the county is near normal conditions and the other one is pretty much dried out,” said Carlier.
Declaring an agriculture disaster will result in timely payments for grain and oilseed producers who make good use of crop insurance, but only a handful of producers insure their hay and pasture.
Carlier hopes recent rain has offered livestock producers some relief.
“For the hay and pasture folks, we have had a bit of rain in the past few weeks, and hopefully some will be able to get a second cut, or perhaps further grazing; otherwise, perhaps some programs through AgriStability or other programs to help out those folk,” said Carlier.
AgriStability is a cost shared federal and provincial government program, and no decision can be made on possible future AgriStability programs until after the federal election.
“I have been assured that our agriculture folks are talking to Agriculture Canada to make sure all our ducks are in a row when and if we have to continue any other programs.”
Until then, Alberta officials will continue to monitor harvest yields and moisture levels, he said.
“The season is still fairly early. Harvest is well under way in southern Alberta. As we progress through the season, we will have a better handle on more data, more information on how harvest is going, and we can look at options at that point,” said Carlier.
Rick Strankman, Wildrose agriculture critic, said farmers have taken up crop and hail insurance readily, but there hasn’t been the same uptake of hay and pasture insurance.
He believes the government should allow farmers to insure hay and pasture with other insurance companies.
“Taxpayers’ dollars is being used to deliver an AFSC model,” he said.
“If it is not being generally popularly received by agriculture producers, there has to be some question marks on the page.”