Alberta is lowering its crop insurance and cow-calf premium rates for this year because of what is says are good growing and stable market conditions.
AFSC said in a news release March 11 that crop insurance premium rates will fall on average by nine percent this year, though the rate for each crop and region will vary.
It said the calf premiums under the Western Livestock Price Insurance Program (WLPIP) are significantly lower, falling 20 to 40 percent depending on the coverage length.
AFSC said the calf rates are subject to change because the market fluctuates throughout the sales season.
“Declining premium rates for AgriInsurance and WLPIP allow us to provide our clients with more value, allowing them to choose the right coverage to manage their risk for less,” AFSC chief executive officer Steve Blakely said in the news release.
The crop insurance reduction follows an eight percent reduction in rates in 2018.
AFSC said reduced premiums allow producers to adjust their coverage to reflect changing risks.
Alberta has largely been experiencing drier-than-normal conditions, even though winter precipitation accumulations have been near normal, Ralph Wright, who leads Alberta Agriculture’s agrometerology unit, said in the news release.
Wright said conditions have been drier than normal south of Highway 16 and across the north half of the Peace region.
The driest areas extend from Red Deer south, he added. Areas in the north Peace are experiencing two-year precipitation deficits.
“It’s important to note that historically, wet and dry spells begin and end abruptly,” Wright said.
“Both long- and short-term trend reversals can be sudden and are very difficult to predict.”
Despite the dryness, AFSC said growing conditions have generally been good for the past several years, resulting in year-over-year premium rate reductions.
It said the lower reductions will provide increased yield coverage for many producers this year.
“Through risk management programming, AFSC crop and livestock producers get the certainty they need to grow and prosper,” Agriculture Minister Oneil Carlier said in the news release.
AFSC said the 2019 Spring Endorsement will again include a 10 percent deductible.
It said the deductible, which was introduced in 2018, led to a 25 percent decline in premium rates for protection on within-year commodity price declines of more than 10 percent.
Hail insurance premiums are also decreasing for many areas this year, AFSC added, considering that claims have been lower over the past two years.
AFSC said the WLPIP is a risk management tool for cattle and hog producers, providing solutions when managing downside price risk of livestock for future sale without limiting upside price potential.