AgriStability could play important role this year

If you’re a producer not enrolled in AgriStability, you’re probably in the majority. But just because you have lots of company doesn’t necessarily make it the right decision.

Yes, your margin has to take a big hit before you trigger AgriStability money, but it can and does happen. And what about the uncertainty over canola prices and the bone dry conditions in many regions? Might this be a year when some producers wish they were still enrolled?

Shawn Jacques, president and chief executive officer of Saskatchewan Crop Insurance, which administers AgriStability in the province, has been taking every opportunity to urge producers to enrol before the April 30 deadline.

“To enrol, simply call the AgriStability Call Centre (866-270-8450) and request a new participant package,” says Jacques in a letter to industry partners. “You will be asked a few simple questions over the phone, with no initial requirement of supplying historical farm information.”

Once enrolled, new participants have the option of submitting either their previous three years or five years of historical information for processing their final application.

Many producers say they’ve dropped out because AgriStability never makes a payment, but somebody is getting money. More than $200 million has been paid to Saskatchewan producers over the past three years. And those haven’t been bad years in the farm economy. Much more uncertainty exists going into the 2019 growing season.

To put it in perspective, AgriStability in Saskatchewan has been paying out about as much as all the hail insurance companies combined. The difference is that hail insurance companies receive considerably more money on average from farmers than they pay out. AgriStability, on the other hand, is subsidized by the federal and provincial governments.

The fee for AgriStability works out to $315 for each $100,000 in reference margin, plus a $55 administration cost. On top of that comes accounting fees because most producers don’t try to fill out and submit the information themselves.

It’s difficult to predict in advance whether you’re going to trigger a payment and there have been cases where producers have received large payments in error and have had to pay money back.

While you hear the bad stories, you don’t hear the good ones because producers who receive money don’t typically brag about it.

With dropping chickpea, durum and mustard prices and below average yields in 2018, our farm triggered a significant AgriStability payment. I’m not proud of it. I’d much rather get my returns from the marketplace. But the program reacted like it was supposed to, more than making up for the AgriStability and accounting fees we’ve paid since the inception of the program.

Perhaps this year’s price decline on canola won’t be as significant as that experienced with lentils and chickpeas last year, but if canola were to drop below $9 a bushel, many farms would see a serious deterioration of margins, particularly if yields come out below average.

While AgriStability has a lot of warts, don’t just go by what the guys on coffee row have been saying. Crunch some numbers and perhaps have a discussion with your accountant.

It’s true that AgriStability doesn’t pay out unless your program year margin falls more than 30 percent below your reference margin. Even then it only pays 70 cents for each dollar decline below the trigger point. However, this could be the year when AgriStability support is an important lifeline.

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