Preliminary results indicate crop insurance programs in Saskatchewan and Manitoba were not relied upon nearly as heavily this year as they were in 2002.
Officials with Alberta’s Agriculture Financial Services Corp. did not return calls on the subject.
Saskatchewan’s program experienced the most dramatic decline in activity, facing about 50,000 claims at the mid-November deadline, compared with 100,000 claims last year.
The numbers are not firm because officials will be processing claims until the third week of December, but it is apparent that volumes are down.
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It’s the same story in Manitoba, where as of Nov. 13, there were 2,700 post-harvest claims registered compared to 7,000 in 2002, which is close to the province’s long-term average.
The Saskatchewan story gets even better in terms of payouts.
“We have a lot more smaller claims this year,” said Doug Matthies, general manager of the Saskatchewan Crop Insurance Corp.
He said $200 million has been paid to farmers to date compared to the staggering $1.1 billion that plunged the program into deficit in 2002.
Matthies wouldn’t put an exact figure on what the final tally will be but he expects it to be around the long-term average of 10 percent of the insured value of crops.
Last year’s crop wreck cost 42 percent of the insured value and put the program $550 million in the hole heading into 2003. The program was $285 million to the good at the start of 2002.
That huge shortcoming was the main driver behind a 52 percent rate hike introduced this spring. But rising rates didn’t lead to a corresponding increase in premiums because producers reduced their coverage levels.
Thirty-nine percent of farmers opted for maximum coverage compared to 53 percent in 2002, said Matthies. Premiums rose 41 percent to $350 million from $248 million last year.
Allan Steinke, manager of special projects with Manitoba Crop Insurance Corp., said while the claim volume will be cut in half in Manitoba, payouts will be down only 30 percent to about $75 million.
“I think some of the forage claims ended up being a little higher than normal.”
He anticipated about 800 claims in the tame hay program, up from 500 in 2002. Winterkill and poor summer rains meant a large percentage of the acres insured under that program produced only one cut of hay.
Conversely, for producers of the major crops it was a good year for quality and a bad year for yield-limiting diseases like fusarium.
“The dry conditions this year did not allow any diseases to really manifest themselves,” said Steinke.
Premiums unknown
Neither official would comment on how this year’s results will affect next year’s premiums. They said the wild card in that decision is what happens with the federal agricultural policy framework agreement.
Steinke said if Saskatchewan signs the existing agreement, producers will be responsible for 40 percent of the program’s premiums compared to the 36 percent they paid in 2003.
“The rate may not go up but cost sharing will change so that farmers will have to write a bigger cheque,” he said.
