CLARESHOLM, Alta. – Alberta cow-calf producers have a new insurance option to guard against price declines.
Alberta Agriculture released details March 7 of the Cattle Price Insurance Program for calves (CPIP-Calf ), which is the third cattle insurance program developed and implemented by the department. The other two programs insure price risk for fed and feeder cattle.
“We can now insure the whole production cycle,” said CPIP co-ordinator Jennifer Wood, in a March 8 presentation to cattle producers.
The calf program differs from the fed and feeder insurance programs in its length. It is designed for producers to sign up in spring to protect against price drops when they sell those calves in fall, at an estimated weight of 550 to 650 pounds, said Wood.
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CPIP-Calf is available from February to May and policies expire during the fall calf run from September to December.
Producers register for a known floor price they expect to receive for their calves and if the price does not reach that point, a payment can be triggered. However, producers are not limited in their ability to sell at higher prices if the market is higher.
Wood said insurance premiums vary depending on the length of term that producers choose, but are generally in the range of $10 to $30 per head.
That same per head range is also applicable to the feeder program, Wood said.
“You pay one premium and you know what you’re covered for.”
The feeder program is based on a 750 to 950 pound animal at sale, and the program is available year round with policy lengths of 12 to 36 weeks. During the last four weeks of the policy, insurance holders can make a claim if the cash market is below their selected coverage level.
Coverage is based on 95 percent of a forecast price developed by the Agriculture Financial Services Corporation (AFSC), which is based on futures data, the Canada-U. S. exchange rate and the basis estimate. Premiums are charged per hundredweight.
“It’s a risk management tool that reflects the risk of feeding cattle in Alberta,” said Wood. “You are not locked into a price as you would be if you were doing a forward price contract.”
Wood said 22 Alberta auction markets across the province supply sale data to AFSC so it can calculate averages and determine its coverage levels.
A price insurance program is also being developed for hogs and is expected to be ready by late spring.
To use the programs, producers must first register with AFSC.
