HALIFAX, N.S. — Canada’s agriculture ministers have pledged to expedite creation of a western livestock price insurance pilot project on the way to including the sector in government-backed AgriRisk private insurance schemes.
However, the timetable they have laid out to create a potential program takes agreement well into 2016 at the earliest.
For several years, governments and the livestock industry have been promoting the concept of sector insurance coverage similar to well-established crop insurance programs.
It would allow livestock producers to buy insurance coverage that would protect against the impact of sharp price declines.
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As a precursor, Alberta has operated pilot projects that have had limited success in attracting producers willing to pay the required premium.
Agriculture ministers dangled the prospect again at the end of their annual federal-provincial meeting July 19.
“Governments remain committed to engaging the private sector in expanding the range of risk management tools available to Canadian farmers,” said the final communiqué.
At a news conference, federal minister Gerry Ritz said Alberta’s pilot projects have been gaining momentum and increased producer support.
“They’re starting to get critical mass.”
He also said he has been talking about involving global insurance underwriters that could reduce the premium cost.
However, ministers acknowledged that despite livestock sector interest in an insurance scheme, there have been problems convincing individual producers in Alberta to join.
Alberta minister Verlyn Olson said the potential involvement of other provinces would expand the base and reduce costs, noting that high premium rates in the pilot project have been a problem.
“It is true that it takes awhile for there to be enough uptake to make it attractive in terms of cost of premiums and so on,” he said.
“So if there were producers across Western Canada, obviously there will be more producers involved and that will tend to make the insurance more affordable for anyone.”
However, Ritz flagged another problem beyond just premium costs. He said producers are reluctant to enroll in a new program whose de-tails and success are uncertain.
“The biggest hurdle we face at this point is getting people moving from programs that they understand,” he said, even if they may not like the programs because they are not bankable and predictable.
He said crop insurance, which he called “bankable, predictable and timely,” also has fluctuating premium rates.
“So we’re working on the right formula to make sure that when we do offer the livestock premium, it’s affordable and it’s something guys will look at seriously.”
Ritz stressed that the concept is for price insurance not connected to production costs.
However, the timeline that ministers have discussed for making a proposal to industry indicates it is at least several years away, even if all goes well.
The plan is to develop a proposal to present to industry by late next year, followed by up to seven months of consultation with producers.
Ministers “will see if we have something that could be implemented at that point” during the mid-term review of the current five-year Growing Forward 2 program, likely at the federal-provincial ministers’ meeting in 2015.
Even if governments and industry then move ahead, the program would almost certainly be delayed until late 2015 or 2016.
