The Agricultural Policy Framework is about to give Manitoba farmers a crop insurance reality check.
In the past, provincial officials have proudly stated that Manitoba farmers lead the country in crop insurance coverage.
But recent changes that will force farmers to pay more for insurance have provincial officials wondering how many farmers will drop out.
“Some people are going to see a 30 or 40-fold increase,” said Manitoba Crop Insurance Corp. research director Paul Bonnet about the Manitoba farmers who now receive 50 percent crop coverage for only 25 cents per acre.
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“They’re probably the people who don’t see great value in crop insurance and they’re buying it because it’s free.”
Right now more than 80 percent of Manitoba’s farmland is covered by crop insurance, compared to slightly more than 70 percent for Saskatchewan and around 60 percent for Alberta, Ontario and Quebec.
But Manitoba’s high sign-up rate is matched by its low premiums, which require producers to pay only 31.5 percent of the cost of the coverage, compared to about 37 percent for Saskatchewan farmers and 50 percent or more in Ontario and Quebec.
The APF will force provincial gov-ernments to redesign their crop insurance programs so farmers pay a uniform 40 percent of the cost in each province.
Manitoba farmers have the choice of signing up for 50, 70 or 80 percent coverage of the value of their crops. Farmers who sign up for 50 percent coverage are now charged no premium at all and only a 25 cents per acre administrative fee.
Bonnet said his agency’s analysis shows that farmers who sign up for 80 percent coverage will see virtually no change in the cost.
Farmers who take 70 percent will see change of about 17.5 percent. The biggest change will be for farmers who sign on for 50 percent coverage who will now have to pay premiums.
The average increase for Manitoba farmers will be 27 percent, Bonnet said.
The changes will come quickly. Next spring, provinces will have to bring their crop insurance gap 25 percent closer to the 40 percent requirement.
In 2005, each province’s producer share of crop insurance will have to be 60 percent closer than it is today. And in 2006, the gap will be closed and farmers will pay 40 percent of the cost of the crop insurance they sign up for.
“We’ll see what happens,” Bonnet said.
