When Guy Anderson looks at his field he sees some puddles where there were none the year before, but the central Alberta farmer doesn’t believe the drought impact has been washed away.
Lingering memories of last year’s dry fields and withering crops have sent many farmers, including Anderson, into the local government office to buy crop insurance.
“I can’t afford two years of crop failures in a row without some sort of protection,” said Anderson of Kingman, Alta.
He has insured his crops for the maximum 80 percent coverage and has even taken the new spring price endorsement option. It protects farmers against significant drops in market prices between the time of seeding and when crops are harvested.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
While many farmers are shocked at the increased crop insurance premiums, Anderson believes the revised program will help them better manage their financial risks.
“Yes, premiums are higher, but the program is offering us much better protection than we had in the past,” he said.
More farmers have signed up for crop insurance, said Merle Jacobson, senior manager of Agriculture Financial Services Corp., the provincial department that looks after agricultural loans and crop insurance.
“There’s been a phenomenal uptake on hay and pasture,” said Jacobson.
Last year in Alberta there were 8,800 hay and pasture policies that covered 9.7 million acres. This year there were 13,600 policies covering 12.1 million acres before the deadline at the end of February. That signup represents about 70 percent of the pasture acres and 10 percent of the hay acres in the province.
Jacobson said changes to the hay and pasture insurance program and the worry of another drought were the biggest factors cited by farmers when they signed up.
“The drought from last year has the biggest impact on people’s minds,” he said.
“Most people are coming in and buying as much insurance as they can get.”
As of April 4, 40 percent of the producers who had crop insurance last year had renewed, compared to 25 percent renewal at the same time last year.
Of the people renewing, 55 percent are taking 80 percent coverage, slightly higher than last year. But more people are also choosing the less expensive 60 or 70 percent coverage options.
A little more than 30 percent have chosen the spring price endorsement option to help insure against price drops.
Memories of last year’s drought have also driven Robert Filkohazy of Hussar into AFSC offices.
“The drought isn’t over. There is some moisture from the late winter snow, but at this point the drought isn’t over,” said Filkohazy, who said he has no choice but to buy crop
insurance.
Protection from another drought doesn’t come cheap. When he compared last year’s premiums with this year’s, for the same coverage, his premiums jumped 53 percent.
“It’s far more expensive,” said Filkohazy, who has chosen not to take the spring price endorsement option. He doesn’t think the price changes will be enough to trigger a payout and cover the premium cost.
Don Boles of Three Hills, Alta., was the first person in the area to sign up for crop insurance and he took the gold-plated version.
“I Cadillaced it,” said Boles, who checked all the boxes that ensured he was covered if prices dropped or his crop failed.
“I’ve covered with both directions if things go up or down. I thought it was the way to go,” said Boles, who added he would analyze his crop insurance choices next year to see which options had the most value.
The Cadillac version isn’t cheap. Last year his premiums were about $24,000 and this year they’ll be about $30,000 to insure his farm against drought and disaster.
But insurance isn’t an option for Boles, who believes many farmers will have to take a hard look at their operations before the April 30 deadline to see if they can afford to take a financial hit two years in a row.
“It made all the difference in the world being well insured last year,” said Boles.
Dennis Read of Provost said he doesn’t know how much insurance he or other farmers can afford. He thinks the high priced premiums will drive more farmers away from insurance than attract them to it.
“This is not much of an incentive to take crop insurance out,” said Read.
“It’s a big bill. It’s one of our major expenses and I’m not even taking the extra perks,” said Read, whose insurance premium bill has jumped from $7,000 to $18,000.
But for Linus Becher of Manning, the problem isn’t just the cost of crop insurance, it’s the combination of increased crop insurance premiums, higher fertilizer cost and expensive fuel.
“It’s almost double the premium I’m accustomed to paying and this is a real concern to me,” Becher told Alberta Agriculture minister Shirley McClellan during the March opening of the Farm and Ranch show in
Edmonton.
McClellan said the changes to the program were what farmers asked for and the increased bill also reflects the record payouts made from crop insurance in the last two years.
Rod Scarlett, executive director of Wild Rose Agricultural Producers, said there would be many farmers weighing their options between paying fertilizer bills or crop insurance premiums.
“There’s going to be a cash flow shortage out there in rural Alberta,” said Scarlett.
