Saskatchewan crop insurance premium rates may be dropping slightly but some producers are going to be picking up a larger share of the tab.
That’s because farmers are now required to pay 40 percent of premium costs at all coverage levels.
Stan Benjamin, general manager of the Saskatchewan Crop Insurance Corp., said producers were told two years ago that under agricultural policy framework agreements, the cost-sharing arrangement would change.
The corporation began phasing in the move to a single-tier premium, where producers at all coverage levels would pay 40 percent of the cost and governments would pay 60 percent.
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In 2004, the approximate producer share was 36 percent. Last year, it was about 37.2 percent.
“For certain producers … everything else being equal, they would pay more premium,” Benjamin said March 3.
The 14 percent of producers who choose the minimum 50-percent coverage level will be most affected. Last year they paid 23 percent of the cost.
“At the other coverage levels, where they used to pay 50 percent of the premium, they’ll pay 40 percent,” Benjamin said.
Ken McBride, president of the Agricultural Producers Association of Saskatchewan, said producers’ costs will go up 7.5 percent while coverage levels go down.
He used the example of a $5,000 premium, which cost producers $1,860 at 37.2 percent. At the higher 40 percent cost, the premium is $2,000. The difference of $140 is 7.5 percent higher, he said.
Coverage is dropping because prices are lower and farmers can’t afford to have less coverage, McBride said. Crops that were covered for $72 an acre are now covered for only $68.
“At $68 coverage it’s not close to what would get your direct costs back,” McBride said.
He added that other provinces are increasing coverage or adding new types of protection. He said it’s getting more difficult for farmers to compete in their own country when it comes to input costs.
Still, he doesn’t think many producers will drop crop insurance when they’re looking at ways to cut costs.
In fact, many producers can’t because lenders require participation in the program.
Benjamin said about 70 percent of the province’s acres are enrolled in the program and that number hasn’t changed much in the past few years.
