VICTORIA (Staff) – Canada’s agriculture ministers last week approved a crop insurance reform package, but questions about one layer of federal funding are casting a shadow over the deal.
Several provinces have told Ottawa they will be able to implement the changes in time for the 1997 crop year only if the federal government continues providing “reinsurance” funds used to bail out provincial plans when they are over-extended.
Until he talks to federal finance minister Paul Martin, agriculture minister Ralph Goodale could give no promises.
He conceded at the end of a federal-provincial ministers’ meeting July 4 that he has a selling job ahead of him.
Read Also
Genesis Fertilizers says it has hit ‘turning point’
Genesis Fertilizer hopes to start construction on its $2.89 billion plant in 2026.
“I hear what the provinces are saying,” Goodale told a news conference. “I will take that message back to Ottawa. But it also must be said that I must live within the fiscal framework.”
The translation is that if Ottawa stays in the reinsurance business, the tens of millions of dollars needed on standby likely will have to come out of the $600 million federal budget already allocated for safety nets.
Saskatchewan minister Eric Upshall, with a crop insurance system heavily in deficit, said Saskat-chewan cannot embrace the crop insurance changes in time for 1997 if it does not receive a commitment from Ottawa.
“The concern is they could pull out of it and the five provinces who use reinsurance would have to find some means of doing it themselves,” he said in an interview. “The provinces want to make sure Ottawa stays in this business.”
Inside the closed ministers’ meetings, Upshall led the provincial charge in demanding a fast, favorable federal decision.
There are rumors out of Ottawa, that the finance department wants provinces to pay private insurance companies to reinsure programs. In effect, it means buying “reinsurance” that would cover claims in disaster years when demands on insurance funds are greater than premium revenue can cover.
Private reinsurance would cost the provinces more money. Although needed only occasionally, reinsurance funds backstopped the Manitoba crop insurance system when it faced heavy claims in 1988 and 1993.
Meanwhile, ministers endorsed crop insurance changes proposed by a task force that held hearings last winter on the troubled system.
Once implemented, the new system will:
- Allow provinces to create “two tier” insurance, offering farmers cheap or free insurance to 50 percent of their crop and then offering additional insurance for more protection, co-funded by governments and farmers.
Manitoba is experimenting with the system now and Upshall said Saskatchewan likely will follow next year.
- Allow minor crop self-directed risk management programs outside traditional insurance systems.
- Plan national waterfowl and wildlife damage compensation programs outside agriculture department budgets.
- Leave it to provinces to decide who pays for crop insurance administrative fees.
If the reinsurance issue is settled quickly, the provinces agreed to make legislative or regulatory changes this fall to bring the new rules into effect next year.
