Despite lingering images from 1996 of weather-related agricultural disasters, Canada’s overall crop insurance system ran comfortably in the black last year.
In most provinces, premium revenue far exceeded payouts, says a federal crop insurance specialist.
“It was a pretty good year,” said Mike Ellis of Agriculture Canada. “Based on preliminary numbers from the provinces, it looks like total premiums were $530 million and claims were $310 million or $315 million.”
It was the third consecutive year in which claims accounted for approximately 60 cents of each $1 raised.
New Brunswick and Ontario were the two provinces in which significant losses were recorded, both because of wet weather. Fusarium in Ontario winter wheat and potato rot in New Brunswick were the result.
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“Generally, though, the program comes out of the year in good shape,” said Ellis.
For those fretting about growing weather instability because of global warming, 1996 produced its share of evidence.
Ellis said changes to the crop insurance program in many provinces will help the system cope if weather instability and crop disasters become more common in future, as many predict.
“This year, as many as five provinces will move to a two-tier insurance system and I would expect as many as eight will do it by 1998,” he said. “Two-tier basically targets money to a disaster type system and if you believe there is a greater chance of that in future, it is probably wise of governments to move in that direction.”
Purchase protection wanted
A two-tiered system provides low-cost or no premiums to farmers to protect a portion of their crop. Producers then can decide whether to increase their protection by purchasing enhanced coverage.
“I haven’t heard it being described as a response to global warming, but if we are heading into weather instability, I would say it is the right way to move,” Ellis said.
Last year produced its share of extreme weather images: greenhouses in British Columbia collapsed under the weight of record snow; potatoes rotted in the Maritimes; wheat went mouldy in Ontario and farms were awash in Quebec floods.
Yet lack of widespread drought has allowed many crop insurance funds to record surpluses in recent years.
“That is what really drains the accounts,” said the federal official. “That is the greatest peril. Luckily, we have been spared that.”
Several environmental studies during the past decade have suggested global warming will produce less predictable weather and will create a drying effect on the Great Plains that will make drought more common in the region.
“If that happens, if there are a number of bad years in a row, then the system is clearly strained,” said Ellis. “Premiums go up, coverage goes down and programs would have to be redesigned. I guess we really have started that already.”
However, the year-end snow and flooding that damaged some B.C. greenhouses will not create a run of crop insurance claims, he said. Crop insurance in the province generally does not cover greenhouses.
Most damage claims will be against general property insurance policies.
