With climate change and a greater risk of extreme weather, it’s logical to say that crop yields are more volatile than they were in the past. In short, extreme weather means extreme swings in crop yields.
But some data suggest that yields are more stable than in the past, thanks to improved varieties and practices like zero tillage.
“I look at last year… when you look at the little amount of rainfall that we had, we ended up paying out 17 percent of our coverage out in our portfolio,” said Jared Munro, the chief executive officer of the Manitoba Agricultural Services Corp.
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In comparison, droughts in the 1980s caused more financial pain for crop insurers like MASC.
“When I look back on a similar moisture year, in 1988, we paid out 30 percent of our coverage that year,” said Munro.
In the bigger picture, risk management experts view Canadian agriculture as a safe bet.
“We continue to hear from reinsurers that agriculture, particularly Canadian agriculture, is still a very desirable space for them,” Munro said. “(That’s) because of the non-correlating risks from the rest of their book.”
