Margin-based insurance program gains traction

Canada’s agriculture ministers are considering whether a margin-based income protection program could replace AgriStability in 2023.

As prairie agriculture ministers look at whether their governments can pay millions more on AgriStability changes before the next five-year agreement, Manitoba’s Blaine Pedersen said margin-based insurance is gaining traction.

Speaking to reporters after the recent federal-provincial-territorial ministerial meeting, Pedersen said officials are working on a program concept and are to present it at the ministers’ next meeting in July 2021.

“It’s an insurance premium on income, very generally,” Pedersen said when asked how it would work.

Producers could buy insurance to top up possible income shortfalls based on their budgets. How producers and governments would share the premium is yet to be determined.

But Pedersen said a key feature of the concept is that individuals insure themselves based on their own operations.

“The challenge with AgriStability right now is it’s supposed to work for the blueberry farmer in New Brunswick, for the cow-calf operator in (Manitoba’s) Interlake, for the canola producer in Saskatchewan,” he said. “The operations are so different and yet we’re trying to make one commodity-based program fit for all of these different commodities.”

Pedersen said a new program is worth a look if it can be bankable, timely and affordable, which most say AgriStability is not.

Alberta minister Devin Dreeshen was also bullish on a new program.

“We want to get all our ducks in a row for this new margin-based insurance program, that would be actuarially sound, to get it in front of Ottawa and other provinces by this summer and then hopefully get a (federal-provincial-territorial government) signoff by 2022,” he said in an interview.

Dreeshen said it would be a better use of time to develop a replacement that’s ready to go for 2023 rather than tinker with the program as it is now.

Prairie ministers are under pressure after federal minister Marie-Claude Bibeau dropped a late proposal on them as their meeting wrapped up Nov. 27. She said Ottawa was willing to remove the reference margin limit from AgriStability and change the compensation level from 70 percent to 80 percent but the cost-share would remain 60 percent federal, 40 percent provincial.

Farm organizations had asked for these adjustments, but wanted the compensation level to go to 85 percent.

Officials are still crunching numbers on that proposal but Dreeshen said it will cost at least $15 million per year in his province, where budget deficits are ballooning.

“Provinces committed to going to treasury board as soon as they could,” he said. “But again it’s something that we in Alberta believe that, even if you did make these changes, the two-year delay makes it 2023, which if we were to put our heads together and make a new program, would be in place at same time.”

Pedersen said Manitoba spends about $19 million per year on AgriStability and is looking at a $15 million annual hit to accommodate the proposed changes.

Saskatchewan’s minister, David Marit, has said just removing the reference margin limit would cost about $20 million per year.

None of the prairie provinces has fiscal capacity to pay these costs, the ministers have suggested, but are under pressure because Ottawa has said if they don’t kick in then farmers won’t get the federal portion.

The ministers are also concerned that their projections will be off because participation rates might go up if farmers like the changes.

All three ministers said they are frustrated that the proposal came so late in the meeting.

“The timelines were just always set up to fail,” said Dreeshen. “That, I think, was frustrating for a lot of farmers and farm groups as well as provincial governments.”

Pedersen said the changes don’t address the key challenges of AgriStability, such as timeliness. He said producers who experience a shortfall in 2021 can’t apply until 2022 and won’t see money until 2023. By then, a new Canadian Agricultural Partnership would be in place.

Meanwhile, Pedersen said he is also concerned about comments from Bibeau to the ministers as the meeting wrapped up.

He said she suggested changes are needed in the new CAP “to lessen support for AgriInvest and AgriInsurance because, and I’ll quote her, ‘payments are going to rich farms only,’ ” he said. “This is a concern.”

Pedersen said this seems to indicate that Ottawa wants to claw back money.

He said commodity organizations that are in favour of the AgriStability changes should consider that if they keep the program in the next agreement they may lose support in other areas.

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