Significant differences exist between the crop insurance programs offered in Alberta, Saskatchewan and Manitoba. One of the major differences comes in how each province handles insured crop prices.
While they all rely on crop price estimates issued by Agriculture Canada, Manitoba announces its program details earlier than the other two and therefore uses an earlier price forecast.
With prices rapidly rising, many of the forecasts now look low, but Manitoba’s are worse. Saskatchewan’s crop insurance price for canola is $12.02 per bushel, while Manitoba, which set the price a month earlier, is at $11.23. The differential on barley is $4.90 versus $4.14, while field peas are $7.50 in Saskatchewan and only $6.53 in Manitoba.
In all three provinces, there are options for producers to buy insurance that will more accurately reflect where prices actually end up this fall.
Both Manitoba and Saskatchewan have Contract Price Options. If you choose this option and have crop contracted at a higher price than the crop insurance price, you can boost your insured price based on the amount and the price of your contract.
In Manitoba, the Contract Price Option is limited, available for only canola and field peas. In Saskatchewan, it’s available on a wide range of crops with a few notable exceptions such as chickpeas.
Raising your insured price through the Contract Price Option comes at a cost proportional to the increase in coverage. Increasing the price coverage increases the cost, but not the insurance rate.
Let’s use field peas as an example. The insured price in Saskatchewan is $7.50 a bushel, but producers may have contracted a portion of new crop production at $9 or even $9.50. Why not leverage that pricing to increase your crop insurance coverage?
Saskatchewan also offers an In-Season Price Insurance Option. This option comes with a cost, even though the price can fluctuate both up and down from the base price. To my way of thinking, it’s not as attractive as the Contract Price Option.
Alberta takes a different approach offering a Variable Price Benefit, as well as the option of a Spring Price Endorsement.
The Variable Price Benefit automatically applies to most crops. When a producer has a production shortfall, the insured price is adjusted upward if it has increased by more than 10 percent as compared to the spring guarantee. The benefit is limited to a 50 percent change.
In many ways, this would appear superior to the Contract Price Option available in Saskatchewan and available to a limited degree in Manitoba. You don’t need pricing contracts to benefit from a price upswing.
The Spring Price Endorsement is available only in Alberta. The province pays all the administrative expenses and shares the premium cost with producers who choose the option. It protects against within-year price declines of more than 10 percent between the spring insurance price and the fall market price on whatever production you actually grow. As such, it is price insurance rather than production insurance.
In a year such as this where most new crop prices are well above crop insurance prices, the Spring Price Endorsement may have reduced appeal. Since I don’t farm in Alberta, I can’t comment on how this option has performed in the past or whether it’s worth the cost.
Hopefully, the provinces will borrow good ideas from each other and, hopefully, producers will take the time to fully access program offerings and continue to make suggestions for improvements.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at email@example.com.