As 2017 crop insurance information becomes available for individual farms, it will be important to go over the details and look at various coverage options.
The Saskatchewan Crop Insurance Corp. announced its overall coverage levels for Feb. 23, but those big picture numbers don’t tell the full story.
On average, coverage levels see a projected increase to a record $217 an acre, up slightly from an average of $216 an acre in 2016. A forecast of strong crop prices and higher long-term yields are credited with the coverage increase.
However, the story is a bit different if you look at the insured prices for individual crops.
Hard red spring wheat is increasing to $5.85 a bushel compared to $5.72 last year, and oats improve to $2.54 a bu. from $2.24. Large green lentils will have an insured price of 43 cents a pound compared to 41 cents last year, while soybeans are up significantly to $11.84 a bu. from $10.62 last year.
Most other crops are down. Canola will be insured at $10.77 a bu. compared to last year’s $11.23, barley is $3.05 versus $3.37, durum slips to $6.53 from $6.67, field peas are $7.25 from $7.53, flax is down 50 cents a bu. to $11.18, canaryseed is down three cents to 23 cents a lb. and yellow mustard is down sharply from 46 cents to 34 cents a lb.
The insured price of red lentils at 27 cents a lb. looks pretty good compared to the current market price. That’s a function of insured prices being based on the January price forecast from Agriculture Canada. However, the insured price last year was 35 cents a lb.
The average premium per acre is expected to go from $7.84 an acre in 2016 to $8.51 this year, which seems like a rather large increase when average coverage is only going up by $1. Imagine what the premiums would be if the federal and provincial governments weren’t paying 60 per cent of the premium cost and all of the administrative expenses.
Most insured yields are going up, but this will be highly variable from one producer to the next. Yield data as well as premium discounts and surcharges always lag by one year, so data from 2015 will be included in the calculations for this year. However, data from 2016 will not be included.
That’s good news for producers who had yield and quality problems in 2016. Estimated payouts in Saskatchewan for last year are $650 million. The program was a big help to a lot of producers.
In addition to analyzing your individual coverage levels and premiums, there are coverage options to consider.
With the variable and in-season price options, insured price levels change depending upon the direction of market prices. You have to pay a somewhat higher premium and your coverage could go up or it could go down. Unless you’re convinced that a crop has a significant upside price potential, these pricing options aren’t for you.
However, the contract price option can be used to increase the insured price for flax, lentils, alfalfa seed, canaryseed, mustard, identity-preserved canola and field peas. If you have a price or a price premium locked in on some or all of your anticipated production, that contract information can be used to raise your insured price.
No one wants to be in a crop insurance claim situation, but it’s a good idea to understand the program thoroughly.