Farmers should be thinking of risk management as the April 30 crop insurance deadline approaches, says Agriculture Financial Services Corporation (AFSC).
“Most producers will invest $200 to $300 or more per acre into their crops over the growing season, and they don’t want to risk losing that to a hailstorm or some other unexpected weather event,” AFSC spokeswoman Nancy Smith said in a press release.
More than 75 per cent of Alberta farmers insured about 15 million acres of annual crops last year, with about $295 million paid out in claims. The lion’s share of payouts last year — roughly $219 million — was triggered under the Hail Endorsement rider, an option chosen by about 90 per cent of producers.
Despite more than 3,700 hail claims, actual losses under the production guarantee that crop insurance provides were only $36 million — among the lowest ever, said Smith. Crop insurance allows farmers to insure up to 80 per cent of their average production on most crops.
From the Grainews website:
New crops and climates drive crop insurance changes
“If yields fall below that, a claim is triggered,” said Smith. “Even many farmers with hail damage harvested above-average yields last fall because growing conditions were ideal across much of the province.”
The Spring Price Endorsement rider on crop insurance triggered $38.8 million in claims after commodity prices on many crops fell up to 25 per cent last fall. That rider compensates farmers when crop prices fall 10 per cent or more between spring and fall.
Other perils that triggered claims included excess moisture, which led to unseeded acres in some areas.
Changes to crop insurance this year include increased Straight Hail coverage, which producers can Auto-Elect with their policy by April 30.
“Previously we capped Straight Hail coverage at $150 per acre for most crops,” said Smith. “We’ve now increased coverage to $225 per acre for dryland cereals, and $325 per acre for dryland canola and chickpeas. For irrigated crops, coverage has increased to $400 per acre for cereals, and $425 per acre for canola and chickpeas,” says Smith.
Farmers who Auto-Elect Straight Hail also receive a two per cent premium discount.
Producers should review and ask questions about their crop insurance to ensure they understand the options and coverage choices available this year, she said.
“For example with lower commodity prices, crop insurance premiums and dollar coverages will come down because the value of the crops being insured is less. Producers may want to review their coverage level and endorsements because premium costs per acre in most cases are now lower.”
About 60 per cent of the cost of crop insurance premiums are subsidized by government. For more information, contact your local AFSC branch or call 1-877-899-AFSC (2372).