AFSC Crop Insurance Deadline Is April 30

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“My best guess is prices will remain relatively stable at the levels we’re seeing now. But we have no way of knowing if markets have bottomed out yet.”

CHARLIE PEARSON

AARD

AFSC RELEASE

As farmers across the province get ready to seed their crops, parched fields and slumping grain prices are among the biggest risk factors on many producers’ minds, says provincial crop analyst Charlie Pearson.

“I’m hearing a lot of concern from farmers on both of those issues,” says Pearson, who works with Alberta Agriculture and Rural Development, and speaks with producers across the province. “Many areas are starting off with low soil-moisture levels, so every-one’s hoping for plenty of spring rain to turn things around and get crops off to a good start.”

On the price side, many producers are feeling anxious because crop prices have dropped substantially in the last two years, says Pearson. No one anticipated wheat, canola and barley prices would plunge 20 to 40 per cent between spring and fall last year, he says. So far this year, prices remain down. Wheat is in the $4-to-$5/bu range compared to $5.50-to-$7/bu at this time last year. Canola has slipped to $8-to-$9/bu compared to $9-to-$10/bu last spring.

With margins so tight, he hopes prices won’t slide further.

“My best guess is prices will remain relatively stable at the levels we’re seeing now. But we have no way of knowing if markets have bottomed out yet.”

Pearson is most optimistic about canola because demand for vegetable oils remains strong. But Pearson says there are a number of factors that could spur prices on all crops in either direction.

Prices could easily climb higher if severe weather negatively impacts crops in a major producing region of the world, says Pearson. “On the other hand, perfect weather worldwide and two to three inches of spring rain in Alberta with reasonable rain through the summer could result in bumper crops that drive up world grain supplies and drive prices lower.” Pearson says favourable weather and abundant world crops were partly to blame for prices dropping last fall. He adds the strong Canadian dollar could send prices downward if the loonie continues to rise this summer.

April 30 deadline

With so much uncertainty around prices and weather, Pearson says it’s a good idea for farmers to look at options such as crop insurance and locking in some prices now in case they dip lower by the fall. He advises producers to consider tools such as forward delivery contracts with grain companies, which guarantee prices for grain delivered this fall; or the Spring Price Endorsement (SPE) rider on crop insurance, which protects farmers if prices decline 10-to-50 per cent between spring and fall. Pearson notes the deadline to apply for crop insurance in Alberta is April 30.

SPE paid out $80.5 million following the price drop in 2009 – the highest payout in 10 years, says Lorelei Hulston, provincial insurance manager for Agriculture Financial Services Corporation (AFSC), the provincial Crown Corporation that administers crop insurance in Alberta on behalf of the provincial and federal governments.

New Crop Insurance Option

A major change to crop insurance this year is the option to elect Straight Hail coverage at the same time you purchase regular crop insurance, says Hulston. “Until now, producers had to wait until their crops emerged to purchase Straight Hail Insurance. If they waited too long and their fields were damaged more than 25 per cent by early hail, they were no longer eligible for Straight Hail coverage on those fields for the rest of the year.”

“The new Auto Elect option eliminates that risk because your hail coverage can now be in place before April 30,” says Hulston. She says producers who choose Auto Elect receive a two per cent discount on their Straight Hail premium. Hail damage, low grain prices, and cool, dry conditions were to blame for most of the $444 million paid out in crop insurance claims last year across the province, she adds.

Additional Changes

Other new changes to crop insurance this spring include coverage of stored silage that is consumed by wildlife, says Hulston. And the Bee Overwintering Insurance program is available again after being unveiled last year. It insures producers against higher than normal death losses over winter. Producers with questions about crop insurance can call their nearest AFSC office or the AFSC Call Centre at 1-877-899-AFSC (2372)before the April 30 deadline.

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