Alberta crop insurance payout could exceed $1 billion

It’s too early for accurate estimates but the scale of the disaster is massive, says provincial crop insurer

Beyond crop insurance, AFSC is looking at options such as increasing interim payments for AgriStability.
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Crop insurance payouts could top a billion dollars for the devastating drought that has hit much of Alberta.

“We collected about $600 million in premiums this year, so we’re looking potentially at payments twice that amount,” said Darryl Kay, CEO of Agriculture Financial Services Corporation (AFSC.)

“It’s really early yet, so it’s hard to speculate on the dollars at this point, but we do know that payments will be significant, not only on the annual crop insurance but on the perennial side as well.”

In past situations — such as the 2002 drought — the provincial crop insurer issued payouts that were double the amount of premiums, and a lot of farmers insured their crops this year.

Adjusters will work as quickly as possible to process claims, says Darryl Kay, head of the provincial crop insurer. photo: Supplied

“We saw record uptake in our annual crop insurance program this year — almost 16 million acres — and there are going to be significant payments through that program,” Kay said on July 19.

Overall crop conditions are “pretty severe” as a result of record-high temperatures and abnormally dry conditions, he said. Some areas, such as the central region, are faring better than others, while conditions in the northwest, northeast, and Peace regions continue to worsen.

“In the last two weeks, we’ve really seen crop conditions deteriorate across the province,” he said. “In a typical year, you’ll see between 70 to 75 per cent of crops in good to excellent condition, but we’re now seeing that drop into the 30 per cents provincially.”

As a result, both annual and perennial crop insurance programs are expected to pay out this year.

Assessing crops — particularly ones that could be used as livestock feed — is a key concern but Kay said he is “pretty confident” his organization can keep up with what will likely be a massive number of calls.

“We have almost 120 adjusting members across the province, and we’re looking very closely at where those resources are needed and reallocating them across the province to deal with those areas that are most urgent,” he said.

Claims are being prioritized for clients who want to use their crop to feed cattle, he added. For those producers who plan to bale or silage their crop, AFSC recommends leaving strips of the crop so there’s no need to wait for an adjuster.

However, farmers need to call their local crop insurance office first.

“Clients must not dispose of or put an insured annual crop to a use other than combining, or for insured hay crops, putting up in dry measurable bales, without AFSC first releasing the acres,” the insurer said in a July 9 post on www.afsc.ca.

But corporation recognizes the need to move quickly, said Kay.

“At the end of the day, we want to make sure we’re supporting producers and that they can make their decisions quickly,” he said. “So if they’re making that call to put the land to an alternate use, all they really have to do is reach out to a branch and we’ll respond as quickly as we can.”

AFSC is also considering a program similar to the Low Yield Appraisal announced for Saskatchewan producers on July 14. The Low Yield Appraisal, through the Saskatchewan Crop Insurance Corporation, will allow producers to salvage low-yielding crops as feed without negatively impacting their coverage.

“It’s certainly part of the review we have underway working with the government of Alberta and the federal government,” said Kay, adding his officials are analyzing costs and delivery for such a program right now.

“We’ve looked very closely at Saskatchewan’s response and at other provincial responses, and we’re considering all of our options at this time.”

AFSC is also working on its policies and procedures to make it easier for adjustors to make quick decisions.

“We know the pressure is going to continue to build — that there’s going to be more pre-harvest claims that people come forward with — but I’m also confident that we have the people and processes in place to move quickly,” said Kay.

Beyond crop insurance, AFSC is looking at increasing interim payments for the AgriStability program, as well as offering loan payment deferrals and interest-only payment periods for their lending clients.

“We want to be very responsive to their individual needs and have conversations about ways we can help from a cash-flow perspective,” he said.

AFSC is also involved in discussions about a potential AgriRecovery program with the provincial and federal governments.

“There’s likely a need for some kind of AgriRecovery response to cover some of those increased costs we’re going to see from a feed perspective,” said Kay, adding that Agriculture Minister Devin Dreeshen “recognizes the urgency of the situation and wants to move really quickly on this.”

In the meantime, “we’re trying to make sure that we are doing everything we can to help producers,” he said.

About the author

Reporter

Jennifer Blair

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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