A price insurance program is being promoted by Alberta Pork to give producers more income protection. Ron Gietz a business development specialist with Alberta Agriculture, told a meeting here this month that industry has been working on the Alberta Financial Service Corporation (AFSC) to push ahead as quickly as possible.
“Perhaps a program can be delivered by next spring, quicker if possible,” Gietz told 150 regional hog farmers at a Alberta Pork director information meeting.
The key to the program is payment of a premium in advance to insure a floor price for market hogs. It is based loosely on a similar program for the cattle industry, and may be expanded beyond market hogs.
“You pay a premium on a grid and that insures you against a price dropping below a certain number,” Gietz said. The program will be based on an Alberta hog price or as close as possible to replicate the Alberta price on a monthly basis.
Farmers would be able to pay more premiums to guarantee a price further into the future. Premiums will not be subsidized. Administration costs will be incurred by AFSC. The plan is for premiums to reflect cost to AFSC, which is fully liable for risk.
Andy Vanessen of Picture Butte, an Alberta Pork director, said the new program sets a base price producers can choose for income protection. If the hog price exceeds the insured price, producers receive the higher market price but don’t get the premium back. They will get a cheque if market price is below the insured price for the insured period.
Vanessen said Alberta Pork officials looked at the timing of the insurance plan. “We met with the minister of agriculture, and said what the hog industry should have. It sets a bottom to losses. It can stop the big hits. That’s all it will do. You pay premiums and hope you never collect.”
As the price insurance plan gets closer, Alberta Pork will have more meetings, and an information website will be set up. Accounting firm Meyers Norris Penny will be part of it because of its strong relationship with Hutterite colonies. “If you have lots of money, you may not need insurance,” said Vanessen. “If you have tight finances, the program may be a big help.”