ATHABASCA – Crop producers in Athabasca, Barrhead, and Westlock County are going to see a higher-than-average increase in the cost of their insurance in 2023, but nowhere near the 60 per cent increase in premiums recently suggested by the Alberta New Democratic Party (NDP).
On March 3, NDP agriculture and rural economic development critic Heather Sweet made a claim that crop insurance premiums would be going up by 60 per cent.
In response, agriculture and irrigation minister Nate Horner held a round table with the press March 9 to refute Sweet’s claim, which he said was “completely inaccurate.”
The crop insurance program has paid out around $4.1 billion over the last two years, according to Horner. There was a drought in 2021, and despite higher-than-average production, specific areas were heavily impacted by hail, and a “cool, dry” spring impacted canola production.
The rates that producers pay are directly impacted by this; in order for the fund to continue, it has to have money in it. The governments subsidize 60 per cent of the program (36 per cent is from the federal government, and the other 24 is provincial). The other 40 per cent comes from the fees paid by local producers.
Horner then clarified that crop insurance premiums are going actually going up 22 per cent, on average, for farmers across the province.
So, how do you get two radically different numbers like that? Sweet’s claim was based on the fiscal plan for the upcoming four years that the UCP put out Feb. 28, which said that “agriculture insurance premium rates (will be) increasing 60 per cent to raise the crop insurance fund balance back to a level recommended by actuarial evaluations.” The 60 per cent increase was calculated from the initial 2022 budget expectation.
When the budget for 2022 was first put out, the crop insurance premium estimate was low. A higher-than-expected crop price pushed the premiums up, according to Emmet Hanrahan, VP of Product Innovation for Agriculture Financial Services Corporation (AFSC)
He noted there were a few different factors for this, but Russia’s invasion of Ukraine was a large contributor.
The 22 per cent Horner talked about will be the average increase from the actual premium paid by local producers last year.
With that in mind, Hanrahan said producers in the counties of Westlock, Barrhead and Athabasca would be seeing a slightly higher increase in crop insurance premiums than the 22 per cent suggested by Horner.
The three counties have had higher claim rates in the previous years. In 2019, an early snowfall covered and killed many farmers crops off, and the number of claims made in 2020-22 has upgraded the risk factor for the region.