LAKELAND – Alberta farmers are likely going to face an increase in crop insurance premiums this year.
On March 10, Minister of Agriculture and Irrigation Nate Horner said that while crop insurance will increase, the 60 per cent increase claimed by Alberta NDP “is completely inaccurate.”
Horner said crop insurance premiums for producers are expected to increase by about 22 per cent which may differ depending on where a farmer is located and what crop they are growing.
“That’s an estimated average but nothing like the 60 per cent we heard of.”
The increase is due to a combination of factors. For instance, the 2021 drought led to indemnity payments “like we’ve never seen before,” said Horner.
Other factors include significant payouts in hail claims in central Alberta, along with the high value in crop payouts last year. “So, that’s a major driver in the $1.3 billion,” he said.
“We’ve seen crop insurance go through a lot over the last two years,” said Horner, noting Agriculture Financial Services Corporation’s (AFSC) crop insurance program has changed “dramatically” over the years, paying out a combined $4.1 billion over the last two years.
The AFSC provides the province’s farmers and agribusinesses the crop insurance.
Around $1.3 billion was paid out last year and $2.8 billion the year prior, said Horner.
When asked how producers are expected to handle the rise in crop insurance, Horner said insurance premiums increase at the same rate as the coverage.
“The fund has been greatly depleted over the last two years, there is a small growth factor in the fund, but beyond that, you’re paying for your coverage,” he said.
“As a producer, the one thing you can control is having this insurance to cover these terrible years when everything else is out of your control,” he added. “So, as much as it’s going up, [AFSC is] a non-profit insurance program. It’s actuarially sound and audited, they look at a 25-year lens so they can control increases in premium rate.”
The minister also noted the program is 60 per cent subsidized by the provincial and federal governments, with 36 per cent paid by the federal government, 24 per cent by the province, and 40 per cent by producers.
As far as the rising input costs for farmers, “We’re all aware,” said Horner. “But I’d say this... there’s tremendous value [in the AFSC’s insurance program] for Alberta farming communities when everything else is outside of [their] control.”
When asked if the provincial government will increase its contribution to the insurance program due to higher production costs, Horner said the AFSC insurance program cannot be touched or changed provincially and is part of an agreement with the federal government.
“It’s non-for-profit,” he reiterated. “It’s actuarially sound,” and while the provincial government may look at other initiatives to help producers, it will not be through the insurance program.
According to a document from the Government of Alberta, $61.4 million will go toward the AFSC insurance programs as part of Budget 2023.
