Minister of Agriculture and Irrigation Nate Horner and Agriculture Financial Services Corporation (AFSC) Vice President of Innovation Emmet Hanrahan held a virtual media roundtable on Thursday, March 9 following claims crop insurance premiums would be increasing by 60 per cent.
Although farmers and producers will see an increase to crop insurance premiums, Minister Horner shared the average increase is about 22 per cent over 2022 premiums.
“Crop insurance premiums will see a rise, and it’s almost entirely due to specific crop commodity change, year over year,” Minister Horner explained during opening remarks at the roundtable.
Minister Horner pointed out, over the last two years, AFSC has paid out some $4 billion due to unprecedented challenges faced by farmers.
This includes the one in 80 year drought which wreaked havoc across the province and other prairie provinces in 2021; there were also some $1.3 billion in payouts in 2022 which were attributed to continued drought in parts of the province, along with hail damage.
He noted some of the confusion and misunderstanding may be due to the fact premium rates have increased by 60 per cent over the last two years, with a 38 per cent increase over 2021 premiums seen in 2022. However, Minister Horner added commodity prices have also increased by 57 per cent over the same period.
“One of the mitigating factors to large swings (in premium rates) is there’s a year-to-year cap of 10 per cent on the premium,” explained Minister Horner. “That 10 per cent on premium rate is a growth driver when the fund is below what actuaries would deem as stable that can grow year over year--everything else is related to crop and elected coverage.”
Minister Horner and Mr. Hanrahan noted the AFSC crop insurance program is a non-profit insurance program which is subsidized by both provincial and federal government levels. As such, it is able to recover losses due to these large payouts in 2021 and 2022 over a much longer 25-year period when setting premium rates.
It is anticipated premiums will increase by some 12 per cent for canola, nine per cent for feed barley, and two per cent for yellow field peas.
The 2023 provincial budget also includes a provision of $61.4 million to ensure the AFSC program has “appropriate funding to support producers during challenging times.”