CAMROSE, ALBERTA--(Marketwired - Jan. 24, 2014) - Agriculture and Agri-Food Canada
An innovative new livestock price insurance program will be available this spring to help cattle and hog producers in Western provinces manage price risks faced by the industry. Federal Agriculture Minister Gerry Ritz, Saskatchewan Agriculture Minister Lyle Stewart, Alberta Agriculture Minister Verlyn Olson, and MLA Donna Barnett (Cariboo-Chilcotin), on behalf of British Columbia Agriculture Minister Pat Pimm unveiled the new price insurance program today at the Canadian Bull Congress in Camrose.
The four-year Western Livestock Price Insurance Program (WLPIP) pilot is a unique collaborative arrangement between the federal government and the Western provinces to enhance risk management options available to the livestock industry. The pilot will help livestock producers protect themselves against unexpected price declines by allowing them to purchase insurance on an insured price selected by the producer from the available coverage levels. Premiums fully funded by producers.
Alberta introduced price insurance in 2009 for their cattle and hog producers sectors. This initiative expands the Alberta program to a regional model, opening it up first to livestock producers in British Columbia and Saskatchewan.
Livestock producers can expect to receive WLPIP information in March from their provincial agriculture offices.
- Alberta's Agriculture Financial Services Corporation will be the central administrative body for the Program to maximize administrative efficiencies.
- In Saskatchewan, the Saskatchewan Crop Insurance Corporation will be the lead customer service delivery agent for the Program.
- Federal and provincial governments will cover administration and delivery costs for the pilot WLPIP through Growing Forward 2's AgriRisk Initiatives - Administrative Capacity Building. The federal government will also provide deficit financing for the pilot.
"This historic initiative is a great example of collaboration among federal and provincial governments and industry to strengthen risk management options for producers. Our Government will continue to work closely with the Provinces and industry to ensure producers have access to the tools they need to grow their businesses and our overall economy."
- Gerry Ritz, Federal Agriculture Minister
"We have been committed to working with the industry to provide price insurance for our cattle and hog producers to help them better manage risk and grow the industry. This has been a top priority for our government and I am pleased to partner with the federal government and the western provinces to offer livestock price insurance."
- Lyle Stewart, Saskatchewan Agriculture Minister
"This program was pioneered in Alberta, in partnership with producers. Expanding this insurance option to other provinces will help the Western Canadian livestock industry protect itself from significant price downturns while also ensuring the program is delivered efficiently."
- Minister Verlyn Olson, Alberta Agriculture and Rural Development
"B.C. livestock producers have expressed great interest in having more tools that help them manage their price risks and the B.C. government is proud to have worked with our partners to deliver a Western Canadian program. Providing predictable and cost effective insurance products will help our cattle and hog producers manage their businesses and focus on longer term operations."
- Donna Barnett, MLA for Cariboo-Chilcotin, on behalf of B.C. Agriculture Minister Pat Pimm
"This program gives more producers access to a solid tool to manage price and basis risk, one of the more unpredictable aspects of managing an operation. Market-based risk management is key to better managing volatility."
- Martin Unrau, President, Canadian Cattlemen's Association (CCA)
- Backgrounder - Western Livestock Price Insurance Program
- Program website - Western Livestock Price Insurance Program
- Growing Forward 2 - AgriRisk Initiatives
- AFSC Livestock Price Insurance Program
Western Livestock Price Insurance Program
As part of the Growing Forward 2 (GF2) framework agreement, federal, provincial and territorial (FPT) Ministers of Agriculture made a commitment to encourage the development and implementation of new risk management tools for agricultural producers, including private sector risk management tools. To this end, the federal government and Western provinces have been working in collaboration to explore the feasibility of a livestock price insurance program.
Livestock producers face a substantial risk from unexpected price declines. Unlike crop producers, who have access to production insurance under the AgriInsurance program, livestock producers have fewer risk management options available to them.
The four-year pilot Western Livestock Price Insurance Program (WLPIP) will enable livestock producers to protect themselves against unexpected price declines beyond market expectations by allowing them to purchase insurance coverage, while still being able to take advantage of favorable market conditions if livestock prices should rise. Producers will select from a range of coverage and policy options to help them manage price risk. Indemnity payments will be paid to producers if the settlement price is less than the insured price. This pilot program is actuarially sound and self-sustaining, with premiums fully funded by producers.
Alberta first introduced price insurance in 2009 for fed cattle. Since then, Alberta broadened its livestock insurance programming to include feeder cattle, calves and market hogs covering price and basis risks. Through a unique collaborative arrangement between the federal and provincial governments, Alberta's existing program will expand to a regional model, offering a voluntary, simple and easy to understand price insurance product to livestock producers across Western Canada.
Alberta's Agriculture Financial Services Corporation (AFSC) will be the central administrative body for the program, using their experience with existing programs to maximize administrative efficiencies, which will allow for a rapid implementation of the expansion to the rest of the Western provinces.
Federal and provincial governments will cover administration and delivery costs for the pilot WLPIP through GF2 AgriRisk Initiatives - Administrative Capacity Building stream, which provides assistance for the implementation of new risk management tools. Canada will also provide deficit financing for the pilot. Near the end of the four-year pilot, governments will initiate a review of program operations and management and will consider its potential beyond the GF2 framework agreement.
Western Cattle Price Insurance
Cattle price insurance is reflective of price in the producer's local market, and coverage options are designed to reflect differences in localized prices and risk for different commodities. WLPIP will help reduce producers' exposure to price and basis risk. Producers have the option of insuring their calves, feeders, or fed cattle as well as selecting only basis protection for fed cattle. A new settlement index will be created to represent Western regional markets for feeders and calves.
Western Hog Price Insurance
Hog price insurance is designed to offer coverage based on current Western Canadian market conditions. Producers decide on the level of coverage, policy length and the amount of weight to insure. Settlement is based on the monthly average price of hogs sold in several Western Canadian markets. If the market goes above the insured price, producers can still take advantage of the upside and sell hogs for that higher price.
Livestock producers can expect to receive WLPIP program information in March from their provincial agriculture office. Further information on the pilot Western Livestock Price Insurance Program is available at www.wlpip.ca.