Crop insurance premiums for growers are expected to increase by about 22 percent, which may vary depending on the farmer’s location and growing area.
LAKELAND – Farmers in Alberta are likely to face an increase in crop insurance premiums this year.
On March 10, Secretary of Agriculture and Irrigation Nate Horner said that while crop insurance will increase, the 60 percent increase required by the Alberta NDP is “completely inaccurate.”
According to Horner, grower crop insurance premiums are expected to increase by about 22 percent, which may vary depending on where a farmer is located and what crop they are growing.
“That’s an estimated average, but nothing compared to the 60 percent we’ve heard from.”
The increase is due to a combination of factors. For example, the 2021 drought resulted in indemnity payments “like we’ve never seen before,” Horner said.
Other factors include significant payouts for hail damage in central Alberta, as well as last year’s high crop payouts. “So that’s a big factor in the $1.3 billion,” he said.
“We’ve seen crop insurance go through a lot in the last two years,” Horner said, noting that Agriculture Financial Services Corporation’s (AFSC) crop insurance program has changed “dramatically” over the years and in recent years overall Paid $4.1 billion in 2 years.
The AFSC provides crop insurance to the province’s farmers and agribusinesses.
Around $1.3 billion was paid out last year and $2.8 billion the year before, according to Horner.
When asked how producers should deal with the rise in crop insurance, Horner said insurance premiums are increasing at the same rate as coverage.
“The fund has been very depleted in 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 only thing you can control is that insurance to cover those horrible years when everything else is out of your control,” he added. “As much as it goes up, [AFSC is] a non-profit insurance program. It’s actuarially sound and audited, they’re looking at a 25-year lens so they can control increases in the premium rate.”
The minister also noted that the program is 60 percent subsidized by the provincial and federal governments, with 36 percent paid by the federal government, 24 percent by the province, and 40 percent by producers.
As for the rising operating costs for farmers, “we’re all aware,” Horner said. “But I would say that is tremendous value [in the AFSC’s insurance program] for Alberta farming communities when all else is out [their] Control.”
When asked if the provincial government would increase its contribution to the insurance program due to higher production costs, Horner said the AFSC insurance program cannot be touched or changed by the province and is part of an agreement with the federal government.
“It’s nonprofit,” he repeated. “It’s actuarially sound,” and while the provincial government will look at other initiatives to help producers, the insurance program won’t.
According to an Alberta government document, $61.4 million will go to AFSC insurance programs under the 2023 budget.
