Resources available to producers

 
 
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 Backgrounder


August 6, 2015

Key Stats
  • In 2015, a record 78 per cent of seeded crop acres in the province were insured through Agriculture Financial Services Corporation (AFSC) crop insurance. Producers insured 14.7 million crop acres, with $3.68 billion in coverage.
  • Producers have insured 6.4 million pasture acres for $79.9 million in coverage, approximately 29 per cent of pasture acres in Alberta.
  • To date, AFSC has paid out approximately $70 million in claims on more than 3,000 insurance policies.
  • For multi-peril crop insurance alone, AFSC estimates total claim payments to range from approximately $700 million to $900 million.
  • Preliminary estimates are that crop yields for 2015 will be 25 to 30 per cent below the five-year average, varying from region to region.
  • Approximately 32 per cent of canola acres and 28 of Hard Spring Wheat acres are rated as poor quality.

Growing Forward 2
  • Growing Forward 2 is a five-year federal/provincial/territorial agreement which includes a suite of business risk management programs available to farmers to help mitigate some of the unique risks in agriculture.
  • These programs, which are administered by AFSC, include AgriInsurance, AgriStability, and AgriInvest.

AgriInsurance
  • AgriInsurance provides protection against losses caused by designated natural perils for crops, hay and pasture.
  • Premiums are cost shared 40:36:24 between producers and the federal and provincial governments.
  • Through production crop insurance, producers select a yield guarantee for a crop by electing 50, 60, 70 or 80 per cent of their average yield for a crop. In 2015, the average coverage level elected was 77 per cent.
  • A claim is triggered when the total production, adjusted for quality, for a crop is below the yield guarantee.
  • Producers have flexibility to harvest, use for livestock feed, or abandon all or part of a crop.
  • Additional insurance endorsements can be purchased including:
      • Spring Price Endorsement – payment is triggered when the fall harvest price is less than the spring insurance price
      • Hail Endorsement – payments are triggered by damage from hail or fire to all or part of a viable crop
      • Moisture Deficiency Endorsement – top up to hay coverage for producers who want more coverage for costs such as transportation. Payments are triggered when precipitation at a weather station is less than 80 per cent of normal.
  • Hay insurance is available for hay crops such as alfalfa, legumes and grass. Producers insured 300,000 acres of hay in 2015 with $24.3 million in coverage. Approximately six per cent of hay acres are insured in the province, which is a similar utilization rate across Canada.
  • Area-based insurance products are also available for pasture. Losses are triggered by events that can include less-than-normal rainfall, spring soil moisture or heat.
  • Straight Hail Insurance can be purchased at any time until October 31. Premiums and administration costs are paid by Alberta producers.
  • The Western Livestock Price Insurance Program provides producers coverage against price declines for fed and feeder cattle, calves and hogs. Producers can select a range of deductibles and policy lengths. Claims are triggered when the provincial average cash price for the type of livestock insured is less than coverage elected by the producer. In 2014/15, 3,119 producers bought 4,738 policies with $1.2 billion in coverage.

AgriStability
  • AgriStability provides support for participating producers against a significant decline in farm margins for their whole farming operation.
  • All producers are eligible and need to pay a small fee to participate.
  • Payments are triggered when the current year’s margin declines more than 30 per cent for the historic production margin.

AgriInvest
  • AgriInvest is a matching deposit-based program for producers administered by the federal government and assisted by AFSC as necessary.
  • Producers deposit up to one per cent of their Allowable Net Sales to a maximum of $15,000 per year, which is matched by the federal and provincial governments.
  • Producers have the flexibility to withdraw funds at any time throughout the year for any reason, including covering margin declines or investing in activities that will improve farm income.
  • The matching deposits and administration cost are shared 60:40 by the federal and provincial governments.
  • $541 million on deposit as of July 19.

AgriRecovery
  • AgriRecovery provides a framework for provincial and federal governments to assist producers affected by disasters. It is intended to complement rather than duplicate or replace existing programming.
  • The federal and provincial governments assess the situation, including the amount of funding available from existing programs, and develop an appropriate response.
  • Initiatives vary depending on the specific situation.

Lending Programs
  • Demand for AFSC lending programs has increased over the past 10 years with annual lending growing to $523 million from $185 million. The loan portfolio has grown from $980 million to $2.1 billion over the same period.

Alberta Farm Loan Program
  • AFSC’s Alberta Farm Loan Program is designed to enable the purchase of new land, equipment and livestock to help farms grow.
  • This program provides competitive interest rates and long-term fixed-rate financing up to $5 million. Beginning farmers receive a 1.5 per cent interest rate reduction for the first five years.
  • The program has flexibility for clients facing difficult economic conditions caused by factors such as drought. These options include new debt, refinancing, re-amortization up to 20 years, and temporary interest-only payments.

Commercial Loan Program and Value Added and Agribusiness Loans
  • Available to rural business which may be also be affected due to the impact of challenging growing conditions on producers.

Emergency Water Pumping Program
  • Provincial government program maintains and distributes a fleet of pipe trailers and pumps to fill depleted dugouts and reservoirs. Alberta producers experiencing water shortages for domestic and livestock use are eligible.
  • Between 400 and 1,400 clients use this program annually.
  • Rates have been cut by 50 per cent.
  • Producers should contact their local Environment and Parks office if they have questions about temporary diversion licences or water licences.
  • To arrange for rental of the water pumping equipment, please call the Water Pumping Program at 780-422-5000.

Livestock Tax Deferrals
  • Under the federal Income Tax Act, the federal government, in consultation with the provincial government, can designate areas within the province where producers are eligible for tax deferrals on sales of breeding livestock as a result of adverse conditions.
  • A portion of the sale proceeds are deferred for one year to help replenish stock the following year. Proceeds from deferred sales are included as part of the producer’s income in the next tax year, when those proceeds may be partially offset by the cost of replacing breeding animals.
  • In July, approximately 65 municipal districts and counties across Alberta were designated as eligible for livestock tax deferrals for 2015.

Growing Forward 2 Water Programs
  • Through the federal-provincial Growing Forward 2 agreement, a number of proactive programs were established to help producers and agri-businesses enhance water management practices.
  • Programs provide grant funding to enhance on-farm water management, irrigation efficiency, on-farm environmental stewardship, and regional water supply studies.

Grazing Access
  • Alberta Environment and Parks assists with feed shortages by utilizing public lands for haying and grazing cattle.
  • Haying and temporary grazing permits will be issued for suitable locations that will not conflict with other users. Temporary fencing is required that will contain any livestock.
  • Current grazing disposition holders may also be granted permission to make underutilized lease land available to another producer.
  • Individuals can find contact information for their local Rangeland Agrologist’s office on our website at aep.alberta.ca or by calling the Information Centre at 310-ESRD.
  • Specialists are also available to provide advice to livestock producers on how they can best manage their grazing practices in challenging conditions.

Online Resources
  • Alberta Agriculture and Forestry posts regular crop reports and agriculture moisture situation updates on its website www.agriculture.alberta.ca to ensure producers have current information about growing conditions in their area.
  • Resources are also available to support producers in their decision making, including:
      • Planning and preparing for dry conditions
      • Drought management checklist
      • Forage, hay and pasture management
      • Crop management
      • Livestock management
      • Programs and services to help manage business challenges
  • Producers looking to buy or sell hay can check out options on the Alberta Hay and Pasture Directory that is available online.
 
 
 
 
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For more information about the content of this document, contact Kelly Bernard.
This information published to the web on August 4, 2015.