Alberta has 950,000 acres of unharvested farm land because snow still coats the arable land - and that doesn’t bode well for the province’s crop insurer.
The early onset of winter in 2016 has put 2017’s harvest of wheat, canola and barley in jeopardy and in turn leaned on Alberta’s Agriculture Financial Services Corporation (AFSC), which insures 80% of the province’s farms.
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“We do expect a lot of claims as a result of that (unharvested land) but it won’t be on the full 950,000 acres because around 200,000 acres are already over coveraged before they even get it harvested,” Daniel Graham, a manager at AFSC, said.
Graham added that more acres of farm land will still yield grain - just later than usual - and won’t require claims, but acknowledges spring returns won’t be an option this year. There are also potential losses on the horizon if there isn’t time to plant a second crop in the spring because the first field is still getting reaped, according to Graham.
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“Those that have elected to participate in insurance for 2017, could be eligible for the unseeded acre benefit,” he explained. “It’s $45 per acre that you weren’t able to seed that you would have been able to seed last year. There are some thresholds included in that but if they have planted fertilizers in the fall and weren’t able to seed it, that benefit would be higher on an acre basis.”
That situation, however, is pretty rare said Graham.
There are 22 different risk areas for crop coverage in Alberta and the AFSC prices them accordingly.
“The historical yields and losses of those areas are reflected in the base premium and if a producer were to take out a policy that is based on the rate base. As the producer makes his history, his rates will be based more on his own history - but the risk is split on an area basis,” Graham said. “The coverage for a comparable acre in one risk area to another can vary because of the different premium loss ratios from one area to another.”
The AFSC is still collecting data on crop coverage participation levels and doesn’t know if there’s been a surge of policy purchases this year - but Graham said there’s little fluctuation on an annual basis.
“A client will elect a level of coverage for his crop,” he explained. “So if he’s harvested some crop in the fall that exceeded his coverage level, the loss of the unharvested acres wouldn’t have compensation associated with it.”
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