crop insurance claims
— Calgary bureau
Alberta may pay close to $1 billion in support payments to farmers this year as crops succumb to drought, grasshoppers and hailstorms.
But other than some additional help for livestock producers, any help will come through existing farm programs.
“We are in a drought,” Alberta agriculture minister Oneil Carlier said at a news conference.
Beyond farm programs, further help for livestock producers who are short of feed and water was announced at the Aug. 6 conference.
Fees will be cut by 50 percent for the emergency water pumping program, retroactive to April 1.
The department of environment has agreed to open unused Crown lands for haying and grazing if there is water and if fences can be built. If a leaseholder is not fully using a grazing allotment, sub-leases will be allowed.
About 800 tonnes of hay have already been harvested from unoccupied Crown lands and additional land has been leased.
And previously, the federal government announced tax deferrals for western Canadian cattle producers who had to sell off breeding herds. However, a wide scale sell off does not seem apparent, said deputy minister David Burdek.
Year-to-date sales volumes are below the number recorded at this time last year and are well below the 30-year average. More might be sold once producers assess their winter feed supplies.
For crops hit by the dought, four programs already in place, including crop insurance, should deliver help if yields fall by a predicted 25-30 percent of normal. About one-third of canola acres and 28 percent of hard spring wheat acres are rated as poor.
Crop insurance has paid out $70 million on 3,000 claims so far this year.
“I believe with the programs we have in place, the agri-insurance program at AFSC (Alberta Financial Services Corp.), will go a long way and it is well subscribed to by producers in the province. It will go a long ways to getting that help they need,” said Carlier.
If current trends continue, $700-$900 million in direct support could be paid to farmers by the end of the growing season, he said.
Besides drought, two nights of hail storms and high winds on Aug. 4 and 5 struck down crops from Calgary to Gem, Alta. The following day a storm front travelled from west of Olds to Strathmore and caused significant damage, said Merle Jacobson, head of Alberta Financial Services Corp., which administers the provincial farm support programs.
But drought remains the major problem. Estimates indicate about 80 percent of Alberta farmers will experience some degree of loss due to the dry weather. Conditions throughout the province are highly variable due to spotty rains. Some may see a small yield loss while others face a total writeoff.
“When we look at the 80 percent that are affected, probably close to half are impacted 50 percent or greater. Those are the ones we are focusing our efforts on,” said Jacobson.
This year’s weather is similar to conditions experienced in 2009, as opposed to the drought of 2002, which was the worst in more than 100 years.
In 2015, farmers took out some of the highest-ever levels of crop insurance coverage. About 80 percent of the seeded acreage, or 14.7 million acres, has been insured for $3.68 billion.
About 6.4 million pasture acres or 29 percent of the pasture acres were insured for $79.9 million.
Hay insurance is available for crops such as alfalfa, legumes and grass. Producers insured 300,000 acres of hay in 2015 with $24.3 million in coverage. Approximately six percent of hay acres are insured in the province, similar to the rate across Canada.
BY JODIE SINNEMA, EDMONTON JOURNAL
EDMONTON – Insurance payouts could likely near $1 billion this year for the 80 per cent of Alberta farmers hit hard by this year’s drought, provincial agriculture representatives said Thursday.
Crop insurance programs have already paid out $70 million to farmers who have lost crops to drought, grasshoppers or hail. That number is expected to rise to between $700 million and $900 million as farmers head into harvest and file claims. That estimate is based on the best, most optimistic weather forecasts, so if there are more hail storms or an early frost, the number will rise.
Last year, when many farmers harvested bumper crops, the same programs paid out $371 million.
A $2-billion reserve fund in the Agriculture Financial Services Corporation’s insurance program, collected through premiums over the past 10 years, will cover the additional costs so neither the province nor taxpayers will have to foot the bill.
“There is no doubt that the early snow melt, dry spring and recent hail storms have taken a toll,” Agriculture and Forestry Minister Oneil Carlier said Thursday.
“While significant rainfall in July has provided some relief to portions of the province, we know that areas of the province remain very dry and some producers are still struggling.”
The rain has been spotty, with some farmers growing fairly good crops while their neighbours’ crops are stunted. In general, the worst hit areas are in northern Alberta in the Peace Country region, counties north of Edmonton, a strip in the province’s southeast and near Cypress in the south. Three counties added their names Thursday to the areas declaring agricultural emergencies, bringing the total to 17 counties declaring severe drought states. About two-thirds of those counties are north of Edmonton, including Lac Ste. Anne and Westlock, Thorhild and Sturgeon counties.
About 80 per cent of Alberta farmers are expected to feel the drought’s financial impact, with half of those likely taking in half the typical crop.
“What does that look like? If you take it where half your revenue from the year is gone, that’s really what it comes down to,” said Merle Jacobson, chief operating officer for Agriculture Financial Services Corporation, which administers the insurance programs for farmers. “It really makes it a challenge.”
The province estimates crop yields will be 25 to 30 per cent smaller than the average over the past five years. That’s similar to the drought in 2009, but less severe than the one in 2002 that devastated large areas of the province.
To help out beyond the typical insurance programs, the province is working with municipalities to find underused Crown land that hard-hit farmers could sub-let to feed their animals. Farmers filling up their dugouts and reservoirs with water pumped from provincial lakes and rivers will also pay half the rental fees they usually do, with the reduced pumping fees retroactive to April 1. About 50 people have used the water pumping program this year, although the province is prepared to see up to 1,400 clients coming forward to fill dugouts for cattle.
READ MORE HERE: Insurance payouts to drought-hit farmers will likely near $1 billion
Last year, when stellar crops created an ideal year, the Agriculture Financial Services Corporation spent $371 million on several crop insurance programs. That amounted to 50 per cent of premiums brought in.
During the last significant drought in 2009, insurance payouts amounted to about 111 per cent of premiums paid.
In 2002, during a one-in-100-year drought, insurance payouts were just shy of 400 per cent of premiums.
This year’s drought insurance payout is estimated to be 120 to 125 per cent of premiums.
Record-breaking temperatures and extremely low rainfalls across Western Canada are causing chaos for farmers and firefighters this summer as they grapple with the worst drought in more than a decade.
The widespread hot and dry conditions in B.C., Alberta and Saskatchewan have led to a jump in wildfires, tight water restrictions, and pressure on farmers as many crops remain stunted and the cost of hay skyrockets.
And while some rain sprinkled over the largely bone-dry Prairies this week, it may be too little too late for the western provinces to fully recover before the summer ends.
Plans to help the dry provinces cope with the drought have already been initiated. On Thursday, Agriculture Minister Gerry Ritz announced the federal government would grant tax deferrals to livestock producers in regions affected by drought.
On the same day, with smoke billowing from a hillside behind him, Prime Minister Stephen Harper vowed to take a hard look at new ways to fight devastating wildfires like the one raging near West Kelowna, B.C.
In Alberta, several counties have declared states of agricultural emergency. In Saskatchewan, crop insurance rules are being loosened to help the anxious farmers. In British Columbia, water restrictions have been imposed while “drought shaming” grows on social media.
And it’s prompting many people to ask just what’s going on.
“Is it climate change? I don’t know. It may just be a fluke, it may just be something coincidental, it’s hard to say,” says David Phillips, senior climatologist with Environment Canada.
He says although many people have associated the lack of rain in the region with El Niño — a climate event that happens when warm water in the Pacific Ocean interacts with the atmosphere — it may actually be connected to a mass of warm water in the Pacific Ocean that originated in the Gulf of Alaska and moved down the coast to British Columbia. It’s been dubbed the “Pacific blob.”
“(It) could have contributed to weather blocking, which prevents normal processing of precipitation events, over the western provinces,” Phillips says, adding it also could have brought wetter weather in the east.
“What we’re seeing now is conditions go from one extreme to the other,” Phillips says. “Some parts of the Prairies last year were the wettest on record. This year, we’ve seen the opposite.”
He calls it “weather whiplash.”
“That seems to be a common thing that we’re seeing around the world, where normal doesn’t exist anymore.”
China‘s insurance regulator estimates the payout in the fatal Yangtze cruise ship capsizing last week, which killed more than 400 people, at around 92.5 million yuan (9.62 million pounds), the official Xinhua news agency reported on Wednesday.
The China Insurance Regulatory Commission (CIRC) told a conference on Wednesday that insurance firms underwrote 340 contracts for parties involved with the accident, ranging from shipowners and travel agencies to passengers and crew members.
Another official media outlet, the Shanghai Securities News, reported on Thursday that the ship, owned by Chongqing Eastern Shipping Corporation, was insured for by 15.7 million yuan by the People’s Insurance Company of China (PICC) (1339.HK).
The Chongqing branch of PICC has paid 10 million yuan to Chongqing Eastern Shipping Corp so far, said the paper.
It said CIRC’s estimates also included 12 million yuan of liability insurance for travel agencies, 61.7 million yuan of personal insurance for 396 passengers and 3.12 million of personal insurance for 18 crew members.
The four-deck Eastern Star was hit by a freak tornado on June 1 and capsized on the Yangtze River in one of China’s worst shipping disasters in nearly 70 years.
By Jen Skerritt, Bloomberg
Gray clouds gather near Greg Bowie’s Alberta ranch, but not a raindrop in sight.
Bowie’s 350-acre pasture is so thirsty that it hasn’t grown enough to feed his 100 cattle. He spent C$3,600 ($2,892) in May to truck in hay.
“It basically doubles your cost on every animal every day,” Bowie, chairman of Alberta Beef Producers, said from his ranch near Ponoka. “The pasture and the hay land need considerably more moisture this time of year and we just haven’t had it.”
Dry conditions have worsened in pockets of Canada’s cattle country, with some areas receiving less than 40 percent of normal rainfall, according to Agriculture and Agri-Food Canada. Livestock producers are bringing in extra hay as forage and some are considering selling animals to reduce costs, said Fred Hays, policy analyst at the Calgary-based beef-producers organization, an industry group that represents 20,000 ranchers.
The dry spell is the latest setback for Canada’s cattle industry, which has declined in the past decade following mad cow disease, floods and labor shortages. The herd in Canada, the world’s eighth-largest beef exporter, is the smallest in 22 years.
“They don’t have the pastures that they need,” Hays said. “It’s getting more and more serious.”
While dry spring weather helped some farmers get an early start on planting, below-normal rainfall has kept pastures from turning green and producing feed, said Trevor Hadwen, agroclimate specialist with Agriculture and Agri-Food Canada. Parts of Saskatchewan and Alberta, Canada’s largest cattle producer, have not received rain for as long as 31 days and one area of eastern Alberta has seen record dryness since April 1, he said. Dry conditions also hampered canola seeding in parts of the Prairies.
May is typically a wet month and the area is “getting close” to a drought, Hadwen said. Lack of moisture is also raising concern about grass fires, he said.concern about grass fires, he said.
There were 39 wildfires burning in Alberta as of June 5, including two that were out of control, the province said.
“Drought is a progressive, slow onset, kind of a creeping disaster,” Hadwen said. “We’re certainly going down that path.”
The situation is a contrast to the U.S., the world’s largest beef producer, where the wettest May on record has boosted pasture conditions in Texas and is prompting ranchers to expand their herds. Drought conditions that shrunk herds to the smallest since 1952 are easing and the U.S. Department of Agriculture forecasts domestic beef output will halt its four- year slide in 2015 and increase next year.
Continued dry weather and lack of rain is starting to affect crops in many areas of Alberta, the province’s agriculture ministry said in a May 29 report. Surface soil moisture declined 24 percent from a week earlier and hay and pasture growth is slow due to cool nights and dry conditions, according to the report.
Canadian ranchers held 11.9 million cattle as of January 1, the fewest since 1993, government data show. Slaughter and exports rose in 2014 as record high beef prices offered farmers an incentive to move their animals, Statistics Canada said in a March 5 report.
If dry weather continues into June, producers may start sending cattle to be processed in the U.S., said Brian Perillat, a senior analyst at Calgary-based Canfax, a livestock industry researcher. Prices won’t increase as U.S. ranchers are expanding their herds and will be able to absorb cattle coming from Canada, he said.
Insurance programs don’t cover the cost of trucking in feed and the price of hay will probably rise as much as C$30 per bale, almost double the current price, if demand for forage increases, Hays said. It can cost producers “tens of thousands” of dollars to bring in forage for cattle, depending on the size of the herd, he said.
“There’s quite an expense there,” Hays said. “That’s when producers might start thinking it’s time to start liquidating.”
Bowie normally puts his cattle out to graze on pasture land in mid-May and estimates he’s already two weeks behind.
“If we don’t get any moisture we might as well graze what’s there,” Bowie said. “The longer it stays dry the higher the costs go.”