My name is Kenton Possberg. My wife and I operate a grain farm in Humboldt, Saskatchewan, which consists of 13,000 acres. We are a grain-only operation.
This presentation is in regard to production insurance and the lack of coverage, especially in Saskatchewan.
I realize that production insurance is a provincial-based program, but the variance in programming between provinces is alarming, and I have come to the conclusion that we need a federal-based program that will level out the differences between provinces and allow for more flexibility from a federal standpoint.
In the past five years in particular, our operation has had weather events play a huge role in our production. In 2001 we had drought; in 2002 we had severe drought; in 2003 there was drought again; in 2004 we had frost in August; and in 2005 we had 15 inches of rain at the beginning of harvest. As such, we have been reliant on production insurance coverage to try to make up the shortfall in income. We have always insured at the highest coverage levels.
I did an analysis between Alberta and Saskatchewan crop insurance programs. The period I examined was from 2003 to 2006. I used our actual numbers for production, and also for coverage and payments. I spent a fair bit of time working on the Alberta numbers and consulted their agriculture department. There may be some minor mistakes made, but the point was not for 100% accuracy, but rather the relative differences between the two.
Also, note that I did not include the year 2002, as too much time had passed for me to be able to be confident in my analysis. But this was the year that would have shown an even larger discrepancy due to a severe drought that cut our production by over 60%.
The main differences between the two provinces' programs are the way that a producer's yield is calculated for coverage, the effect that a production loss has on a producer's future coverage levels, and premium calculations based upon production history and claim history.
I found, based solely upon production loss, that between 2003 and 2006 an Alberta producer would have received an extra $454,000 in insurance payments. In addition, Alberta producers also have the ability to participate in a revenue insurance program, which will pay out based upon a drop in grain prices. This is not available in Saskatchewan or most other provinces. From 2003 to 2006, I found the same Alberta producer would have received an additional $288,000 through the revenue insurance program, had they participated.
In conclusion, I feel that too much time is spent debating the CAIS program and disaster aid, but not enough time is spent on looking to improve our current programming. A huge reason for the drop in our CAIS reference margin is due to the lack of a proper crop insurance program. CAIS was not designed to make up for crop insurance deficiencies, but to work in conjunction with a properly working program.
I have worked with the provincial department to design a more relevant program, but have gotten nowhere. The only way to get a proper production insurance program is to have a federally developed program that can be designed to fit each production area.
I would like the committee to undertake a provincial comparison of the net benefits from crop insurance for the typical farmer, assuming a wheat yield or canola yield with various levels in drops of production—let's say 50%—over a five-year period, and take into account what the impact of the CAIS program would be, and other programs, so that policy-makers have a better understanding of how farmers in various parts of the country are treated under the programs.
I'm not a proponent of handouts or ad hoc programs, and with a proper risk management program in place there would be no need.