Thank you.
Mr. Chair and members of the committee, thank you for the invitation.
I'm here to make a structural argument that Canada's BRM framework has begun to recognize private insurance, most recently through the 2020 AgriStability amendment, but does not yet currently extend the federal risk backstop or premium subsidy to qualified private products, even when they cover risks that the public products do not. The risks that the public programs do not cover are widening, and the next FPT framework is the moment to address it through partnership with provincial Crown corporations, not replacing them. I will close with three recommendations for the committee's consideration.
Global Ag Risk Solutions is a Saskatchewan-based crop insurance company. We are fully private, and over 15 years, we have paid nearly half a billion dollars in claims to Canadian producers. We've channelled international reinsurance capital into Canadian agriculture and introduced product innovations in margin coverage, parametric heat coverage and integrating with the Crown corporation's yield coverage.
The risk that Canadian producers manage has changed dramatically. Our customer data shows that the break-even in western Canadian grain farms has more than doubled in the last decade, from approximately $250 per acre to now over $550 per acre and rising. At the same time, trade tariffs, market disruptions and geopolitical risks have never been more volatile, and farms have grown to a scale at which an off-farm job in the winter can no longer fill the risk gap that it could a generation ago.
Private insurance is already part of Canada's BRM landscape in hail and livestock price insurance and margin and parametric coverage offered by GARS and others, and the public framework itself is under strain. AgriStability participation has fallen to below 30% today.
AAFC's own evaluation concludes that the program's “current design and delivery favours larger operations and sectors with narrow margins” and that the complexity “is a major barrier to participation”, particularly for smaller producers.
AgriInsurance covers approximately 73% of the value of Canadian crop production, but there are significant gaps in horticulture, livestock, aquaculture and small mixed operations.
The next FPT framework, taking effect in 2028, is the moment to address this. I will propose three recommendations for consideration.
First, amend AgriStability to permit producers to elect enterprise-level accounting, separating grain from livestock margins, which would allow producers to choose the option that best fits their operations and won't penalize them for diversifying. I also believe that we should introduce a lag year rather than using the current year or developing the reference margins, and we need to simplify the program. This addresses the structural failures that AAFC has documented in its own evaluations. Whole-farm averaging prevents triggering on diverse operations, and complex margin calculations that are not known well into the program year disincentivize participation.
Second, I believe that we should establish a federal reinsurance backstop to approved private BRM products on equivalent terms to the public crop insurance with rigorous federal approval criteria. This would allow for a portable premium subsidy, so producers could direct their existing subsidy entitlement to whichever approved product, whether that's public or private, best fits their operation.
Third, I'd argue for establishing a structured pathway modelled after the U.S. Federal Crop Insurance Act, section 508(h), by which a qualified private insurer may submit new BRM products for federal approval, premium subsidy and backstop, with approval weighted towards products that extend coverage to underserved risks, sectors and regions.
I want to be clear that this is not a submission that is proposing the displacement of the provincial Crown corporations. It is not a removal of the public option. It is also not a reduction in existing subsidies. It is a recommendation that is in partnership, not replacement.
The U.S. has operated with a public-private system for decades, and their industry continues to flourish. While it has its flaws, their framework now insures over 130 unique agricultural commodities with 12 private insurers under federal rules, with the federal government acting as the reinsurer and regulator.
The structural question this committee faces is whether Canada's next framework should permit and incentivize private innovation within the publicly supported system or continue to leave that capacity outside the framework.
I look forward to the committee's questions.
Thank you, Mr. Chair.