AG INSURER TO LAUNCH BMP DISCOUNT PROJECT
BY IAN DOIG
Under the latest five-year Sustainable Canadian Agricultural Policy (SCAP) framework, each province must develop its own ag insurance initiative to promote a best management practice (BMP) that produces an environmental benefit while it reduces operational risk. Farmers who employ the practice could receive a benefit through their premium calculations. In Alberta, program development falls to the Agricultural Financial Services Corporation (AFSC), which partners with the provincial and federal governments to create and deliver farm insurance products. “Every province has been given free rein to do whatever they feel is impactful in that province,” said Jesse Cole, AFSC manager of insurance products and product innovation.
Within the five-year agreement, AFSC must implement at least one agri-insurance product that incorporates the practice. Cole noted the project will contribute to the insurer’s own risk arithmetic while it may well benefit the ag industry as a whole. The farmer will be eligible to sign up for the new insurance product if they have adopted the designated practice less than seven years prior to the insurance start date. Beyond that, its effects will have been accounted for in the existing insurance package.
To what degree politically mandated social good should be incorporated in crop insurance is not AFSC’s job, said Cole. “It’s about the environment on the federal side. Our mantra is we don’t want to tell anybody how to farm. We want to insure things accurately. This pilot allows us to ask, ‘Are there any improvements we can make? Do some of these environmental factors have an impact on risk? Can we add things into the insurance products in the long-term that produce more individualized, accurate premiums?’”
The adoption of these BMP-based insurance products will not be mandatory for farmers. The approach contrasts with the imposition of environmentally minded farm legislation in European nations such as Germany, where a 2021 glyphosate ban saw tractors roll through the streets of Berlin in protest.
For the past two years, AFSC has analyzed the risk reduction potential of various farm practices. It will now examine these through an environmental benefits lens to produce a shortlist of potential BMPs. This will be followed by industry consultation and roll out of a pilot project to gather further data. Though AFSC is not obliged to launch a resulting program immediately, this work must be completed by the end of the current SCAP agreement in 2028. “Grow into it, don’t go into it,” could be a project motto, said Cole. The work completed in each province will also inform analysis being done under SCAP on the effects of climate risk on BRM programming.
There has been a lot of opposition to the project. Given the highly variable and regional nature of farming, critics have suggested the choice of a single BMP will not be adoptable across an entire province. The single practice approach also does not benefit the farmer who has been a long-term adopter of the chosen BMP. The creation of multiple options is preferable, said Shannon Sereda, Alberta Grains director of government relations, policy and markets. “You don’t want to penalize farmers who have long adopted practices that have positive environmental outcomes.”
She also suggested positive financial results take priority. “Producer groups want to see selected BMPs focused on risk mitigation and not on the environmental outcome alone. Farmers don’t want to be handcuffed, but if they can reduce their insurance premiums, that’s very positive.”