RISK MANAGEMENT REINTERPRETED
BY TREVOR BACQUE • PHOTO COURTESY OF ALBERTA GRAINS
Outdated. Reactive. Costly. This is how certain critics describe business risk management programs available to Canadian farmers.
A Farm Management Canada (FMC) report prepared by the Canadian Agricultural Policy Institute (CAPI) notes the need to dramatically improve the suite. Dubbed Striking the Balance: Proactive Strategy versus Reactive Response, the September 2025 report lists five key takeaways: Current policies have created dependency and discouraged alternative solutions; Proactive risk management is needed; Declining investment inhibits proactive risk management; A new, modern framework is required; and, National farm data harmonization is vital.
FMC program manager and national risk management lead Mathieu Lipari said there is good reason to revisit existing BRM programming. “We noticed there wasn’t a lot of focus on a comprehensive approach to managing risk. It was very much focused on BRM and the insurance side of things, which is still the case today, unfortunately.” The organization’s staff created its own online tool, AgriShield, to help farmers be proactive with risk management.
Lipari believes the problem is not the programs, but how they are perceived. “A part of agriculture seems to believe those programs essentially guarantee profitability, and that’s not what they’re meant to do,” he said. “They’re meant to protect against disasters.” Certain farmers see it this way and adopt proactive risk management practices, added Lipari, while others who depend on BRM programming want the suite to do even more for them.
A part of agriculture seems to believe those programs essential guarantee profitability, and that’s not what they’re meant to do.—Mathieu Lipari
He contends programs must do more than simply repair damage after the fact. A shift is needed toward proactive management that will prevent and reduce risks in the first place. Not all risks come from the skies, either. Poor marketing strategies, bad financial planning, informal or absent transition plans and labour shortages are real risks that deserve attention, said Lipari. “We need to adopt a more proactive and comprehensive approach to risk management in the ag sector. Part of the solution could be to divert some of the money currently devoted to our BRM suite towards programs that encourage farms to adopt a proactive risk management approach.” He added government could better explain how the programs work, citing the “really complicated” AgriStability as an example.
To qualify for AgriStability, a farmer calculates margins based on allowable expenses and allowable revenue. This doesn’t include things like machinery amortization or rental costs—for the last five years, removing the highest and lowest year, and then averaging the remaining three years. Suppose that a farmer’s reference margin is $100,000; to qualify for a payment, there must be a 30 per cent drop, or $30,000, in their current year margin versus their reference margin. If a farmer earns $60,000 in a year, they qualify and their payment is $70,000 minus $60,000. At a 90 per cent payout rate, the farmer receives $9,000. Complications aside, it is one of the most affordable forms of risk management available to farmers at $3.15 per $1,000 of reference margin.
AgriRecovery is classified as a relief framework intended to complement the broader BRM in times of natural disaster. It does not cover production loss or revenue lost to disaster. “There’s definitely education to be done about the programs,” said Lipari.
Then there’s the cost factor. Lipari wants to see less overall dependence on the suite, which he said will become a danger in the long-term. “We have to figure out better ways of doing it.”
He’s right.
According to the federal government, 55.1 per cent, or $1.98 billion, of its Agriculture and Agri-Food Canada budget for 2024-25 was “sector risk,” or the BRM suite. This number will stay virtually stagnant in planned spending until at least the end of 2027, but the actual cost will depend on demand for the programs.
The government’s 2025-26 estimates quantify the planned cost to run production agriculture’s individual primary risk management programs. AgriInsurance contribution payments cost $1.03 billion, AgriStability is second at $339 million, AgriInvest third at $153 million and AgriRecovery, the smallest program, at $118 million. The actual cost in 2023-24 for AgriInsurance was $1.2 billion, AgriStability was $499 million, AgriInvest sat at $200 million and AgriRecovery, again the smallest, at $181 million, although it can vary substantially based on natural disasters. Federal spending covers 60 per cent of the total cost of the programs, while the provinces pay the rest.
Tyler McCann, CAPI executive director, said the numbers indicate the BRM suite is very costly, and will likely become more so. Meanwhile the government is under pressure to control the federal deficit. “On both sides, there’s pressure to say, ‘How do we get more effective for farmers managing risks and more effective for governments offering more cost-effective risk management tools to farmers?”
He suggests AgriInvest could be phased out. It allows a farmer to put up to $1 million of allowable net sales (gross sales minus purchase of allowable commodities) into an account. The government will contribute a matching one per cent of the farmer’s total. For those who max it out, it’s a quick $10,000. “People do just see that as free money,” said McCann. Further, it’s not enough money to properly manage risk, though cynics may suggest it’s enough to buy a snowmobile or make an AgriInsurance payment. McCann readily admits each program has positives, but, overall, the suite isn’t a pragmatic toolbox for farmers in 2026. He offers two examples.
“Farmers who use AgriStability understand it can be an effective program, but on the flip side it’s seen as complicated, not timely and not effective that way. And our participation rates are low.” He added about one-third of farmers use AgriStability, but it represents about half of Canada’s production. This demonstrates large-scale production ag utilizes the program while smaller farms don’t.
On crop insurance, he asserts: “It’s probably seen as a pretty effective tool for dealing with weather issues, but if China suddenly shut the border to your product, it’s not effective there.”
WHAT’S NEXT?
CAPI and other agricultural advocacy groups will present ideas to build a better toolbox at this summer’s Annual Meeting of Federal Provincial Territorial Agriculture Ministers (FPT) in Halifax, N.S. There, it’s hoped ministers will collaboratively craft a high-level statement on the direction of Canada’s next agricultural policy framework, to run from 2028 to 2032. McCann is optimistic the meeting will affect real change to Canada’s agriculture risk management programs, permanently and for the better.
Farmers and government must contemplate modernization, said McCann. “It’s frustrating the policy framework has largely remained unchanged for 25 years despite the fact so much has changed in agriculture. We want to offer government and the sector alternatives that should be considered and debated. We could show that better is possible when it comes to ag policy in this country.”
National private sector program delivery has for years failed to materialize. From McCann’s perspective, the medium should be of little concern. “What matters is how the programs are designed and what’s that share between farmers, the government and taxpayers. But we should be open to private delivery.” Many farmers and farm groups have lobbied politicians to broaden the delivery system to include private options. In Western Canada, multiple private hail insurance providers have successfully delivered farm coverage for years.
Two well-known private insurance companies are Agi3 in Winnipeg, MB, and Global Ag Risk Solutions (Gars), based in Moose Jaw, SK. Gars describes itself as a “whole farm” risk management option that covers a farmer’s input costs and a gross margin they choose over and above those costs.
“Not only are you protected in a worst-case scenario, you’re also positioned to take advantage of marketing opportunities that are simply too risky for most producers with traditional farm insurance products,” reads the Gars website.
Agi3 aims to push the boundaries of product delivery. According to its website: “Our vision is to transform agricultural risk management with AI-driven solutions that enhance farm productivity, resilience and long-term sustainability—while creating the most advanced digital ecosystem for farmers and industry partners.”
This may rightly be balked at by a Liberal government. Prime Minister Mark Carney has demonstrated he’s not as pro public service as his predecessor Justin Trudeau. However, the addition of government approved private delivery to the BRM suite would be a real coup for the private sector, should it happen.
At FPT this summer, CAPI will promote new directions in the three core priority areas of innovation, risk management and environmental programming. McCann said agricultural innovation has largely stalled and investment is nowhere to be found while outdated environmental farm plans need a refresh.
It’s frustrating the policy framework largely remained unchanged for 25 years despite the fact so much has changed in agriculture.—Tyler McCann
TAKE RESPONSIBILITY
Risk management must start at the farm gate, rather than Wellington Street. And, at the risk of sounding glib, McCann said thinking about a plan is not a plan. “The evidence tells us when you take the time and you write it down and you force yourself to go through and say, ‘What are the risks I’m worried about? How do I manage them and deal with them?’ you change how you think and act about these things.”
In January 2025, CAPI surveyed 668 Canadian farmers about risk management. Almost a third predicted their risk level would not increase that year, even with the knowledge U.S. President Donald Trump intended to blow up trade relations with Canada. This didn’t surprise McCann. It was risk-aware and risk-savvy farmers with real BRM plans who registered least concern. “When it comes to risk management, they approach their work as business managers differently.” The size of a farm is not the measure of one’s risk appetite either, he said, and added it’s a mindset criteria, not one of acres or livestock head count. Certain farmers view their best risk management plan as income from an off-farm job, indicating they may consider farming a part-time job.
McCann reminds farmers the best farm management strategy for risk is to make the first move. “Farmers are their own first best line of defence, and that should be the start of the risk management discussion. What can they do proactively to ensure they’re better positioned to deal with this changing risk landscape? Then we should talk about what is the program suite that’s available to them.”
PRAIRIE VIEWS
Farming in Western Canada is little subsidized. Still, the programs farmers access must be sensible, and they are, said Shannon Sereda, Alberta Grains’ director of government relations, policy and markets.
She characterizes the federal BRM suite as responsive and said AgriInsurance is by far the most subscribed and pragmatic product a farmer can buy. Still, she believes the winds of change must blow. Sereda feels the most important stakeholders are the farmers who aren’t even in the game yet. “As we re-evaluate these programs, we really need to look at who the next generation of farmers is and what their needs are,” she said. As an example, she cites crop insurance premiums, which are based on a farmer’s five-year average. A young person without this history starts out at a disadvantage.
By 2032, the face of farming will drastically differ as widespread farm transition will have occurred. Program redevelopment will be critical for new farmers, said Sereda. Many farmers over 55, she noted, have strong access to capital and a healthy asset base with some even going as far as self-insuring and not using as many government programs. This won’t be the case for new entrants.
“They’re going to require that support to be able to protect their investments and the viability of farming. That’s going to be a big factor in attracting the next generation to the farm,” said Sereda. “Our focus is ensuring programs meet the needs of the next generation and ensuring they continue and that crop insurance persists to be able to provide a level of security for farmers that it has, and that’s allowed them to thrive.”
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