Grainswest - Winter 2022

Winter 2022 Grains West 30 ECONOMIC IMPACTS Insult to injury with contracts, inputs and insurance Brutal as conditions were in 2021, many are keen to forget the year and move on. For those who want to know just how bad it truly was, even if merely out of morbid curiosity, insurance payouts are a chilling indicator. “I’d say we’ll pay out more money than we ever have,” said Jesse Cole, supervisor of innovation at AFSC. “It could be more than multiple years combined.” The latest five-year payout average from 2016 to 2020, not including hail endorsement, is $320 million. By comparison, 2002 was $650 million. “It’s one of those disasters [where] there are some OK pockets, but it’s very widespread,” he said. The final crop numbers, based on AFSC Harvested Production reports, were not known at press time. Not surprisingly, Cole uses the difficult year to plug crop insurance. In a year as bad as this, one key feature of crop insurance is the Variable Price Benefit (VPB). As crop prices hit record highs, crop insurance will play a key part in certain farmers not losing their shirts, despite losing their crops. The VPB allows AFSC to pay out claims at a higher level if the market moves up. Even though it caps at 50 per cent, that’s a possible farm-saver for many. “With 70 to 80 per cent coverage, even with large losses, [farmers] may end up with a better-than-average revenue year,” he noted. “That’s very interesting. It speaks to the relevance of [crop insurance]. Anyone with a crop and crop insurance is doing OK.” Cole said this year, insured crop acres jumped 1.2 million to 15.6 million from 14.3 million. That is about 80 per cent of all acres in Alberta. He suspects the increase in acres was due to the fact AFSC offered a 20 per cent discount on insurance in 2021. The year was hard on crop farmers, but also extremely challenging for the livestock sector. The Alberta government made $136 million available through AgriRecovery on Oct. 29, and asked the federal government to contribute an additional $204 million. If the federal government grants that money, cattle and bison farmers could earn $200 per head in relief. The federal government already pledged $100 million to be shared from B.C. to Ontario. Alberta’s Environment and Parks ministry also announced a temporary program to extend grazing rights and licences to vacant Crown lands and forested areas for an extended period of time. Lack of yield is hard on both livestock and crop farmers, but farmers may feel an additional sting as grain companies are reportedly charging extra fees on top of regular cancellation fees. These are often referred to as “admin,” “replacement” or “cancellation” fees. With no standardized grain contract in place across Canada, every set of paperwork can have unique terms and conditions. Geoff Backman, business development and markets manager for Alberta Barley and AWC said farmers unfortunately have little recourse once they’ve signed a contract. Still, he’s heard enough tales of woe that he put together a farmer survey intended to capture these stories. “The impact of this on farmers is going to be much higher, and availability and awareness of this practice is going to be much more prevalent,” he said of the extra charges. “It’s a topic that has been raised by farmers in the past.” Although farmers buying out contracts for failure to deliver is nothing new, a year like 2021 is one further twist of the knife. Certain farmers signed deals in early 2021 to deliver CWRS for November at $6. However, by delivery day the spot price had jumped to $13. The $7 hit is substantial but the penalty on top of the $13, which might As well, pea leaf weevil, a vicious pest of the rhizomes of pulse plants with no true control option, may also have been impacted due to weather. “We’ve had drought conditions on and off for several years, and pea leaf weevil populations have retracted,” he said, and added that provincial survey data indicates they have shrunk right back across Western Canada. One pest that didn’t mind the heat was the wheat stem sawfly. Unfortunately, its natural parasitoid enemy, Bracon cephi , is knocked back by such conditions. Sawfly populations were up and if 2022 is similar to last year, this could become a more pronounced issue. Grasshoppers also thrive in hot, dry weather, while fungal pathogens that keep grasshopper populations down thrive under wetter conditions. Although there has not been a declared outbreak since 2002, if current conditions continue, 2022 might be the next one, said Wist. Warm, moderate fall conditions, Wist believes, also helped grasshoppers make it to the egg laying stage, which takes place once grasshoppers reach adulthood. “Look at the weather,” he said plainly. “If it’s not going to be raining at all keep an eye on those hoppers. They move from field margins into the field. When they’re small, you have opportunities to spot spray or spray the edges of your crop where they are congregating. Do some scouting and you can knock them back with not much effort if you catch them early.” Despite the overall difficulty of 2021, McKenzie preaches perspective. He encourages farmers not to obsess over a single dry year. “All a farmer can do is say, ‘OK, we had a dry year, my soil conditions were dry heading into winter.’ Decide accordingly into next spring with fertility rates and add or cut back. A farmer just looks at their risk and how they want to approach things. It’s really all a farmer can do: look at past experience, present conditions, talk to specialists and plan for next year accordingly.” FEATURE