Canada - Rethinking crop insurance in face of climate change

18.01.2016 340 views
The notion that society should share the risks inherent to farming in an environment as unpredictable as the Prairies is deeply embedded in Canadian farm policy. Farmers have been able to buy government-subsidized crop insurance in some form since the federal Prairie Farm Assistance Act was passed in 1939. But the model in use today, in which the cost is shared equally between farmers, the province and the federal government, first came into being in the late 1950s. Of all the farm support programs that have come and gone during the decades, insurance has remained relatively intact. However, the way in which that support is offered could be in for some changes as governments consider their exposure as climate change risks making farming even more unpredictable. The Manitoba government recently completed a task force review of agriculture risk-management programs and came up with 25 recommendations for how programs should be structured in the future. Taken as a whole, the report should make people who think government support for agriculture lies in doing more of the same, but only better, a little nervous. It implies the way we do farming here faces fundamental changes. That's not to say there aren't some encouraging recommendations, starting with an acknowledgement governments have a role in helping farmers insure against increased weather risks from climate change. There is also recognition of the need for publicly supported research and extension. However, some specific programs, such as excess moisture insurance, and AgriStability, which insures revenue, could become too costly for both farmers and taxpayers under various climate change scenarios. Not surprisingly, this report places the front-line responsibility for adapting to climate change squarely on farmers and points out that government's role through insurance is to share risk, not cover it completely. It suggests programs should inspire innovation by encouraging best management practices, perhaps even tying the two together. We see references to "empowering" farmers to take ownership of their own business risk management. And there is this statement in the appendix report in reference to a 2011 study by the Organization for Economic Co-operation and Development: "Reducing the role of the government in risk management is a first step in allowing proactive approaches to risk management to emerge." The supporting documents suggest the biggest risk to governments is to offer programs in such a way that they mask incentives for farmers to change how they operate in order to reduce their own exposure. "There is a need to develop and expand alternate cropping options that could counteract adverse climatic conditions. It was noted that uptake has been painfully slow, but there are existing options and existing models for alternate production practices that can mitigate the impact of severe climatic shifts," the task force reports. "Examples include inter-cropping, crop rotations that include nitrogen fixation plant species, perennial cereal varieties, and organic production. "As these options become further advanced and available, business risk management programming needs to evolve and support these options; certainly the business risk management options must not discourage these new and different production modalities," the report says. Hence, the task force recommendation that the province explore the introduction of whole farm revenue insurance as a replacement for AgriStability. It is seen as a means of reducing taxpayer exposure and keeping the premiums farmers pay within reason. Insurance under a whole-farm approach would be based on the farm's total revenue, not on the current crop-by-crop basis. That means that if one part of the farm enterprise performs well, it will counter lost revenue from sections that underperform. That approach would foster diversification, which is a form of self insurance. Considered in their entirety, the recommendations imply the resource-dependent production culture that has been promoted in agriculture and heartily embraced by farmers may not be the way of the future. It also implies one of the best ways for government to help farmers adapt to climate change -- is to help a little less. Source - winnipegfreepress.com
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