Alberta's beef producers to benefit from risk management product

The government of Alberta in Canada is offering beef producers a new form of risk management with the introduction of the Cattle Price Insurance Program (CPIP) for feedlot operators.

CPIP, the first of its kind in the country, will help Alberta's feedlot operators manage price risk on fed cattle through price insurance and basis insurance available through Alberta's Agriculture Financial Services Corporation (AFSC).

George Groeneveld, Minister of Agriculture and Rural Development said the programme is a "made-in-Alberta solution that reflects industry needs and allows producers to customize coverage levels and policy length to suit their operation."

The coverage sets a guaranteed price for fed cattle intended for sale 12 to 36 weeks from the policy purchase date. Programme levels and premiums will react to market factors on a daily basis, with policies settled against an Alberta average index.

CPIP reflects industry needs and effectively fills an area of risk management that did not previously exist. The programme was developed in consultation with industry, including the Alberta Beef Producers (ABP) and the Feeder Associations of Alberta who were the keys in its development.

Rich Smith, General Manager of ABP said they have supported CPIP as they thought "price and basis insurance could be available risk management tools for cattle producers". This is a new option for risk management which could provide significant benefits to the industry, he said.

Reg Schmidt, Chair of the Feeder Associations of Alberta confirmed CPIP is designed to be flexible and absolutely delivered with a voluntary, market-driven programme that's easy to understand. It fills the gap in price risk management, and Schmidt said they will be encouraging our members to take advantage of this unique risk management tool.

An outcome of the Alberta Livestock and Meat Strategy (ALMS), CPIP complements the work led by the Alberta Livestock and Meat Agency (ALMA). The project, according to Joe Makowecki, ALMA board chair, "is an excellent example of cooperation that furthers the goals of ALMS." He added that the industry developed the programme, AFSC is delivering it and ALMA is helping finance it.