October 9, 2024

Pilot insurance to protect beef farmers in Prince Edward Island, Canada, against surprise price drops

Beef farmers on Prince Edward Island (PEI), Canada, are now eligible for protection against "an unexpected drop in prices over a defined period of time" through a recently launched pilot insurance programme.

Canada has introduced the Maritime Livestock Price Insurance Pilot Program, enabling producers in PEI and New Brunswick to buy price protection for beef cattle through an insurance policy, safeguarding against sudden market declines. This initiative is described as "a new risk management tool for beef producers" designed to "facilitate growth of the sector across the maritime region".

Under the programme, producers will pay 100% of the premiums, while federal and provincial governments contribute to administering the pilot scheme. The two-year regional initiative is intended to complement existing business risk management programmes available to the livestock industry. It will be evaluated and could be extended if it is deemed successful', according to the government of Canada.

According to the PEI government, premiums are determined based on the coverage level selected by the producer.

Premium rates are calculated based on the weekly average price of feeder cattle and calves sold at auction in Ontario and Quebec, with their data voluntarily contributing to the relevant settlement index. Prices are expressed in dollars per unit, following a defined pricing methodology.

Producers participating in the Maritime Livestock Price Insurance Pilot Program are advised to align the policy length with the expected marketing period for their cattle and choose coverage that sets "a floor price that best suits their operations needs". If the settlement index for the claim week falls below the insured index, producers qualify for a payout under the policy, according to the PEI government.

The claim window begins in the final four weeks of the policy. Producers must manage the first three weeks manually, notifying the Agri-Commodity Management Association (ACMA) if they wish to settle.

At settlement, producers can claim for part or all of the insured weight. If a claim is due at settlement, payment for any remaining insured weight is automatically issued to the producer.

- The Scottish Farmer