With just weeks remaining for Bashaw, Castor and Stettler-area farmers to enrol in AgriStability for 2013, many producers across the province are asking how coming changes to the program will impact their farms.
“Some of the farmers are asking if it’s still worthwhile to participate in the program, because they say, ‘Commodity prices are high and times have been good on my farm, so I haven’t collected a payout for a few years. Why do I need AgriStability?’” said Vicki Chapman of the AFSC (Agriculture Financial Services Corporation).
The AFSC administers AgriStability on behalf of the federal and provincial governments.
“I remind farmers that all it takes is one catastrophic event — such as a livestock disease like BSE or a sudden economic downturn — and the profitability many are now enjoying can turn on a dime,” said Randy Jensen, an AFSC AgriStability field analyst in the central Alberta region. “The producers I’ve been talking to haven’t forgotten those big events, so they get the importance of having a backstop like AgriStability to compensate them for major losses on their farm. That’s where the program continues to offer the most value.”
Jensen has been meeting one-on-one with area farmers and holding AgriStability information sessions across the region.
“It’s my job to ensure that farmers understand the new program changes and the risk level it still covers on their farm — so they can make an informed decision before the April 30 enrolment deadline passes,” he said. “The worst scenario would be if someone opts out of the program without having a clear understanding of what they’re saying ‘no’ to, and then experiences a disaster that threatens the financial future of their farm.”
The AgriStability program will continue to provide whole farm protection against the severe drops in farm income caused by factors such as production losses, falling commodity prices, rising input costs and market interruptions, Jensen said. Coverage, however, is being reduced in some areas and expanded in others.
“Beginning in 2013, producers must experience a larger drop in farm income before triggering payments under AgriStability,” he said, noting changes would not affect 2012 AgriStability claims.
“Payouts under the new rules will now trigger when a producer’s margin — their allowable income minus allowable expenses — drops below 70 per cent of either their Olympic margin over the last five years or their average allowable expenses during that time frame, whichever is lower.”
Jensen said Olympic margins are calculated by dropping the highest and lowest margins over the last five years and averaging the remaining three.
“The trigger point for payments was previously at 85 per cent,” Jensen said.
“Limiting coverage to a producer’s average allowable expenses when it’s lower than their Olympic margin is also new.”
When the payments trigger, producers will be paid 70 cents for every dollar of loss, Jensen said. They were previously paid up to 80 cents on losses above a zero margin, and 60 cents on losses below a zero margin — known as the negative margin. “Now if farmers suffer a big hit and drop into a negative margin where they typically can no longer cover their input costs, they’ll receive a bigger payment at that 70-cent level.”