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Private agriculture insurance payments no longer offset AgriStability

  • 2 min read

A change has been announced for 2020 that alters the relationship between AgriStability and private insurance programs. Payments from private programs will no longer offset AgriStability payments.

In July, federal, provincial and territorial agriculture ministers from across the country signaled this change was being explored to improve existing programs to address the needs of producers and complement private sector tools. This involved analyzing how AgriStability treats private insurance payments. One of the largest sources of private insurance payments to be affected will be crop hail.

“The change makes a great deal of sense,” says Bruce Lowe, CEO of Ag Direct Hail Insurance, an exclusively online crop hail insurance provider. “Producers insuring themselves for a revenue loss shouldn’t be penalized when it comes to their AgriStability support.”

"The change makes a great deal of sense.”

That opinion is shared by Grant Kosior, president and CEO of Global Ag Risk Solutions, a company offering gross margin revenue insurance to grain farms in the Prairie provinces.

“As a direct result of this change, we’re offering an insurance option this year that tops up the coverage levels provided through AgriStability,” Kosior says. “Our programming can now work in conjunction with AgriStability, and this top-up option carries a much lower premium.”

The change also affects the Western Livestock Price Insurance Program (WLPIP) through which producers can lock in floor prices for hogs and cattle. WLPIP is government-run in British Columbia, Alberta, Saskatchewan and Manitoba. Still, premiums paid by participating producers cover the cost of insurance so that it will be treated like a privately run program.

This is different than the AgriInsurance (crop insurance) programs across the country. In those programs, governments share premium costs with producers, and for that reason, crop insurance payments will continue to count as income for purposes of AgriStability, thereby offsetting AgriStability payouts.

It should be noted that a producer who does not participate in crop insurance may have their AgriStability benefit reduced. This reduction occurs only in cases where the producer has a negative program year margin, but it’s a reason to remain in crop insurance and not assume AgriStability will cover all your production risk.

Making decisions about price and revenue insurance can be difficult. There’s no easy formula for determining the correct products and level of coverage for any farm.

Ask yourself...

  • How will price or a production shortfall affect our bottom line?
  • Can our operation sustain an income shortfall?
  • What’s the cost of each potential insurance product, and what coverage do they provide?
  • How do insurance programs complement each other to reduce risk?

From an AgriSuccess article by Kevin Hursh.


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