Alberta’s provincial price insurance program for livestock producers has rolled out a third component to cover calves.
The province on Monday launched the voluntary Cattle Price Insurance Program-Calf (CPIP-Calf), on the heels of CPIP-Fed and CPIP-Feeder in 2009 and 2010 respectively. The new offering also comes ahead of a provincial price insurance program for hogs, expected to be available in late spring this year.
Unlike CPIP-Fed and CPIP-Feeder, both available for purchase year-round, CPIP-Calf will be offered from February to May each year with policies expiring for settlement in the fall calf run from September to December.
“The introduction of CPIP for calves gives beef producers a way to help manage price risk, specifically in the fall calf run from September to December,” provincial Agriculture Minister Jack Hayden said in the province’s release. “CPIP reflects the needs of industry and gives beef producers the flexibility to tailor the insurance coverage to their operation.”
In buying a CPIP policy, administered by the province’s Agriculture Financial Services Corp. (AFSC), a cow-calf producer gets a known “floor” price for the covered cattle without limiting his or her ability to sell them at a higher price, the province said.
CPIP-Calf is designed to insure calves intended for sale during the fall. While it’s to be based on calves weighing 550 to 650 pounds, the province said there will be no restrictions against insuring calves that will be heavier or lighter.
By using a forecasted price and matching policy length to the expected time of sale of the cattle, the producer gets his or her “floor” price. If the cash market during the claim window is below the coverage level and a claim is submitted, the producer is paid the difference, the province said.
CPIP-Calf coverage levels are calculated by forecasting what the price of a 550-650 pound calf will be for each policy length offered. From this price — which is set using forecasts from CPIP-Feeder data on feeder futures, the loonie exchange rate and the basis — insurance is offered at 95 per cent of the forecasted price.
For CPIP-Calf, the insurance incorporates the difference in the calf price to the price of feeders, as well as the price of barley, the province said.
The settlement index, meanwhile, is calculated using data collected from participating auction markets on 550- to 650-pound steers in lots of three head or greater in a Monday-to-Saturday week, to calculate the average price of a 550- to 650-pound calf in Alberta in a given week.
Cow-calf producers would not have to market their covered cattle to claim on their CPIP policy. An enrolled producer will be able to claim in the four weeks before his or her policy expires.
When a claim is filed, the coverage purchased is compared to the settlement index to determine if an indemnity is owed, the province said. Policies would be honoured even in the case of a “major market disruption,” such as a border closure, the government added.
Producers looking to sign up for CPIP-Calf can fill out a one-time application form either online or through an AFSC district office. Past and current premium tables and settlement indices will also be available online.