Livestock price insurance in works for Manitoba

Price volatility could soon be a thing of the past for Manitoba’s beef producers, if a proposed livestock price insurance program comes to fruition.

The provincial government on Tuesday pledged such a plan in the speech from the throne by Lt.-Gov. Philip Lee.

“Building on the recent introduction of forage insurance, in the year ahead our government will introduce livestock price insurance to provide better protection for Manitoba’s important beef and hog sectors,” Lee said.

Such an insurance plan could be announced within weeks, according to Cam Dahl, general manager of the Manitoba Beef Producers.

Agriculture Minister Ron Kostyshyn was unavailable for comment, but reportedly told a recent producer meeting in Durban that an announcement is forthcoming. A spokeswoman said, “I don’t have any details I can share publicly — but expect that will change in the very near future.”

Manitoba’s beef producers have been asking for government-administered price insurance since the BSE crisis hit a decade ago. Only Alberta currently has an insurance program to protect producers against steep drops in prices.

The new program is expected to be based on the Alberta model and to encompass the four western provinces, Dahl said.

“The government wouldn’t be contributing to the premiums, but would be covering the cost of administration,” he said, adding those costs are expected to be shared by the federal and provincial governments.

“Combined with the new forage insurance program, producers will be able to ensure the price of their major inputs, as well as to cover off a significant portion of the price risk,” Dahl added.

Although beef prices are fairly strong at the moment, he noted Alberta beef producers used their insurance plan to mitigate some of the price fall following the E. coli outbreak at XL Foods in 2012.

But pork producers, who will also be able to enrol in the insurance plan, won’t see much of a benefit, said Andrew Dickson, general manager of the Manitoba Pork Council.

“We don’t think it’s very valuable because our processors here offer forward pricing at the high end,” said Dickson.

“In other words, you can lock in a finish price with Maple Leaf, and with Hylife and with the Co-op, so we don’t understand why anybody would want to go to a floor-price system.”

Alberta hog producers aren’t keen either, even though they don’t have the same forward pricing options (save at the Maple Leaf plant in Lethbridge).

“It’s not been very successful, about 30 guys have enrolled in the program and about two have actually used it — it’s not cheap, and producers don’t find it very useful,” said Dickson.

“But we’re not arguing against it — the cattle guys really want the program and so it’s up to them.”

Dahl said it’s hard to estimate exactly how many beef producers will participate, but said interest has been strong so far.

“This will be a real benefit to the beef industry and make us much more competitive,” he said.

— Shannon VanRaes is a reporter for the Manitoba Co-operator in Winnipeg. Includes files from AGCanada.com Network staff.

Related stories:
New forage insurance to take effect in 2014, Nov. 6, 2013
West considers shared livestock price insurance plan, Nov. 27, 2011
Manitoba cattle price insurance in the works, April 24, 2011

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