Manitoba, February 13, 2014. – Manitoba’s livestock producers will have a new tool to manage risk and withstand market volatility. Federal Agriculture Minister Gerry Ritz and Manitoba Food and Rural Development Minister Ron Kostyshyn announced today that the province will participate in the Western Livestock Price Insurance Program (WLPIP).
“With this new program, Manitoba’s beef and pork producers can insure their herds against unexpected price drops,” said Minister Ritz. “Our government will continue to work closely with the provinces and industry to make sure producers have access to the bankable and predictable tools they need to grow their operations and our overall economy.”
Details of the new pilot program are being finalized and will be available for cattle and hog producers beginning this spring. It is a voluntary and user-friendly program which will help producers manage risks related to market volatility and unexpected price declines.
“This insurance program is new territory for the Manitoba livestock sector and something producers have been asking the province to pursue,” said Minister Kostyshyn. “We are pleased to partner with the other western provinces and the federal government to make it a reality. Through WLPIP, producers will now have a new way to manage price risk.”
The WLPIP will operate as a four-year pilot project that includes an evaluation to assess its effectiveness as a risk management tool for livestock producers. The program is intended to be actuarially sound, with premiums fully funded by producers.
“Price insurance has been a long standing request from beef producers and this new risk management tool will help the industry develop the confidence we need to re-build Manitoba’s beef herd,” said Heinz Reimer, president of Manitoba Beef Producers. “Beef producers require strong, bankable risk mitigation tools. The combination of this price insurance and the revisions to forage insurance announced this past fall will give beef producers a strong and bankable risk management package, which could fundamentally change beef production in this province.”
Alberta’s Agriculture Financial Services Corporation is providing program administration across Western Canada, with the Manitoba Agricultural Services Corporation acting as the insurer for Manitoba producers who participate in the program.
The federal and provincial governments will cover the administration and delivery costs through Growing Forward 2’s AgriRisk Initiatives – Administrative Capacity Building. The federal government will also provide deficit financing for the pilot.
More detailed information about the WLPIP will be available in March and shared with producers online at www.wlpip.ca or at 1-877-899-2372 (toll-free). Information will also be available at the Manitoba Agricultural Services Corporation.
In Manitoba, the federal and provincial governments are investing $176 million under Growing Forward 2, a five-year, federal-provincial-territorial policy framework to advance the agriculture industry, helping producers and processors become more innovative and competitive in world markets.
Jeff English
Director of Communications
Office of the Honourable Gerry Ritz
613-773-1059
Media Relations
Agriculture and Agri-Food Canada
Ottawa, Ontario
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As part of the Growing Forward 2 (GF2) framework agreement, federal, provincial and territorial (FPT) ministers of agriculture made a commitment to encourage the development and implementation of new risk management tools for agricultural producers, including private sector risk management tools. To this end, the federal government and western provinces have been working in collaboration to explore the feasibility of a livestock price insurance program.
Livestock producers face a substantial risk from unexpected price declines. Unlike crop producers, who have access to production insurance under the AgriInsurance program, livestock producers have fewer risk management options available to them.
The four-year pilot Western Livestock Price Insurance Program (WLPIP) will enable livestock producers to protect themselves against unexpected price declines beyond market expectations by allowing them to purchase insurance coverage, while still being able to take advantage of favorable market conditions if livestock prices should rise.
Producers will select from a range of coverage and policy options to help them manage price risk. Indemnity payments will be paid to producers if the settlement price is less than the insured price. This pilot program is actuarially sound and is intended to be self-sustaining, with premiums fully funded by producers.
Federal and provincial governments will cover administration and delivery costs for the pilot WLPIP through GF2 AgriRisk Initiatives Administrative Capacity Building stream, which provides assistance for the implementation of new risk management tools. Canada will also provide deficit financing for the pilot. Near the end of the four-year pilot, governments will initiate a review of program operations and management and will consider its potential beyond the GF2 framework agreement.
Cattle price insurance is reflective of price in the producer’s local market, and coverage options are designed to reflect differences in localized prices and risk for different commodities. WLPIP will help reduce producers’ exposure to price and basis risk. Producers have the option of insuring their calves, feeders, or fed cattle as well as selecting only basis protection for fed cattle. A new settlement index will be created to represent Western regional markets for feeders and calves.
Hog price insurance is designed to offer coverage based on current Western Canadian market conditions. Producers decide on the level of coverage, policy length and the amount of weight to insure. Settlement is based on the monthly average price of hogs sold in several Western Canadian markets. If the market goes above the insured price, producers can still take advantage of the upside and sell hogs for that higher price. Livestock producers can expect to receive WLPIP program information in March from their provincial agriculture office. Further information on the pilot Western Livestock Price Insurance Program is available at www.wlpip.ca.
More information on Growing Forward 2 AgriRisk Initiatives can be found at: agriculture.canada.ca/eng/?id=1369851891708.
