Crop Insurance Yield Averages

Res #: 20-03A
Number: 20
Year: 2003
Midterm: No
Expired: Yes
Responses Received: No

Resolution 20-03A

WHEREAS, the crop yields in the majority of the Province were the lowest in the last 50 years; and

WHEREAS, the Saskatchewan Crop Insurance uses average yields to determine coverage based on the most recent ten years for which they have data; and

WHEREAS, using the 2002 yields would artificially lower these yield averages;

THEREFORE BE IT RESOLVED, that SARM lobby the senior governments to either extend the yield average calculation to include the past 30 years or eliminate the 2002 yields from their calculation.

Response from the Honourable Clay Serby, Minister of Agriculture, Food and Rural Revitalization:

Crop Insurance guarantees producers' yields based on long-term yield experiences. Since 1997, the program has not used a simple 10 year average. Yields are now calculates by updating the cumulative yield experience with the most recent year in the formula as time moves forward. This calculation results in a more stable average than a simple 10 year average, which appears to be the same objective as that sought by the approach proposed in the above resolution.

At present time, the Saskatchewan Crop Insurance Coporation (SCIC) is not permitted to exclude low production years in calculating insured yields, if the province is to receive full federal government cost sharing for the crop insurance program. In respect to the impact of 2002 yields, these results are not incorporated in the actuarially approved formula for calculating coverage for two years.

 As a result, the 2002 crop year results did not affect producers' yield coverage in 2003, but will be included in 2004. The province will continue to work with industry, the federal government and other provinces to improve the crop insurance program over time. However, while we are prepared to consider proposals for changes, we are not in a position to implement them unilaterally as crop insurance is cost shared with the federal government.