Work is underway to bring livestock price insurance to Atlantic Canada’s beef producers.
While producers in Western Canada have access to the Western Livestock Price Insurance Program and Quebec and Ontario also have risk management programs, producers in the Maritimes lack any program to offset market risk.
“Producers in the Maritimes manage their risk by diversification,” Amy Higgins writes via email. Higgins is the industry co-ordinator for the Maritime Beef Council. She adds that diversification typically includes off-farm employment or other ag enterprises.
“Without a functioning price risk management mechanism, there may be rationing decisions on inputs that may be a short-term solution that causes longer-term issues. Springtime forage land fertility and maintenance is a prime example of one of the first things that may get ‘skrimped’ on if the fall outlook isn’t very clear,” she says.
A market floor for the calf crop should leave producers better able to invest in things such as bull genetics, seed or lime before selling calves, Higgins adds.
Nathan Phinney, past chair of the Maritime Beef Council and former chair of the New Brunswick Cattle Producers, writes that price insurance is a bankable program both young and established producers can take to their lenders. It allows producers to plan and there is high demand for it among producers when it’s explained, Phinney adds.
“This is the most important tool for any growth of the beef industry in Atlantic Canada,” Phinney says.
Market risk management is key to the success of the Maritime Beef Growth Strategy, Higgins explains, and has been “rolling around the drawing table for many years.”
Expanding price insurance into the Maritimes is a “very high priority” for the Canadian Cattlemen’s Association (CCA), says Brady Stadnicki, policy and program manager for the association.
To lay the groundwork, the Beef Cattle Research Council funded a research project led by Canfax looking into whether calf and feeder volumes in Eastern Canada are sufficient to develop a pricing index. Stadnicki says they’ve found there are enough cattle to develop an index, subject to blackout periods, “which we see here in Western Canada as well.”
The project has also determined that there are enough calves sold in Eastern Canada for the program to have a longer settlement period, Stadnick adds, similar to the recently expanded settlement period for the Western Livestock Price Insurance Program.
Right now researchers are gathering historical data from auction marts in the East to develop indices for calves and feeders that could be used by a program administrator, Stadnicki adds. That project is expected to wrap later this year.
Meanwhile, the Maritime Beef Council, regional associations in Atlantic Canada and the CCA are working to get federal and provincial governments on board to expand the program into their regions and “do the necessary legwork to make the program a reality,” says Stadnicki.
Stadnicki says it’s been a lobby topic for years at both the provincial and federal levels, but he senses more support from provincial governments in the last year.
Higgins also sees support among the provincial governments for the program. Bloyce Thompson, Prince Edward Island’s ag minister, has publicly spoken in support of price insurance, Higgins says. New Brunswick has supported a project by the New Brunswick Cattle Producers related to future funding of the program. Department staff from New Brunswick, Nova Scotia and Prince Edward Island are involved in a price insurance steering committee, Higgins adds.
At the federal level, the House of Commons Standing Committee on Agriculture included the CCA’s recommendation to expand price insurance in its final report last fall.
“And the federal government response to that report did acknowledge the recommendation and confirm that they’re working with Maritime provinces to determine the feasibility of a program, which is a positive step” towards expanding into the Maritimes, Stadnicki says.
The COVID-19 pandemic and the uncertainty it’s introduced to markets has added urgency to the conversation around price insurance in the Maritimes. While that market volatility increased the program costs in Western Canada last year, it also emphasized the importance of a program that gives “some peace of mind in locking in a floor price for your calves” and reducing COVID-related risks, Stadnicki says.
Given all the factors at play, Stadnicki is reluctant to put a timeline on when the program might be implemented. One possibility would be to include it when the Canadian Agricultural Partnership rolls out new programming in the spring of 2023. But he says CCA and its regional counterparts will also be pushing for it to be in place as soon as possible, with spring of 2022 as the best-case scenario.
“There’s a need for it today,” says Stadnicki.