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New crop insurance options being considered for market gardens

“We have spent a lot of time with the government working on a risk mitigation and hail insurance program for market gardeners,” explained Staples. “There really isn’t an effective program in the province right now.”
Market garden industry reps are seeking new insurance options.

Market gardens, U Picks, apiaries and other niche agricultural operations often have trouble finding the right crop insurance coverage for themselves at a price they can afford.

Take for example hail insurance, said Blaine Staples, who is a special advisor to the board of the Alberta Farm Fresh Producers Association (and the owner of The Jungle Farm, near Innisfail). 

“We have spent a lot of time with the government working on a risk mitigation and hail insurance program for market gardeners,” explained Staples. “There really isn’t an effective program in the province right now.”

Staples cited his own farm’s example to illustrate the problem. Staple’s summer strawberry production was completely wiped out due to a major hailstorm on Aug. 1, but under the Alberta Financial Services Corporation’s (AFSC) hail coverage products for market garden operations, he is only entitled to receive about $2,000 per acre. 

Staples only has 20 acres of strawberries on his farm, so said that $2,000 per acre would hardly cover the cost of his losses. That’s particularly when one takes into account the severe building and infrastructure damage he received, which he argued will impact his farm’s production for several years to come.

“This hail event (we experienced) is going to be really hard on our farm, and it is going to stop our growth, and slow us down for a couple of years,” Staples admitted. “But for a new grower, it could very easily put them out of business. I would really like to see the industry grow, and to grow we need to have those new growers. And not have them get hailed out within their first three or four years, and find out their bank can no longer support the business.”

Jesse Cole, who is manager of Insurance Products and Innovation AFSC, acknowledged the problem with current insurance offerings for these types of niche agricultural operations.

“One of the things we learned (talking with Staples) is that (a per-acre) limit might not be high enough for some of the costs they are experiencing,” he said. “And that they see some of the products across the grain and oilseed sectors, and some of those insurance products have cost-sharing attached to them. 

“So the federal and provincial government will pay for part of the premiums, roughly 60 per cent. Alberta Farm Fresh Producers Association is very interested in something like that which is cost-shared so the premiums aren’t so high.”

Cole said it is possible to increase the hail payout limit per acre fairly easily, and it is a short-term fix AFSC is seriously contemplating. However, he explained there are other complexities to insuring market gardens which would be much trickier to resolve.

“There’s a line there between affordability and coverage,” Cole acknowledged. “We don’t want to get into a situation where we are creating the Cadillac when a Corolla is all that is needed, or vice-versa. We want to design it to fit the needs of the industry.”

Cole contrasts the grain and oilseed industries with the challenges facing the market garden industry. According to Cole, grain and oilseed producers in Alberta had 81 per cent buy-in this year for crop insurance coverage packages. Those farmers also produce a very high volume of acres in Alberta at a well-defined price, which is usually set in the global marketplace. The costs of production in these industries are fairly well known and standardized. 

Because they are dealing with volume over specialization, it is also easier for adjusters to analyze and set a price on damage – particularly since these are annual crops that can only be grown and harvested once.

Cole stated market gardens, on the other hand, often grow perennial crops like strawberries, which may recover production next year, or a market garden operation will grow wildly varying types of crops and with wildly varying prices on smaller acres. 

So growers might, he said, have pumpkins for two acres, squash for two acres, strawberries for 10 acres, etc. The question is, how does an adjuster put a price on hail damage for the entire farm in this instance? 

“It keeps our adjusters up at night,” Cole confessed. “It is pretty easy to adjust a whole field of wheat that’s hail damaged, but the market gardens do require quite a bit more effort. They are smaller plots and we want to go in there and assess it accurately. We are trying to find adjusting procedures for strawberries, (for example) – a very hard crop to adjust.”

Another problem with creating a viable insurance product for smaller-scale market producers and other niche agriculture operations, said Coles, is that, historically, there has been very limited uptake on such programs by those operators. He said it is likely a combination of premium costs, which are higher when you have a lower volume of operators taking part in an insurance program, and the fact current insurance products are not accurately targeting the operators’ specific needs.

“We have got to design something that works both for producers and the industry,” Cole stated. “It has got to match what is happening there, and meet the needs for risk mitigation.”

Staples said in his conversations with Cole and the AFSC, and with provincial and federal government officials, there seems to be a growing recognition of the importance of market garden growers to agriculture, particularly in the production of local food. It is very encouraging from an industry point of view, he confirmed.

“We have made some good progress in getting the government more aware, and the AFSC more aware, of how important the market garden industry is to the province,” Staples said. “I think the local food market gardening industry is important to the province, not only from a quality and recreation perspective, but also from a food security perspective. 

“I think we are reaching a point where we can’t rely on California to provide us with all of our produce year-round,” he added. “We can fill in a good chunk of that here in Alberta, but for the industry to really grow, we need some help with risk mitigation – whether it is helping a grower to get an irrigation system in place, or helping get some sort of insurance program in place so that a hailstorm doesn’t (wipe them out).”

Cole confirmed there is a willingness at a very high level of the AFSC and in government to create new insurance products that cater to the market garden industry, and recognize its importance to the overall agriculture industry.

“There are some short- and long-term options,” he said. “In the short term, we can do things like look at that straight hail coverage’s maximum limit, and try to get that high enough so that it is useful. And then, in the long run, the plan is to meet with the industry and some of the farms and actually narrow down what they need. We want to get to the bottom of the issue.”

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