Malt barley crop insurance available to growers with a production contract

Written by Eric Vielfaure on Mar 15 2016

Category: Sell Grain

Malt barley growers now have access to crop insurance coverage, here's what you need to know.

 A couple of weeks ago, I wrote a blog post about how production contracts can help to mitigate production and marketing risk for malt barley growers. I highlighted some of the differences between contracts, be it grade specs, pricing, act of god, and of course, deciding between a fall/spring delivery or a larger window. There are definitely advantages of signing a production contract, in fact, Agriculture Financial Services Corporation just gave you another reason. I had a chance to connect with Jesse Cole from Agriculture Financial Services Corporation to learn more about a brand new crop insurance product for malt barley growers and asked him a few questions.

Eric V: Thanks for taking the time to meet with me Jesse. Can you tell me why AFSC decided to launch this new insurance product to Alberta growers?

Jesse C: Alberta Barley had the resolution as part of the AGM in 2014 when they asked farmers about their pain points. Today, insurance is only available on feed barley, and there is definitely a bit of price discrepancy between feed and malt so we worked with maltsters, growers and industry associations to develop a malt barley program for the first time in Canada and is now available to Alberta growers.

Eric V: In order to qualify for the insurance, what does the farmer need to know?

Jesse C: First and foremost, growers are required to have a malt barley production contract signed by June 20th for a minimum of 40MT. The contract must include the buyers and sellers signatures, contracted tonnage (or acres) and specify that malting will be the end use. Varieties from the Canadian Malt Barley Technical Center list and other varieties specified on a contract will be eligible. The grower should also know that you can’t grow feed and malt barley and insure both of them as malt, farms with feed and malt varieties will have the option to insure as commercial but not malt end use.

Eric V: Does Cargill’s production contract qualify for the insurance?

Jesse C: Yes, Cargill’s malt barley production contract has all the requirements that AFSC needs to make sure an AFSC client is eligible for the malt barley insurance product. To be a little more specific, Cargill’s malt barley production contract has an obligation to deliver tonnes, information on the variety, grower’s name, location, township, and a signature provided it’s signed by April 15, which is when the First Choice malt barley contract is due. Cargill is obviously not the only contract out there, but it is important for growers to know that handshake type contracts do not count. The reason AFSC uses the production contract as a qualifier is that it tells us the grower understands how to grow malt and means that no geographic boundaries within Alberta are necessary.

 

After my conversation with Jesse he sent me an example that shows the differences in coverage between the traditional feed barley program and new malt barley program.

 

 

2015

2016

 

Commercial End Use (Feed)

Commercial End Use (Feed)

Malt End Use

Avg. yield for barley (bu/acre)

75

75

75

 

Feed Barley Spring Price/bu

$3.74

$3.86

 -

 

Malt Barley Spring Price/bu

$6.01

 

Chosen coverage level

70%

70%

70%

 

Production Guarantee (bu/acre) (Trigger for payment)

52.5

52.5

52.5

 

Coverage ($/acre)

$196

$203

$316

 

 

Here are the things that you need to know:

  •          Premiums paid will directly reflect the increase in coverage (e.g. 40% price premium for malt barley will result in a 40% increase in premium paid)
  •          Malt barley can be insured in conjunction with pedigreed seed and silage however feed barley and malt barley varieties grown on the same farm will not be eligible for malt barley insurance. In this situation, the entire barley crop can be insured as feed
  •          Growers will need to provide proof of a contract to AFSC for more than 40 tonnes of malt barley by the June 20th - Land Report deadline
  •          The Spring Price Endorsement and Hail Endorsement are available for malt barley
  •          All benefits and discounts will apply to eligible growers as they do with feed barley
  •          Individual yields will not be affected for barley, rather feed barley yield history will be used so clients will not need to start at the area average yield

This new offering in Alberta is a welcomed advancement to the industry and I encourage you to visit their website at www.afsc.ca to learn more or have a conversation with your Cargill rep or an AFSC staff member.  For more information about Cargill’s First Choice malt barley production contract visit the special offers page and remember the deadline to sign up is April 15th.

 

 

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