AFSC scraps spring price endorsement, wildlife top-up

Source: www.producer.com

A provincial crown corporation that helps Alberta producers and agribusinesses with everything from crop insurance to loans is cancelling two programs and permanently closing five branch offices.

“These are very difficult decisions,” said chief executive officer Darryl Kay of Agriculture Financial Services Corp. in a statement about the closures. They will occur in High Prairie, High River, Rimbey, Smoky Lake and Spirit River as of May 1.

“AFSC has an ongoing responsibility to evaluate its operations and determine how we improve to deliver more value to our clients and all Albertans,” said Kay.

The overall borrowing limit for AFSC was earlier increased by $800 million as part of the recent provincial budget, bringing the total limit to $3.6 billion by 2024.

The increase in lending “goes a long ways for direct loans to farmers and ranchers as well as ag businesses,” said agriculture minister Deevin Dreeshen Feb. 25.

However, besides closing the five offices, AFSC recently announced it is cancelling its Spring Price Endorsement program. Any outstanding claims from the 2020 crop year will be processed.

The program protected against declines of more than 10 percent between the spring insurance and fall market prices of crops.

“Historically, the program has had a low rate of participation, and recent enhancements to the program did not result in increased participation,” said an AFSC statement.

“In the past four years, only nine percent of insured clients used this option.”

The trend is likely due to recent higher prices and market stability for grains and oilseeds, said Lynn Jacobson, president of the Alberta Federation of Agriculture.

However, markets have a history of volatility, he said, pointing to deepening tensions between Canada and China. The emerging Asian superpower is second only to the U.S. as a market for Canadian agricultural products.

“(If things) explode and China decides to do what they did to Australia, then prices will immediately drop for us,” said Jacobson.

However, private-sector options are available for clients looking for alternatives to the program, with AFSC staff available to provide information, said the AFSC statement.

AFSC is also eliminating a 20 percent top-up payment under the Wildlife Damage Compensation Program. It protected against losses caused by animals such as birds, deer and elk, said Jacobson, who has a farm northeast of Lethbridge.

Although the situation in the area has improved, there have been times when ducks and geese “could pretty well devastate a quarter for you,” he said. “They would take at least 30 percent of your field.”

The federal and provincial governments will continue to share up to 80 percent of the cost of the program.

“For example, if a producer received $250 in wildlife damage compensation last year, this year they will receive $200.”

Meanwhile, the five branch offices will be amalgamated with “larger, full service offices in the same service areas,” said the AFSC statement. The closures will have no impact on client-facing branch staff, it said.

“These one-employee offices provided limited services to a small number of clients. The newly amalgamated offices will provide increased support for AFSC clients and staff, while offering a full range of risk management and lending products for Alberta producers.”

As part of AFSC’s ongoing review of its operations, about 250 clients were consulted about their needs and preferences, said the statement.

The closures and program cancellations will likely “be a disappointment to a lot of people,” said Jacobson.

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