Western Livestock Price Insurance Program

The Western Livestock Price Insurance Program was recently announced for British Columbia, Saskatchewan & Manitoba. This announcement will place us on a level playing field with Alberta where a similar program has been in place for the last 4 years.

The program offers producers the opportunity to purchase price insurance. There are 3 separate programs: calf, feeder & fed.

The calf program is available for purchase from February to the end of May. The program uses calves weighing 550 to 650 pounds to arrive at a premium & a settlement price. The support price & the premium are available each Tuesday, Wednesday & Thursday. The support price & premium may vary each day. The insurance can be purchased from 16 to 36 weeks in the future. The settlement price will be calculated weekly from September to December. The program is not based on the sale of your cattle.

The settlement price is calculated from the average price at participating auction markets. If the settlement price is below the support price there will be a payout.

The feeder program uses feeder steers weighing from 750 to 950 pounds to arrive at a premium & a settlement price. Insurance can be purchased from 12 to 36 weeks into the future. The program is not based on the sale of your cattle. The settlement price is calculated from the average price at participating auction markets. If the settlement price is below the support price there will be a payout.

These programs have definite value. The feeder program looks especially attractive for producers who background or run home raised yearlings. The calf program does not appear to be as favorable.

There a three unique advantages to this program.

One is that when you purchase price insurance you are setting a floor price. If the market is higher than the support price you can sell for the higher price. When you contract your cattle you lose any opportunity to sell at a higher price.

The second positive point is that in the event of a border disruption price insurance will still be honored. Cattle contracts are declared null & void when there is a border disruption.

The third positive is that price insurance allows you to price your cattle over a 36 week period. In any 36 week period there will be price fluctuations. We all have the ability through financial planning to know how a given price relates to profit for our individual businesses. When we are doing our home-work we will know at what price to purchase insurance. This is much more likely to result in profit than selling on a particular day.

I encourage everyone to investigate & understand price insurance. It may or may not benefit you. You will never know if you don’t understand the program.

The web site for price insurance is: http://www.wlpip.ca

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