The results are in and they are not surprising: 2023 was the hottest year ever recorded. European climate agency Copernicus’ annual report put the global average temperature at 14.98 degrees Celsius, the warmest since 1850 when data began being collected. July and August 2023 were the hottest months ever reported, and the whole year was about 1.48 degrees Celsius warmer than pre-industrial levels.
December 2023 exhibited unusually high temperatures, as Albertans can attest to. Both daytime and nighttime temperatures averaged 0.1 degrees Celsius, deviating significantly from the usual minus 6.8 degrees Celsius. It was the warmest December on record for Calgary in over 141 years.
Along with warm temperatures has come far less moisture. The Government of Alberta has officially declared a drought, with two years of tiny snowpacks in the mountains leading to less runoff filling rivers, lakes, and reservoirs. The province is currently in water shortage management stage 4 (out of 5), where multiple water management areas are impacted by water shortages, most significantly in the southern areas. Three southern Alberta counties declared agricultural disasters early in the summer: County of Forty Mile on July 12; Cardston County on July 17; and the Municipal District of Taber on July 18. By mid-August, more than a dozen counties total had declared “agricultural disasters.”
Alberta’s farmers face continued significant threats with this drought, says CBC. Consecutive dry years have resulted in critically low soil moisture levels and the risk of major erosion. In order for farmland to remain viable, irrigation is an absolute must these days, but many farms rely solely on rainfall for moisture.
Irrigation is a significant user of the province’s water. Irrigation licenses total 3.5 billion cubic metres per year and make up to 60 to 65 per cent of the province’s water usage, according to a 2017 report from the Alberta Land Institute. In southern Alberta, water use is restricted through the issuance of “water licences” by the Alberta government. As of now, there are no extra licenses available, meaning those who want to buy licences must purchase them from existing licence owners using a system that has been in place since 1894. In times of drought those who received their licence first – some more than 120 years ago – will continue to receive water first according to the established hierarchy.
One hundred per cent of southern Alberta’s water has already been allocated.
In the very near future, Alberta may need to explore constructing additional reservoirs to secure water for extended periods and implement water diversion and restriction strategies to sustain the agricultural industry.
Crop insurance at a glance
It’s obvious that a lack of water threatens crops.
Many farmers in Alberta use government-subsidized crop insurance through the Agricultural Financial Services Corporation (AFSC), which provides relatively broad coverage at rates most private companies couldn’t usually compete with. In 2022, $324 million in insurance premiums were paid by crop producers, which breaks down to about $10 to $50 per acre. A recent (and major) rate hike has increased those costs to $16 to $80 an acre, however.
As farmers deal with rising prices for fuel, fertilizer, and transportation, and the lack of water, these increases in crop insurance are making a significant impact on bottom lines. More options and versatility are needed, including the potential for private crop insurance. Farmers are encouraged to check the Government of Alberta’s CropChoices site for more information on what is available.
Farm insurance coverage explained
Although farm insurance acts a lot like home insurance, the fact that farmers are also businesspeople means there are very important differences. Lane’s certified insurance brokers have years of specialized farm insurance experience under our belts, and we are able to find you the most comprehensive coverage at excellent rates.
Farm insurance is generally comprised of:
- Coverage for your buildings, including your home and any outbuildings such as Quonsets and sheds.
- Machinery coverage for items and infrastructure such as your tractors, trailers, ATVs, combines, and irrigation equipment.
- Loss-of-use coverage for when a major machine breaks down and you are unable to work.
Livestock can be insured through regular farm insurance for incidences such as fire, explosions, and even animal attacks, depending on what form you choose. An additional offering available through the AFSC is livestock price insurance, which protects ranchers who have cattle and hogs against drops in prices over a period of time. Livestock price insurance is not currently subsidized by any type of Canadian government, while crop insurance is, however ranchers have been lobbying for its inclusion in order to increase affordability.
We also highly recommend adding loss-of-earnings coverage to your farm insurance policy, which provides compensation for missed earnings due to an insured event. In general, you can choose to insure your property, machinery, and livestock together under one package, or separately, allowing for customization of your policy.
Sewer back-up insurance and/or water-damage coverage is also advisable for your farm insurance coverage, and don’t forget that farms are at a very high risk for huge losses due to fire. Many of Alberta’s farms are located far away from fire departments, so ensure you have a number of fire mitigation implements in place as possible and have them checked regularly.
Trust Lane’s for all of your Alberta insurance needs
The experienced and knowledgeable insurance brokers of Lane’s can help explain the ins and outs of all types of insurance coverage for your farm and rural properties. We work for you — not the insurance companies, which means we are able to provide advice and recommendations above and beyond what you would get with a regular insurance company. Just a sampling of the products we provide includes home insurance, car insurance, travel insurance, commercial auto insurance, commercial property insurance, commercial surety bonds, contract surety bonds, and contractors insurance. Contact us at our Calgary, Edmonton, Banff, and Alberta offices today.
