Editor’s note: This story and headline were updated after the provincial government published its letter responding to APAS.
The Agricultural Producers Association of Saskatchewan (APAS) and the provincial government are disagreeing publicly over the province linking drought-induced crop insurance payments with its deficit for 2021.
The Saskatchewan government reported a projected record $2.7 billion deficit in its mid-year financial update on Monday, with Finance Minister Donna Harpauer referring to an expected $2.4 billion in crop insurance payments and additional funds going to AgriRecovery programs for livestock producers.
“If you backed out the expense of crop insurance, that $2.4 billion, as well as the livestock producer support, we would almost be balanced,” Harpauer said. “That’s how significant that support was for agriculture producers.”
APAS responded with a news release raising concerns about the comments.
“In 2020, Saskatchewan Crop Insurance Corporation (SCIC) reported a $2.4 billion surplus accumulated over previous years, plus a sizable surplus in the reinsurance fund,” noted Ian Boxall, vice president of APAS. “It’s not fair to blame producers for a provincial deficit in a drought year when that surplus gets used up.”
Government crop insurance in Canada is a cost-shared program with premiums shared between the federal and provincial governments and producers. Producers buy coverage from the program and only get paid when they are in a claim position.
“Over the years, producers have worked very hard to reduce risk through our management practices, and we use Crop Insurance as a last resort when we experience production shortfalls beyond our control,” Boxall explains. “Over the last several years, claims have been lower than premiums, which is why a surplus built up over time. If the Crop Insurance surplus had been invested in a dedicated fund like the SGI Auto Fund, then that money would have been readily available for paying Crop Insurance claims.”
Boxall adds that the federal and provincial governments are also protected by reinsurance policies that insulate them from the risk of high claim years.
The province has since has issued a strongly-worded response to APAS, calling the claims “ignorant or deceitful.” The government says it is disappointed the organization would “willingly misinform” its membership on the matter.
Going further, the government has asked Boxall to retract his statements.
Signed by Minister of Agriculture David Marit and Minister of Finance Donna Harpauer, a letter addressed to APAS president Todd Lewis states that Boxall does not understand summary financial reporting, and does not understand the difference between deficit and debt. The government also stands by its management of SCIC funds.
“In the future, we hope APAS will remember that our government has been steadfast in its commitment to agricultural producers, and that APAS doesn’t take our support for granted the next time it considers making such a reckless statement,” the letter concludes.