The Western Livestock Price Insurance Program (WLPIP) is a risk management tool available in British Columbia, Alberta, Saskatchewan, and Manitoba. The program provides producers with protection against an unexpected drop in prices on cattle and hogs over a defined period.

Jason Dobbin is the Manitoba provincial coordinator for Western Livestock Price Insurance, a program that launched in Manitoba in 2014 for livestock producers and the province.

Dobbin, a cattle producer said they have not had any risk mitigation, especially on the cattle side of things.

“We haven’t had the protection required for some of us, incidents such as a flood, drought event or a border closure, and even just a significant drop in the market,” he said. “So this program is now full price, against the cash market, in the future, and it protects you from those market declines that as a producer you can’t guard yourself against.”

Dobbin said this program, first initiated by the beef producers when the Alberta beef producers hired Gibson Capital, a private firm to develop it and finally implement it in 2009. In 2014 the rest of western provinces, BC, Saskatchewan, and Manitoba joined in.

“In Manitoba, we as cattle associations and Manitoba Agricultural Services Corporation (MASC) administered a program in Manitoba, SCIC in Saskatchewan, and AFSC in Alberta. So cattle incorporations are administering programs that were initially designed by the beef producers,” he said. “It’s insurance. You’re buying an insurance policy to have a floor price in the future. That floor price is your bottom. There is no commitment to sell your cattle or your hogs. You can keep them or sell them previously to what you’re trying to protect yourself for.” It’s providing a period, protection for a floor price and if the cash market drops below that, the cattle producer gets the difference.

“But it’s not paid on what you get for your animals, so that’s why there’s no commitment to sell. If a good producer gets above the average market price, he puts that in his pocket, and if the cash market drops from when we insure that, he or she gets the difference,” said Dobbin. While, the insurance program does not affect when or how the producer markets, he said that’s right.

“Now there’s a bit of a contradiction here in that you’re trying to buy an insurance policy to when you normally would sell your animals so that when the price declines this would be a top-up to what you would probably get in the marketplace,” said Dobbin. “Saying that, it’s not what you exactly get. So like, we’re not collecting sales receipts for what you get because we have modern hardware in every auction mart, 22 auction marts in Saskatchewan, Manitoba, and so electronic sales data all go into our calculation of the settlement price.”

While initiated and started by cattle producers and their organizations, hogs are also a component of Western Livestock Price Insurance. It’s a little different methodology and as far as the calculations on that go so, he encourages a hog producer who is interested, to contact him.

Dobbin said the uptake is being slow but steady.

“We got out of the gates pretty good there in 2014, and then we’ve seen some dip a little last year, but this year we’re are double what we had for sales last year, as far as policy sales go,” he said. “Funding of the program, the premiums paid for the policies, it’s 100 per cent producer-paid premium. However, the federal and provincial governments pay the administration costs.”

Dobbin who farms south of Mcgregor said the program works for him.

“Absolutely. And you know what? It gives you peace of mind. You have to determine somewhat also what that peace of mind is, what is it worth? So when we talk to some of these issues that people raise about our friends to the south and the new administration and what they may or may not do, that stress of how it’s going to affect the market if it drops, when you have a policy like this,” he said. “Because unlike some other contracts, if the border closed tomorrow this contract is always honoured. There is no catch like if the border closes, it’s canceled or anything like that.” •

— By Harry Siemens