A study on the feasibility of a crop-hail insurance program in Manitoba
Chychota, Roger Stephen
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Variations in crop yields cause variations in farm incomes. To help stabilize the income from crop production most Manitoba farmers may insure their crops against unavoidable losses with hail insurance and all-risk crop insurance. The all-risk crop insurance in Manitoba protects against losses due to all unavoidable losses including hail. However, this insurance does not cover to the full value of the insured crops. The coverage is sixty percent of the long-term average yield of the crop in each area. Only crops which yield below the coverage level are indemnified the amount the actual yield is different from the coverage level. Hail damage on crops is in most cases not to the extent that the crop qualifies for indemnity from all-risk crop insurance... Three alternatives were examined in the study to determine the alternative which would give the best protection against the crop losses due to hail damage and all other unavoidable causes... The proposed crop-hail insurance program offers separate coverage for hail damage under the all-risk crop insurance program. Some conclusions drawn from the study are: (1) All-risk crop insurance does not apparently offer adequate protection against hail damages. (2) Separate coverage for hail under the all-risk crop insurance is feasible in an area where hail damage is to the extent that the average crop yield is not brought substantially below the all-risk crop insurance coverage level. A program of this type would be feasible in the Russell and Silvercreek Municipalities of Manitoba. (3) A feasible crop-hail insurance program is one which offers better protection to the farmers than any existing formal insurance or any conceivable alternative. It is also a self-sustaining program which may be put into operation by an insurer such as the Manitoba Crop Insurance Corporation, providing that the portion of the yield variability between farms attributable to the risk hail, may be estimated from past records of an all-risk crop insurance program...