Ranch Musings: Is there insurance against nature delivering surprises to agriculture producers?

Regular columnist David Zirnhelt writes about financial resilience and production insurance

There is much talk about producers being resilient in their responses to disaster and serious challenges.

Mad Cow disease in the early 2000s, with the decrease in cattle prices, was a financial shock that saw price recovery happening almost a full decade later.

Now it is fact that we can be jolted by both flood or excessive rain and drought in adjacent regions of the provinces or regions of this continent.

Currently, most of the Cariboo is in a flood situation, with surplus rain preventing our hay harvest.

Only some parts of the Cariboo are designated by the federal government as eligible for income tax deferral in the face of a winter feed shortage causing sell off of cattle. In some cases in the western Chilcotin, ranchers have no feed.

It makes no financial sense to import expensive feed for cattle in the quantities required for feeding the herd through winter.

Most ranch herds are subject to being considered income when sold, not capital dispersal.

But if you can defer the income tax from much larger than usual sales until next year when buying replacement cattle, then the financial health of the ranch will be much greater.

It is a common practice to write off cattle income annually by making purchases for the farm business thereby reducing taxes paid for that year. One can depreciate the value of the herd so that when you sell down inventory those taxes have already be paid, so you get to keep more of the income.

The wish to keep as much of the income in the farm business in normal years may work in those years, but that increases the taxes when there a big sell off of cattle because of weather related conditions such as we have now.

Programs for disaster relief have been the topic of federal-provincial Ministers of Agriculture for decades, and it seems a localized or general disaster catches everyone un-prepared.

Good old crop production insurance is at least one option that producers can utilize.

But after a series of good crop years, producers tend to forget why that insurance is there until disaster strikes.

Now it is pretty hard to insure against destructive climate change. The long-term challenge that is before us is to have a diversity of crops and soil management strategies so we are resilient when natures sends us curve balls.

Today, what you can do is buy production insurance for next year. The deadline for next year’s crops is Nov. 30. Get on it, and call Chad at 250-398-4500 at the Ministry of Agriculture.

A cost of a few hundred dollars ($3-5 per acre for minimum coverage) can bring big pay back if you experience serious drought or flooding.

Or you can go to the Ministry website at www2.gov.bc.ca/gov/content/industry/agriculture-seafood/programs/production-insurance.

Plan for your financial resilience.

David Zirnhelt is a rancher and member of the Cariboo Cattlemen’s Association. He is also chair of the Advisory Committee for the Applied Sustainable Ranching Program at Thompson Rivers University Williams Lake.

READ MORE: Ranch Musings: No-till pasture rejuvenation and sivopasture trials


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