AFSC: Here to help Alberta’s producers

Farming in Alberta can be unpredictable, but Agriculture Financial Services (AFSC) is committed to providing solutions to help Alberta’s producers do what they do best – build, grow and succeed. We offer a range of lending and risk management options. 

Lending

AFSC offers a dependable source of financing for Alberta farmers and agribusinesses through our Next Generation, Developing Producer, Alberta Producer, Revolving and Agribusiness loans. With competitive interest rates and flexible terms, AFSC’s lending solutions are tailored to Alberta producers’ growing operations.

AFSC helps clients with cash flow concerns, providing a variety of ways to support them. One way is to provide lending relief during tough times. Existing clients can discuss relief payment options with their Relationship Manager Lending. 

Crop Insurance

AFSC’s annual and perennial crop insurance programs offer producers protection from designated perils that lead to production loss. 

AFSC offers production-based programs that cover annual and perennial crops. This insurance provides a production guarantee based on the average of historical yields and coverage options selected. When production falls below the guarantee due to an insured peril, the shortfall will be paid.

AFSC’s area-based programs annual insurance offerings—like the Silage Greenfeed program—provide protection for crops based on a chosen area over a specified time; they do not directly reflect what happens on your individual farm.  

AgriStability

The AgriStability program offers coverage to protect farm income, based on all of a producer’s commodities, against large margin decline that may threaten the viability of your farm. Removal of the Reference Margin Limit in 2021 makes AgriStability less complex and more responsive to all types of farming operations. It is anticipated that approximately half of participants will benefit from this change over time and their coverage could increase by up to 30 per cent.

Livestock Price Insurance

As a risk management tool, Livestock Price Insurance (LPI) essentially forecasts prices and offers coverage based on what markets expect cattle will be worth in the future. This coverage is settled against the overall average cash market; therefore, producers still need to do the best job they can to market their cattle.  

LPI is not based on a producer’s personal prices or production, and is an index-based program (uses standard weight and class of cattle to measure market performance). The indexing concept is important, as this standardized insurance product is what allows the program flexibility.

The program helps manage risks for cattle and hog producers throughout the various stages of production. Producers pay a premium to receive forward price coverage; if the market falls below the coverage price in the timeframe selected, the producer receives a payment. 

Choosing the right cattle program—calf, feeder, fed—is very important. 

• ‘Calf’ is designed for the cow-calf producer. Having a tool available to help protect against the ‘unknowns’ of the fall calf market and associated price volatility can assist with profitability.
• ‘Feeder’ insures feeder cattle using a forecasted future market driven price. The program is based on local markets and helps producers who background cattle better manage the risks in today’s unpredictable cattle market. 
• ‘Fed’ offers price insurance for finished cattle that are intended for slaughter and expected to grade A or better. This program takes the difficulty out of managing all three risks that producers face (price, currency and basis) and combines them into one product.

The basic mechanics of LPI are simple. The program establishes a coverage level for the client—meaning an insured price level. If the cash market moves up during the time of your policy, you sell the cattle for higher dollars into that market; the insurance doesn’t pay because the market was stronger than your minimum when you bought the coverage.

If the cash market falls below your coverage, LPI pays the difference between the established settlement index and your coverage. This is intended to make up the difference between what you expected the market to be (your coverage level) and what the market actually was (the settlement index).

To learn more about AFSC lending and risk management offerings, please see AFSC.ca, reach out using Live Chat on AFSC Connect or our website, call our Client Service Centre at 1.877.899.2372 or contact an AFSC branch office.

---

This article was first published in Volume 2 Issue 2 of ABP Magazine (April 2022). Watch for more digital content from the magazine on ABP Daily.