Climate change hurts farms and costs Canadian taxpayers

To get an idea of ​​the financial toll extreme weather is taking on this country’s agricultural industry, look no further than the Saskatchewan government’s books.

The Prairie Province had forecast a surplus of more than $1 billion for the fiscal year ending March 31, 2024, but new budget documents released last month show the surplus has completely evaporated, leaving Saskatchewan with a deficit of approximately 482 million dollars for the year.

The reason for this dramatic change? In large part, the drought and the resulting increase in government payments for crop insurance.

It’s an example of what some experts say Canadians can expect to see more of as climate change puts pressure on agricultural production. Taxpayer money already supports the agricultural industry in this country to the tune of billions of dollars each year, and some say the bill will rise as natural disasters caused by climate change make it harder for farmers earn a living.

“We’re going to see more droughts, more pests, and yields aren’t going to be as good,” said Guillaume Lhermie, director of the Simpson Center for Food and Agricultural Policy at the University of Calgary.

“For me the question is: who should pay for that? I predict that more and more will be asked of the government.”

In Canada, crop insurance is available to farmers in all provinces to help cover production losses in the event of natural hazards such as drought, floods, excessive heat or snow, etc.

It’s part of a suite of enterprise risk management programs, all jointly funded by the federal and provincial governments through what’s called the Sustainable Canadian Agricultural Partnership.

But extreme weather – from droughts to wildfires to “heat domes” to flash floods – has affected farmers from coast to coast in recent years.

Why climate change in the countryside means a big bill for Canadian taxpayers. #ClimateChange #ExtremeClimate #IndustryAgriculture

In the case of Saskatchewan, last year’s drought conditions impacted agricultural production, resulting in a year-over-year decline of almost 11 per cent and forcing the provincial government to spend almost $1.2 billion more than budgeted through its Ministry of Agriculture.

For next year, provincial Finance Minister Donna Harpauer said in her recent budget speech that as a result of “challenging climate and soil conditions,” Saskatchewan will budget $431.7 million this year (an increase 5.8 percent year-on-year) to ensure that crop insurance and other agricultural risk management programs are fully funded.

It’s not the first time drought has hit the province’s finances: in 2021, Saskatchewan farmers experienced one of the largest production declines in the province’s history (47 per cent year-over-year) due to extreme heat and winds. drought conditions. That year, the Saskatchewan Crop Insurance Program paid a record $2.6 billion to farmers to help cover their losses.

Large crop insurance payouts have also been a problem in other provinces.

In Alberta, the provincial Crown corporation known as Agriculture Financial Services Corp. paid out $2.1 billion in 2021 and $552 million in the 2022 crop year, with drought the leading cause of losses in the vast majority of those claims .

AFSC warned that Alberta farmers can expect to see higher crop insurance premiums for the 2024 crop year, primarily due to the program’s financial losses in 2021 and 2022.

Beyond crop insurance, Canada also has a federal, provincial and territorial disaster relief framework that can be activated when farmers face “extraordinary costs,” such as the additional feed costs that Western Canadian ranchers have experienced. had to pay in recent years as the drought dries up. their grazing lands.

During the three-year period ending December 31, 2023, more than $1.4 billion was paid to Canadian producers in disaster relief under that framework, which is called AgriRecovery.

Keith Currie, president of the Canadian Federation of Agriculture, said that while funding for disaster relief is welcome, severe weather events are becoming so common that the entire system may need to be re-evaluated. AgriRecovery, for example, has been criticized for being too slow to respond after a disaster; He said it’s not uncommon for farmers to wait months or even a year to receive funding.

“When we look at events like the ‘atmospheric river’ that occurred in British Columbia, the impacts of hurricanes that have occurred in Atlantic Canada, or even smoke damage from wildfires and how this affected crops “We need better risk management programs to help farmers have some kind of assurance that they can survive these types of climate change impacts,” Currie said.

While crop insurance will always be necessary, said Shannon Sereda, director of government relations at industry group Alberta Grains, governments can mitigate the financial cost of extreme weather by increasing investment in agricultural research.

“One of the best defenses we have against climate change or extreme weather events is really investment in research,” Sereda said, adding that science can reduce climate-related crop losses through innovations such as the development of drought-resistant seed varieties.

Stewart Oke, who farms in central Alberta, east of the city of Red Deer, a part of the province nicknamed “Hail Alley” for its reputation for punishing storms, said he “wouldn’t be able to operate” without crop insurance. to protect you from unexpected losses. .

But while he acknowledged the program is costly for both producers and governments, he said he believes it is sustainable as long as investments in research and technology keep pace.

“With access to innovation, there are many things we can do as producers that will help keep our risk at a controllable level,” Oke said.

Lhermie, a professor at the University of Calgary, said that in the short term, climate change means governments will have no choice but to invest more money in the agricultural industry to help it withstand extreme weather events.

In the long term, he suggested that governments may want to consider making financial support for farmers conditional on certain environmental practices, such as soil health and biodiversity management.

“Technically you could say that if you want to be insured, then you have to be a good steward of the land. That’s something that might be feasible in the future,” Lhermie said.

“Because in Western countries, when these (agricultural disasters) happen, governments intervene a lot, meaning they subsidize and cover losses. But in the long run, that’s just not sustainable for government spending. It costs a lot of money.”

This report by The Canadian Press was first published April 4, 2024.

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