Fall 2014 Q12
The question mentioned the farmer participated in the Production Insurance Program and Canadian Agricultural income stabilization program. So, is the claim settlement basis "at harvest prices" a feature of AgriStability program?
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The question mentioned the farmer participated in the Production Insurance Program and Canadian Agricultural income stabilization program. So, is the claim settlement basis "at harvest prices" a feature of AgriStability program?
Comments
Claim settlement is based both on your reference margin and harvest prices
I thought AgriStability protects against margin decline, then why would settlement still be determined by the final harvest price and not something that is pre-determined. This seems counter-intuitive.
Your margin is determined by your final harvest price. This difference vs a reference historical margin is what determines your payout.
Revisiting this question here - the question asked for payout from AgriInsurance. What if it asks for the payout from AgriStability? Would it be the difference in payout between using the $3.00 initial price and the $2.25 harvest price?
I had to do a google search, which shows that the calculations are more involved than that. AgriStability provided financial assistance when a producer’s current year margin (allowable income minus allowable expenses) fell below 70% of their historical reference margin, which was calculated as the average margin from three of the past five years, excluding the highest and lowest years.
I would focus on AgriInsurance as that is what the bulk of the paper focuses on, and what has been tested historically that we know of!