Alberta Drought Costly to Insurers

CALGARY - Jul 1/02 - SNS -- Alberta producers who bought crop insurance this year could receive their biggest payout in the province's history as the drought gripping much of the province remains unbroken and commodity prices inch upward.

Alberta's Agriculture Financial Services Corporation believes this combination of events could result in a payout of CDN $1.4 billion, compared to the $270 million paid last year.

Speaking to a Canadian Press reporter, Tom Crozier, manager of research for the corporation, said, "If the market moves up more than 10% [over our target price] at the end of July, we would increase the price coverage producers are eligible for, provided they paid for the variable price option on their insurance."

Officials with Alberta Agriculture reckon this year's drought covers nearly 60% of the province's farmland. Unfortunately, after last year, subsoil moisture reserves are too low to sustain crops between rainfalls, said Lloyd Andruchow, spokesman for Alberta Agriculture.

The problem is most obvious along the Saskatchewan border. Canola fields in the Lloydminster area are out of the ground, but not all the seedlings survived and remaining plants are turning yellow because of a lack of moisture. Some growers in the area believe yields will be down at least 80%.

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