The Top 10 Questions About WLPIP

  1. Why should producers participate in the Western Livestock Price Insurance Program (WLPIP)?
  2. Why do WLPIP premiums fluctuate?      
  3. Why is it important that producers have coverage, even in record high markets?  
  4. All producer premiums go into a general fund to pay indemnities. What happens if the payout for indemnities exceeds what is in this fund?
  5. Why are calf policies not sold year-round?
  6. Can a producer overlap policies for each production stage?
  7. Does the program recognize each individual producer’s management practices?
  8. If the market drops significantly, does WLPIP still work?
  9. When do I have to sell my animals, and what sale documentation do I need to provide?
  10. WLPIP settlements for Feeder and Calf are derived from steer data only, are heifers still insurable?

1. Why should producers participate in the Western Livestock Price Insurance Program (WLPIP)?

Volatile market prices along with basis and the Canadian dollar all influence the financial return to a livestock operation and can be hard to manage. WLPIP is designed to reduce the financial risk to producers in Western Canada and protect against market unknowns.  

2. Why do WLPIP premiums fluctuate?        

Premiums are strongly influenced by market volatility and can increase due to factors facing the market.  Premiums can also be quite economical when market volatility is relatively low.

WLPIP offers a wide range of coverage, which allows a producer to tailor their level of protection to the risk they want to insure, and premium to the budget that they can afford.

3. Why is it important that producers have coverage, even in record high markets?  

When a producer purchases a WLPIP insurance policy, it protects the producer’s investment on calves, feeders and fed calves and hogs. This program allows producers to pocket the increase in the market price while still having the peace of mind of protection from a potential market downturn.

4. All producer premiums go into a general fund to pay indemnities. What happens if the payout for indemnities exceeds what is in this fund?

If the fund goes into a deficit position, the Government of Canada and your provincial government cover the program. Producers have no risk that policies are not paid because the fund is in a deficit position. Existing policies will be honoured even in the case of a border closure or similar catastrophic market event.

5. Why are calf policies not sold year-round?

Historically, the volume of calves sold outside of the fall calf run has been too low to provide the accurate market data  needed to generate coverage and premium levels. Calf policies are offered from February 1 to May 31, 2018.

6. Can a producer overlap policies for each production stage?

Absolutely. A producer can overlap a feeder policy on a calf policy, and have a fed policy overlap a feeder policy all on the same weight.

7. Does the program recognize each individual producer’s management practices?

WLPIP policies are settled based on the average price of electronic and auction mart sales, not on the sale of the livestock covered by your WLPIP policy. Breed or animal conditions do not influence settlement of individual policies.

8. If the market drops significantly, does WLPIP still work?

Whether the market is high or low, there is still the need to protect one’s equity. WLPIP is a risk management tool meant to mitigate risk throughout the entire market cycle. When the market drops, WLPIP provides producers with a floor price; if prices increase over that period of time, a producer can benefit by selling livestock as he or she sees fit. WLPIP doesn’t limit producers to the floor price if the market goes up.

9. When do I have to sell my animals, and what sale documentation do I need to provide?

WLPIP does not require you to sell your animals. To mitigate risk, a  producer should match his or her policy lengths to the sale of their cattle, but if conditions change there is no commitment to sell livestock at a specific time.

Producers do not need to provide documentation of sale because policy settlement is not determined from individual producer sales. It is based on the average cash price obtained from electronic and auction mart sales data.

10. WLPIP settlements for Feeder and Calf are derived from steer data only, are heifers still insurable?

Yes, heifers can be insured under any one of the Cattle Price Insurance Programs.  However, coverage and settlement of the Feeder and Calf programs are based on average weekly steer prices.   Indemnity is based on a comparison between the published steer settlement price   and the producer’s chosen level of insured coverage. The difference determines if there was a decline in projected cattle prices from the time  the producer purchased the policy. 

Protect your livestock from unpredictable market factors. Contact your local WLPIP branch today.