Why climate change on the farm means a big bill for taxpayers

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

The prairie province had forecast a more than $1 billion surplus for the fiscal year ending March 31, 2024, but fresh budget documents released last month show that surplus has completely evaporated, leaving Saskatchewan with an approximate $482 million deficit for the year instead.

The reason for this dramatic reversal? In large part, drought and a resulting increase in government crop insurance payouts.

It’s an example of what some experts say Canadians can expect to see more of as climate change pressures agricultural production. Taxpayer money already supports the agriculture industry in this country to the tune of billions of dollars each year, and some say the bill will go up as climate change-driven natural disasters make it harder for farmers to eke out a living.

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

“For me the question is, who should pay for that? I do foresee that government will be solicited more and more.”

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, flood, excessive heat or snow and more.

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

But extreme weather — from drought to wildfires to “heat domes” to flash floods — has plagued farmers from coast to coast in recent years.

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

For the coming year, provincial Finance Minister Donna Harpauer said in her recent budget address that as a result of the “challenging weather and soil conditions,” Saskatchewan is budgeting $431.7 million this year — a 5.8 per cent increase year-over-year — to ensure crop insurance and other farm risk management programs are fully funded.

It’s not the first time drought has thrust a wrench into the province’s finances — in

2021, Saskatchewan farmers saw one of the largest production declines in the province’s history (47 per cent year-over-year) due to extreme heat and drought conditions. The Saskatchewan Crop Insurance Program paid out a record $2.6 billion to farmers that year to help cover their losses.

Large crop insurance payouts have been an issue in other provinces as well.

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

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