By Olivia Richardson, Ryan Tougas-Cooke and Michael Twigg
Canadian farmers are facing growing climate and market risks, from droughts and floods to rising production costs and increasingly expensive insurance claims. As these pressures mount, governments, insurers and farmers need new tools to build resilience while maintaining profitability and competitiveness.
Supporting resilient farming practices
Beneficial management practices (BMPs)—such as practices that improve soil health and fertilizer management—can reduce risk, strengthen farm performance and support environmental goals. Yet adopting new practices often involves short-term uncertainty for farmers, and current agricultural insurance programs rarely recognize or reward farmers who take proactive steps to reduce risk.
Two opportunities for innovation
This report explores two insurance innovations that can help bridge that gap. Transitional coverage protects farmers against short-term losses as they adopt new practices, while insurance premium incentives reward farmers with lower premiums or enhanced coverage when they implement practices that reduce their farms’ risk over time.
Drawing on examples from Canada and abroad, the report argues that insurance can play a larger role in supporting farmers as they deploy risk-reduction measures. When combined with cost-share programs and sustainable finance solutions, these tools can help modernize Canada's agricultural risk management system, reduce long-term public costs and support a more resilient and competitive agriculture and agri-food sector.
Key recommendations
The report identifies three priorities for policymakers and insurers:
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Strengthen evidence on the relationship between BMP adoption and risk reduction.
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Redesign insurance products to reward proactive risk management.
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Pilot new insurance innovations that help share the risks of on-farm transitions.
Read the report
This project was undertaken with the financial support of Farmers for Climate Solutions. It is a product of our Sustainable Agriculture and Agri-food Systems program, which explores how to accelerate innovation on the farm and across the entire agri-food value chain.
