Cow-calf producers in western Canada face large amounts of operational uncertainty each year. However, there are limited livestock-specific risk management tools available to producers outside of Livestock Price Insurance (LPI). Despite offering downside price protection to producers, adoption levels in western Canada over the last decade have remained low. In this paper we analyze survey data from 336 western Canadian cattle producers using a logit model to understand what factors impact the likelihood of LPI purchase. In addition, we explore common rationale behind non-adoption from producers in the three prairie provinces. We find that producers who have large herd sizes, are risk-averse, and who participate in other risk management programs are more likely to purchase LPI. Mixed producers with large proportions of their operating acres dedicated to crop production, and producers operating in a partnership were less likely to adopt LPI. Across all three prairie provinces, the cost of LPI emerged as the dominant reason behind non-participation, followed by program complexity and limited indemnities. The results of this research indicate that premium subsidization and targeted extension may have the potential to increase future program adoption.
Zanello et al. (Wed,) studied this question.