Farmers across Canada are facing mounting challenges, extreme weather, rising input costs, trade disruptions and market instability. At the same time, we are looking for opportunities to implement high-resilience, low-emission practices into our operations. Farmers for Climate Solutions’ (FCS) 2024 National Poll of Farmers and Ranchers reinforced this, with producers indicating a high level of interest in practices such as improved nitrogen management. However, trying a new practice can be risky, and the short-term return on investment can be uncertain. Beneficial Management Practice (BMP) adoption could result in short-term crop yield and profit losses for farmers. As the risks facing Canada's farmers grow, so too does the need for innovative and reliable risk-management tools. Our same polling research showed that 87% of farmers indicated that risk-management tools were somewhat or very important when trying new practices on the farm.
As part of a new project, FCS is working with the Smart Prosperity Institute and the Nature Investment Hub to assess the feasibility of new and innovative de-risking tools. Together, we are implementing on-farm pilots that test new de-risking tools with Canadian farmers. The ultimate goal is to explore how to lower the risks of trialing new BMPs, allowing farmers to evaluate whether a practice works on their farm, determine effective implementation and planning strategies and access technical support.
Risk-management tools for a resilient agriculture sector
Canada’s federal and provincial governments already offer a vital set of risk-management programs, and international jurisdictions have begun exploring how to use risk-management tools to help farmers confidently trial and adopt BMPs that can build greater on-farm resilience and improve environmental impact.
Can Canada explore new risk-management tools tailored to specific BMPs, production systems and our on-farm realities? Choosing the right tool depends on several factors: funding availability, desired outcomes, partnerships and inclusion of other supports and reporting requirements. We are seeking to find the answers.
Working with our project partners, we are trialing different risk-management tools to de-risk BMP adoption. Our hope is to contribute to build a comprehensive toolkit for Canada’s agriculture sector by testing novel de-risking tools on farms with farmers. Tools with significant potential include:
Production guarantees function similarly to warranties, offering yield coverage to farmers testing a new product or management plan for one growing season. Examples from the U.S. include Innovation Assurance and Growers Edge Crop Plan Warranty.
Risk payment reductions provide a flat-rate payment to farmers if a new practice leads to reduced yields. For instance, Practical Farmers of Iowa offers $35 US an acre through their Nitrogen Rate Risk Protection to farmers who reduce fertilizer rates and experience a yield loss.
Premium discounts encourage early adoption by lowering crop insurance premiums for farmers implementing specific practices or achieving environmental outcomes. In the US, the Crop Insurance Discount Program offers producers a $5 US-an-acre discount for adopting cover crops. In Canada, provincial insurers are piloting similar models. Alberta Financial Services Corporation is a leader in this space, exploring links between higher soil organic carbon levels and lower insurance premiums.
Sustainability-linked loans provide producers who adopt specific practices with lower-interest loans. For example, BMO’s Greener Future Financing Program offers farmers a 1% interest reduction on loans for investments in practices that reduce emissions and improve climate resilience.
BMP insurance provides farmers with an insurance policy that protects yield or profit levels when adopting a new or more sustainable production practice. An indemnity payment is triggered when the new practice reduces a farm’s yield or profitability, compared to business as usual. These programs are commonly paired with technical support. Aside from a small-scale pilot on Prince Edward Island in 2007, BMP insurance is new to Canada, but pilots—such as the BMP Challenge—have been conducted in the US.
Our pilot with Ontario farmers
In spring 2025, we launched the first pilot, recruiting a small group of farmers producing corn across Ontario. The Split Nitrogen Application Profit Guarantee Pilot is designed to help these farmers test split nitrogen application in their fields or update application rates. The pilot will pay these farmers in case of yield-based profit loss due to split nitrogen application on enrolled acres, which minimizes the risks associated with this practice. The program also offers subsidized technical support to help with nutrient-management planning, soil testing and rate determination. Split application can help reduce nitrogen costs, allowing farmers to be more nimble in response to the growing season, resulting in higher yields and minimized nitrogen losses, all while benefiting the environment and improving business resilience by maintaining or even improving profit margins.
The initial pilot will enable us to test the production guarantee model in the context of well-known nitrogen management and enhanced soil testing practices to define the application rate. This pilot is intended to collect data and refine program design elements. We will use findings from this pilot to inform future pilots, allowing us to apply the tool to other crops, BMPs and regions.
Stay up-to-date on this project. Sign up for our newsletter to read the results of this pilot and learn about upcoming opportunities to get involved in this initiative!
A resilient future for Canadian agriculture
The risks that we face as farmers continue to increase, and we need innovative and reliable risk-management tools to help us implement practices that build resilience and improve environmental impacts without adding more financial stress or risk. Through this project, we are developing partnerships with government, sector organizations and financial and insurance institutions to identify and implement practical solutions that should help our farms thrive amidst multiple uncertainties.
To learn more about this project, contact Virginie at virginie@farmersforclimatesolutions.ca.
