deJonge v Crop Insurance Commission of Ontario, 1997 ONAFRAAT 1

Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West

Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca

Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

deJonge v Crop Insurance Commission of Ontario

deJonge v CICO 1997 ONAFRAAT 1

STATUTE:

Crop Insurance Act

HEARING:

January 8, 1997

DATE OF DECISION:

January 17, 1997

1997-01

NEUTRAL CITATION:

1997 ONAFRAAT 1

deJonge v Crop Insurance Commission of Ontario

IN THE MATTER OF: Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) R.S.O. 1990, c. C.46.

AND IN THE MATTER OF: An Appeal to the Crop Insurance Appeal Board by Fred deJonge, Binbrook, from the decision of the Crop Insurance Commission of Ontario, in the way it calculated their winter wheat production.

Before: Vernon Spencer, Chair; Douglas Flook, Member.

Appearances: Mr. Pieter deJonge, on behalf of the appellant.

Mr. Martin Kiefer, Mr. Gord Phillips and Mr. John Barkovic on behalf of the respondent, the Crop Insurance Commission of Ontario.

DECISION OF THE BOARD

This appeal was heard in Guelph, Ontario on January 8, 1997.

Mr. Fred deJonge, deJonge Brothers Farms, (deJonge) appealed to the Crop Insurance Appeal Board (the Board) from the decision of the Crop Insurance Commission of Ontario (the Commission) in the way it calculated their winter wheat production.

Background

Mr. Fred deJonge insured 280 acres of winter wheat with 80% coverage. His average farm yield is 42.93 bushels/acre resulting in a guaranteed production of 34.34 bushels/acre.

When calculating deJonge's winter wheat production, the Commission used the following applicable sections of Regulation 255.

Section 8.1 In calculating an insured person’s average farm yield, the Commission shall

(a) determine an insured person’s actual yield in a year from that person’s acreage production records for the year or, in the absence of such records, estimate an actual yield figure in a year on the basis of a review of the insured person’s farmland, the farmland in the district in which the insured person’s acreage is located and the insured person’s farming practices;

Form 1, Section 16

(1) The indemnity payable for loss or damage to an insured crop shall be determined in the manner prescribed herein.

(2) The Commission may cause the production of an insured crop to be appraised by any method that it deems proper.

(3) The loss in respect of an insured crop and the amount of indemnity payable therefor shall be determined separately for each insured crop.

(4) No indemnity shall be paid for a loss in respect of an insured crop unless the insured person establishes,

(a) the actual production obtained from the insured crop for the crop year; and

(b) that the loss in production in the crop year resulted directly from one or more of the perils insured against.

The Issue

Did the Commission calculate deJonge's yield in accordance with the coverage purchased?

The Evidence

Mr. Pieter deJonge appeared on behalf of Mr. Fred deJonge. Pieter testified that he and Fred are partners in deJonge Brothers Farms. He said they operate a farm just south of Hamilton. Their farming operation consists mainly of cash crops - corn, soybeans, wheat and forage. He said they farm approximately 1800 acres.

He stated deJonge had a poor winter wheat crop due to weather and disease and they feel the Commission has made an insufficient claim payout. He said the damage was reported and the crop inspected May 8, 1996. He said the Commission confirmed damage on specific areas and the remaining acres were reported as good. He said they harvested the wheat August 2, 4, 5, 6 and 7, 1996 and stored it in a bin on their farm. He stated that they took a sample to Misener Farms, a neighbour, who indicated to them it would likely pass as Grade 3. However, the moisture was high and therefore they commenced drying immediately. He said they felt this would also assist in avoiding further contamination of mold. Samples of the wheat were sent to Reid Milling and Robin Hood Mills for testing before they would purchase. Robin Hood’s sample tested Grade 3 with a fusarium count of 4.2% and 15.1% moisture. Robin Hood Mills informed deJonge that they would not accept their wheat due to the high fusarium count. Reid Milling also informed deJonge that they would not accept the wheat either, due to the high fusarium count. deJonge said that since the moisture content was high, they continued to aerate the wheat.

On September 3, 1996, deJonge shipped a load to Goderich Elevators in Port Colborne. He said the load was rejected due to high moisture and was then sold to Harvey Armstrong Ltd. as feed. He stated that the Goderich Elevator test showed 15.5% moisture, 1.7% fusarium and wheat grade as feed.

deJonge said that on September 5, 1996, Mr. Gord Phillips, crop insurance adjuster for the Commission, came to measure his bins and determine wheat yield. He said he knew the load had been rejected at Goderich Elevators but did not know the grade at this point. For the purposes of the Commission's Yield Report, deJonge estimated that his wheat would be Grade 3 with 14.7% moisture and 4.7% fusarium.

Mr. deJonge presented into evidence weigh slips for wheat shipped to Goderich Elevators on September 19 and 23, 1996. The total wheat shipped to Goderich was 97,670 kg. or 3588.76 bushels. He said if you add to that figure the load sold to Harvey Armstrong Ltd. (1272.43 bushels), his actual total wheat production was 4861.19 bushels.

Mr. deJonge said the gross yield, as calculated by the Commission, by using the bin measurements was 5533.68 bushels. Since the Commission figure is 672.49 bushels higher than the actual production, deJonge feels the Commission has made an insufficient claim payout.

Mr. deJonge stated that in previous years, 1994 and 1995, when the yield report was incorrect, he called the Commission and the yield was revised. He said he cannot understand why the Commission is refusing to accept his actual weigh tickets versus their estimated calculations of yield. He said the elevators are approved by the Wheat Board and the scales are licensed. He said Regulation 255, Form 1, Section 16, 4(a) states:

"No indemnity shall be paid for a loss in respect of an insured crop unless the insured person establishes,

(a) the actual production obtained from the insured crop for the crop year."

He said in the deJonge case, the claim was paid on estimated yield and should have been paid using actual production figures.

Mr. deJonge said he believes the sample taken from his bin for determining pounds per cubic foot was not a representative sample of wheat in that bin. He said that to his knowledge fusarium causes many light heads and weight reduction. Therefore even though volume might be there, actual weight is not. deJonge said that the variance in weight is mystifying and the only thing he can figure out is that fusarium affected it.

Mr. Gord Phillips, adjuster for the Commission, appeared on behalf of the Commission. Mr. Phillips said that he visited the deJonge farm on September 5 to determine the deJonge wheat yield. He said that he and Pieter deJonge measured the bin and as far as he knew Mr. deJonge was in agreement with the measurements. He said the bin was measured to be 113.3 feet in circumference and the wheat in the bin to be 5.3 feet high. He said that the milk pail weight of the winter wheat was determined to be 47.2 pounds/cubic foot. The Yield Report and/or Proof of Loss Form that Mr. Phillips completed while at the deJonge farm was submitted into evidence. Mr. Phillips said that since the client signed the form, as far as he knew Mr. deJonge was in agreement with the bin measurements he had taken.

Mr. John Barkovic, District Co-ordinator for the Commission, also testified on behalf of the Commission. He said that he first spoke with Mr. deJonge back in May 1996 when he reported some problems with his winter wheat. He said the next time he spoke to Pieter deJonge was October 29, 1996. At that time, Pieter had called to say their corn and soybeans were poor and they also discussed winter wheat.

Mr. Barkovic introduced into evidence a booklet entitled "Our Product - Yield Edition Winter Wheat & Spring Grain 1996" which is used by the Commission in training sessions for the Commission's yield evaluators. Mr. Barkovic read into evidence the first two points in the yield checklist:

"1. Make sure that the insured understands what he is signing. Signatures for claims MUST be the same person(s) as the name on the top of the contract. If the farm manager signs for a corporation, please indicate that he is the farm manager.

2. Remind insureds to check yield report and yield confirmation when they receive it from Toronto. Point out the necessity of a correct yield. Revised yields will NOT be accepted unless you have made a mistake in a measurement."

Mr. Barkovic said that the Commission’s Yield Report, which was signed by Mr. deJonge, is an official report of declaration. He said that it is the Commission's practice to collect yields as soon after harvest as possible. He said that as time goes on, yields can become less accurate as farmers can sell to or purchase from another farmer. He said the Commission does not wait until all of the crop has been sold as their practice is to get a claim cheque issued to the insured as soon as possible.

Mr. Martin Kiefer, Acting Chief Commodity Manager for the Commission, said that he acknowledges that the yield for deJonge was revised in 1994 when deJonge indicated they disagreed with the Commission's yield figure. When an adjuster went to reinspect the crop (corn silage) it had already been fed to cattle. He said that since there was no crop to inspect, the Commission agreed to use the County average as the yield for deJonge. He submitted an Adjuster's Special Report which indicated that, in 1995, the Commission revised the yield as they realised they had taken the bin measurements incorrectly.

Mr. Kiefer said that it is the policy of the Commission not to adjust yields based on weigh slips. He said the only time they make an adjustment in the yield is if the bin measurement was incorrectly taken.

Mr. Kiefer stated that if the wheat crop is Grade 3, the Commission discounts the yield by 5%; if it is feed grade the yield is discounted by 10%. Therefore the Commission calculated Mr. deJonge's yield as 5533.68 bushels less 5% for an effective yield of 5193.38 bushels for crop insurance "payout" purposes. Mr. Kiefer said that since Mr. deJonge's crop was feed grade, he should have received a 10% discounted yield. The Commission and Mr. deJonge agreed that the quality issue was not part of this appeal and that it was an issue that they could resolve themselves.

Mr. Kiefer submitted a document entitled "winter wheat yields" in which he compared bin measurements, milk pail weights and gross yields of wheat. Mr. Kiefer's figures are as follows:

Bin Measurements Milk Pail Yield Circumfer. Height Weight/cu. ft.

Commission’s measurements 4261 bushels 113.3' 5.3' 47.20 pounds

Actual yield (as (per weigh slips) 3543 bushels 113.3' 4.4' 47.44 pounds

Mr. Kiefer stated that this information indicates to him that the milk pail weight taken by the Commission is accurate as there is only a slight difference between Commission's figures and actual figures as per weigh slips.

In response to a question of Mr. deJonge as to whether or not he had subtracted the height of the aeration floor when measuring the bin, Mr. Phillips said that he can't say for sure but that when he took the bin measurements they both agreed on them. Mr. Kiefer stated that part of Mr. Phillips training is to look for an aeration floor when taking bin measurements and also that Mr. deJonge was present when the bin was measured.

The Findings

In the opinion of the Board, deJonge exercised good management practices in aerating the winter wheat.

When a client is in a claim position, it is the policy of the Commission to get a cheque processed quickly and to avoid fraud. In the opinion of the Board, there was no evidence presented by either party that would lead the Board to doubt the honesty/integrity of deJonge.

The Board notes that bin measurements were taken by Mr. Phillips when Mr. deJonge was present. Mr. Phillips said that at that time Mr. deJonge agreed with the measurements. Mr. deJonge signed the Yield Report and/or Proof of Loss form which would indicate he had agreed to the measurements taken. In the opinion of the Board, the discrepancy in yields could be accounted for by measurements being incorrect and it could possibly be the thickness of an aeration floor. However, the Board had insufficient evidence to find that this was in fact the case. In the absence of information to confirm that bin measurements had been taken incorrectly, the Board accepts the Commission's measurements.

The Board was convinced by the evidence presented that the milk pail sample taken at the farm was representative of the winter wheat that deJonge harvested.

The weigh slips obtained at the time of sale of the wheat indicate a lower yield than calculated by the Commission using standard methods of bin measurement and sample weights. The Board notes however, that it is the policy of the Commission to pay claims based on yields indicated by bin measurements.

In the opinion of the Board, in calculating the deJonge claim, the Commission followed standard procedures and applied the regulations in a manner consistent with other clients.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Board decided to deny the appeal for the following reason:

In the opinion of the Board, the Commission applied the yield calculations in the same manner as to other clients who purchased Winter Wheat insurance.

Recommendation: The Board recommends that the Commission consider revising the Yield Report and/or Proof of Loss form to require the adjuster and the insured to indicate whether or not there is an aeration floor in the bin when taking bin measurements. This action should ensure that both parties are aware of the floor and take appropriate measurements.

DATED at GUELPH, Ontario this 17th day of January, 1997.