Brazeau et al. v Agricorp, 1999 ONAFRAAT 11

Agriculture, Food and Rural Affairs

Appeal Tribunal

1Stone 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:

Brazeau et al. v Agricorp

Brazeau et al. v Agricorp 1999 ONAFRAAT 11

STATUTE:

Crop Insurance Act

HEARING:

May 4, 1999

DATE OF DECISION:

May 11, 1999

1999-11

NEUTRAL CITATION:

1999 ONAFRAAT 11

Brazeau et al. v Agricorp

IN THE MATTER OF:

Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) 1996, S.1996,C.17,

Schedule C.

AND IN THE MATTER OF:

An Appeal to the Crop Insurance Appeal Board by Andre & Chris Brazeau, Robert & Joan Brazeau, Ron & Anne Bailey, Claude & Darlene Bowen, Eric & Sandra Willard, Bert Jibb, Brian & Jesse Hewitt, Ben Thomas, Timiskaming District, from the decisions of AGRICORP in 1997 and 1998 concerning the amount of the claim under the Crop Insurance Plan For Forage.

Before:

James Rickard, Chair; Andrew Osyany, Vice-Chair; Edward Mailloux, Vice-Chair.

Appearances:

Chris Brazeau, appellant.

Darlene Bowen, appellant.

Ron Bailey, appellant.

Fred Thompson, on behalf of the respondent, AGRICORP.

Husseinali Shivji, on behalf of the respondent, AGRICORP.

DECISION OF THE BOARD

This appeal was heard in New Liskeard, Ontario, on Tuesday, May 4, 1999.

This is an appeal to the Crop Insurance Appeal Board (the Board) by Andre & Chris Brazeau, Robert & Joan Brazeau, Ron & Anne Bailey, Claude & Darlene Bowen, Eric & Sandra Willard, Bert Jibb, Brian & Jesse Hewitt, Ben Thomas, Timiskaming District, from the decisions of AGRICORP in 1997 and 1998 concerning the amount of their claim under the Crop Insurance Plan For Forage (the Forage Plan).

The Background

The Forage Plan covers loss against drought only. It is an area-based plan which does not guarantee an individual yield of hay on a farm. The minimum amount of coverage that can be purchased is $2,000. The maximum coverage is determined by the client and the local District Coordinator from AGRICORP.

Because there are so many different forage crops it is difficult to calculate an average farm yield which is appropriate for all insured growers. Therefore, a computer generated yield simulation is used to establish an area average which is used as the insured's yield for each crop year. Since 1977, the Crop Insurance Commission (now called AGRICORP) has been using a computer program called "Soil Moisture-Based Simulation of Forage Yield (SIMFOY)" to calculate area averages for the purposes of the Forage Plan.

The forage simulation is based on the following variables:

• soil moisture at the beginning of the growing season,

• rainfall,

• temperature, and

• sunshine

which are the perils covered in the Forage Plan. Based on these variables, the SIMFOY model simulates forage growth using assumptions about:

• good farm management,

• the predominant soil type within the township where the insured grower is located,

• a 30 inch minimum soil depth and,

• a specified species mix.

Each grower is tied to a weather main station and a subG5

station in the geographic vicinity of the grower. Each grower is required to submit rainfall information for their farm. Twenty-five main stations in the province supply daily minimum/maximum temperature and sunshine data for the simulation. Approximately 175 substations in the province supply additional rainfall data for insured growers who do not report their own rainfall. The substation rainfall data is not used unless the insured fails to report the rainfall data for their farm.

For the purposes of the simulation, the SIMFOY model uses cutting dates that are the average of all of the insured growers’ first cutting date for each main station. Dates for the second and/or third cut are assumed thereafter, at fixed intervals, after the first and second cut respectively and are determined by the SIMFOY model by reference to the average date of the first cut. For Northern Ontario a second cut is assumed in the simulation whether or not an insured grower actually takes a second cut. For Northern Ontario no third cut is simulated.

An insured grower’s actual rainfall records are used in the SIMFOY model to simulate growth for that producer. This is the only variable supplied by the producer.

Actual first cut forage yields from the insured producers’ area are incorporated into the simulated results. For this purpose “cooperator” producers are identified. A "cooperator" is a producer for a given area who works with AGRICORP field staff to provide actual first cut forage yields on an annual basis. An average of the measured cooperators’ yields within a 15 mile radius of the insured producer’s location accounts for 50% of the first cut growth and the SIMFOY simulated growth accounts for the other 50% of the simulated first cut growth. If there is no cooperator within a 15-mile radius of the client, AGRICORP may use the average cooperator yields from the county/district in which that particular producer is located.

In other words, if

1. the average yield of the cooperators within a 15 mile radius of the insured property is 70% of the average of the cooperators 10 year actual first cut yield and,

2. the SIMFOY model simulated first cut yield for the insured property is 60% of the insured’s 30 year average,

then the insured’s simulated first cut yield is 65% of average [ (70 + 60)/2 ].

The first cut yield percentage is then converted to a kilogram/hectare yield by multiplying the calculated %yield by the 30 year average yield simulated by the SIMFOY model at the producer’s main station.

The second cut yield is simulated by the SIMFOY model using the rainfall data supplied by the insured and the weather data from the main station. This yield is compared to the 30 year average yield for the insured and expressed as a percentage of the insured’s 30 year average second cut yield. The second cut is converted to a kilogram/hectare yield by multiplying the insured’s percentage yield by the 30 year average second cut yield simulated for the main station.

The kilogram/hectare first cut yield is then added to the kilogram/hectare second cut yield and expressed as a percentage of the 30 year total yield simulated at the main station. This percentage is the simulated yield for the insured.

The simulated yield is then averaged with the simulated yield of other insured’s within a three or six mile radius circle of the insured property. If there are not three insured growers (including the insured) in a three mile radius, then the circle used is six-miles in radius. The insured's simulated yield accounts for 35% of the insured’s computed yields for a crop year with the remaining 65% of the insured’s yield coming from the average of the insureds within a three or six-mile radius, as the case may be.

In principle, the Forage Plan is intended to insure, on an area basis, a simulated yield that is at least 80% of the average simulated yield for the same area over the previous 30 years. To this end, statistics for the components used in the simulation have been collected for the past 30 years. The simulation calculates the current crop year's data as a percentage of the 30-year average.

When the calculated yield is below the 80% guarantee, the difference is doubled and then multiplied by the dollar value of coverage selected. For example, if the simulation result is 75%, the claim is the 80% guarantee less the 75% simulated yield for the crop year which equals 5%. This difference is then multiplied by two to produce 10%. In this example, the 10% would then be multiplied by the amount of the coverage selected to determine the total claim amount.

In proposing and administering the Forage Plan AGRICORP derives its authority from Section 5 of the Crop Insurance Act (Ontario), 1996 and Regulation 380/97 Crop Insurance Act (Ontario) 1996, General, and the Crop Insurance Plan for Forage 1998.

Specifically, the 1998 Crop Insurance Plan for forage states:

“Because there are many different forage crops (dry hay, haylage, pasture) it is difficult to calculate an actual yield for all insured growers. Therefore a yield simulation is used, and individual results within the area are averaged.”

The role of the Board is set out in Ontario Regulation 140/96. Specifically, clauses 2 and 3 of the regulations state:

2The Board has exclusive jurisdiction to hear and determine all disputes between the Commission and an insured person arising out of the adjustment of a loss under a contract of insurance.

3(1) If the Commission and an insured person have failed to resolve any dispute arising out of the adjustment of a loss under a contract of insurance and have complied with all requirements respecting the filing of proof of loss forms, either party may appeal the matter in dispute to the Board.

3(2) To appeal the matter in dispute, the appellant shall file a notice of appeal with the Board and send a copy of the notice to the other party within one year of filing the proof of loss form.

3(3) Where a party has appealed in accordance with subsection (2), the Board shall fix a day, a time and a place for considering the matter in dispute and hearing the parties, and shall notify the parties accordingly.

3(4) On the day, and at the time and place so fixed, the Board shall hear the evidence of the parties respect the matter in dispute, and shall make a decision on the matter.

The Board does not have the authority to amend the contract of insurance.

The Issue

The issue before the Board is:

Did AGRICORP calculate the forage growth for the eight appellants from Timiskaming District in accordance with the coverage purchased?

The Evidence

Mrs. Chris Brazeau was spokesperson for the appellants at the hearing. She told the Board that the appellants thought they had bought a safety net program but it does not work and it is not possible for the appellants to understand the implementation of the Forage Plan.

She explained that on her farm the land the land is tile drained, grid soil sampled and fertilized to recommendations in 1997 and is under intense management practices. She has minimum stands of alfalfa. In 1998, she reduced cattle numbers by 1/3, and bought $2,500 worth of hay because the pasture dried up in July and she had to start to feed hay. The cost of the hay purchase was only partially offset by the Forage Plan payment. Considering the extent of the drought in the area she could not understand why the forage payment was not larger. She explained that other Forage Plan clients in the district had similar problems.

Mrs. Brazeau told the Board that the appellants were appalled at the lack of response and concern from AGRICORP. She detailed a number of conversations with people she understood were employees of AGRICORP, pointing out that she received conflicting information on the amount of the payment she could expect from the Forage Plan. She said that the initial letters of appeal written to Mr. Brown were lost by AGRICORP as were the recommended improvements to the Forage Plan that had been submitted by the Forage Plan cooperators for Timiskaming.

Mrs. Brazeau explained that the appellants were frustrated by an apparent disparity in the Forage Plan payments in the district. She said two of the appellants have their rain gauges about 100 meters apart and one received 1 mm of rain more than the other. She said the appellant with the higher rainfall received a greater percentage payment. This is unfair.

Husseinali Shivji, Customer Solutions Representative, gave evidence for AGRICORP. Mr. Shivji described the 1997 and 1998 Forage Plans in general terms as outlined in the preceding “Background” segment of this Decision. In doing so, he summarized that the 1997 and 1998 Forage Plan is based on a two cut system for Northern Ontario. The model simulates forage growth on a daily basis beginning when there are three consecutive days with temperatures of more than five degrees Celsius. He emphasized that the Forage Plan is an area-based plan.

He said the information for the appellant’s calculations concerning cutting dates, species mix, etc., were taken from either the New Liskeard or the Earlton Airport substation. While the appellants are tied to the New Liskeard main station, information for the computer model came from the main station in North Bay since the New Liskeard main station is no longer operated by Environment Canada. Mr. Shivji explained that, with so many assumptions going into the plan, the computer generated simulation does not always represent what actually happened on the insured’s farm.

Mr. Shivji said the information AGRICORP uses in its computer model is sent to the producer. If the producer indicates an input error and it is verified, then it is corrected before final payment is made. He said the same model is used for all clients. Mr. Shivji told the Board that he had checked the information used to calculate the appellant’s results for the 1997 and 1998 crop year and that he had found no errors in the data used.

Mr. Shivji said the plan automatically pays if a producer’s simulated yield is below 80% of the 30-year average simulated yield for the same area. The producer does not have to submit a claim to get a cheque.

Mr. Shivji told the Board that there is a penalty for insured growers who do not send in their rainfall cards. That penalty is deducted from any payment. All of the appellants had reported rainfall so this was not a factor in this case.

In response to questions, Mr. Shivji said that only the first cut simulation takes into account cooperator yields. He said when AGRICORP uses circle averaging, the circles can go across county borders and neighbours would not likely have the same producers in their circle averaging, as each producer is the center of their circle.

Mr. Shivji brought his computer with him and showed each appellant their 15 mile circle for cooperators and three mile circle for circle averaging.

In his summation, Mr. Thompson argued that AGRICORP had explained that the Forage Plan is an area-based plan that attempts to predict forage production for an area. He said that, because of limitations in the plan design, it does not accurately measure individual client yield. He said that AGRICORP has consistently presented and delivered the plan as an area-based plan utilizing the SIMFOY model to predict forage yield. He said that the data used for the simulations in question have been reviewed and found to be without error, confirming the claim rates as calculated are correct according the plan and therefore the appeals should be denied.

In her summation, Mrs. Brazeau told the Board that she still feels the plan is not fair and there should be compensation for the losses the appellants experienced. She said that she understood the computer program has done what it is supposed to do but the result is not fair. She recommended that the rainfall data be supplied by neutral parties, that common rain gauges should be used and the payment for 1997 and 1998 should be increased as there is inequity in the plan.

The Findings

In the opinion of the Board, the appellants did a good job of organizing their arguments and presenting their position in a manner which expedited the hearing process. The dialogue that took place between the appellants and AGRICORP staff at the hearing was useful, informative and necessary for this situation. Because of the complexity of the Forage Plan, information sessions where the details of the calculations necessary for the plan to operate should be held with clients before an appeal is filed with the Board. Such sessions should go a long way to reducing the hearing time for these appeals.

In the opinion of the Board, Husseinali Shivji did a good job of explaining the plan operation including the computer demonstration of the selection of cooperators and other insured clients used in the averaging calculations. He answered all of the appellant questions on how the plan worked.

The appellants and AGRICORP agreed that the current plan is not working satisfactorily. In the opinion of the Board, the Forage Plan is complex and very difficult for an insured to fully understand. The area provisions of the plan may lead to inequitable payments. The Board understands that the rest of the AGRICORP programs are based on individual farm yields and perhaps the forage plan should also be based on individual yield or returned to a large area based plan so all producers in the area are treated the same regardless of the particular on farm situation.

The Board is concerned about the statements concerning the lack of response to questions from the appellants. In particular, Mrs. Brazeau claimed she was told she would receive a payment of $1,480 and the cheque had been mailed and then a day or so later she received a report indicating a different payment. AGRICORP staff agreed at the hearing to investigate this allegation. The Board wishes to have a copy of the response from AGRICORP to Mrs. Brazeau filed with the Board.

The Board is concerned that two styles of rain gauge may be in use for clients tied to a main station or substation. Theoretically, the gauges should record the same amounts of rainfall but one of the appellants who has both types of gauge told the Board that the gauges record significantly different amounts for the same rain events. The Board recommends that AGRICORP consider requiring that all Forage Plan clients for any main station have the same style of rain gauge.

The Board is convinced that the appellants’ farms experienced a drought in 1997 and 1998.

The Board does not have before it any evidence that the Forage Plan coverage has been miscalculated by AGRICORP. As for the data input to the computer, the appellants have agreed with the details.

The Board is satisfied that AGRICORP has applied the Forage Plan in an even-handed way. The Board finds that these particular appellants have not been treated any differently than other insureds either in this general district or elsewhere in the Province.

Decision and Reasons

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

1. The appellants were aware that this was an area-based plan when they purchased forage insurance.

2. AGRICORP applied the claim calculations for the Forage Plan in the same manner to all clients throughout Ontario.

AGRICORP is directed to file in the Board office a copy of the response to Mrs. Brezeau’s complaint about the conflicting information on the payment amount.