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

Leonhardt v Agricorp

Leonhardt v Agricorp 1999 ONAFRAAT 13

Crop Insurance Act

June 11, 1999

DATE OF DECISION:

June 22, 1999

1999-13

1999 ONAFRAAT 13

Leonhardt v Agricorp

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

Sched. C.

An Appeal to the Crop Insurance Appeal Board by J. Leonhardt, Thamesford, Ontario, from the decision of AGRICORP concerning the adjustment of loss under Regulation 380/97 and the Crop Insurance Plan For Corn..

Before:

James Rickard, Vice-Chair; Armand Bechard, Member; Doug Flook, Member.

Appearances:

Mr. Joe Leonhardt, appellant.

Ms. Sharon Rounds, on behalf of the appellant.

Doug Green, Adjuster for the respondent, AGRICORP.

John Barkovic, Territory Manager for the respondent, AGRICORP.

This appeal was heard in Guelph, Ontario on Friday June 11, 1999. Mr. Joe Leonhardt appealed to the Crop Insurance Appeal Board (the Board) from the decision of AGRICORP concerning the adjustment of loss under Regulation 380/97 and the Crop Insurance Plan For Corn for his 1998 crop year.

The Background

In proposing and administering the Corn 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 Plans 1998.

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

2 The 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 respecting 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.

In 1998, Mr. Leonhardt’s average farm yield for crop insurance purposes was 128.50 bushels per acre and his coverage was 85% (109.8 bu. per acre). In 1998, Mr. Leonhardt harvested 32 bushels of corn per acre.

Mr. Leonhardt claimed the loss was due to drought, an insured peril. AGRICORP judged that the loss was due to combined perils of drought and poor weed control. AGRICORP adjusted the loss by reducing the guaranteed production by 43 bushels per acre due to poor weed control, an uninsured peril, and paid a claim based on the 109.8 bushel guarantee less the 32 bushel harvested and the 43 bushel adjustment. Mr. Leonhardt disputes this adjustment.

The Issue

The issue before the Board is, did AGRICORP fairly adjust the 1998 claim for loss of corn on the Leonhardt farm?

The Evidence and the Findings

Mr. Leonhardt told the Board that in 1998.

He purchased this farm in 1971 and has grown continuous corn on the field in question.
The field has a variety of soil types from heavy clay to loam and is systematically tiled drained on 40 foot spacing.
He fall ploughed part of the field and spring ploughed the rest followed by three passes with a disc harrow combination prior to seeding.
He planted his crop in good time, planting a population of 29-30,000 plants per acre, in 30 inch rows, with some Bt corn, using a conventional planter.
He sprayed the crop with Primextra Light and Banvel at the recommended rates and in good time.
He achieved about 90% emergence in his crop.
He achieved good weed control in his field early in the year but had a flush of grass late in the summer.
1998 was an extremely dry year and he had a crop failure due to lack of rain.
Right after harvest, he contacted Jerry Pool from AGRICORP to tell him that his corn crop was damaged.

Sharon Rounds speaking in support of Mr. Leonhardt told the Board that:

Her farm is in the same approximate area as Mr. Leonhardt.
One of her fields yielded about 80 bushels per acre, while another was 180 bushels per acre.
The 80 bushel per acre field was in the drought area, while the other field received rain at critical times of crop development.
Her records showed 57 days from July to mid-September of 1998 with no rain at all.
She experienced in her field a flush of grasses late in the summer near the time of pollination of the corn crop and there are no chemicals available to control the grass at that time of crop development.
She had the representatives from the weed control company inspect her field in late August because of the late growing grasses. At harvest the grass in her field was five feet tall, similar to that in Mr. Leonhardt’s field.

Mr. Leonhardt told the Board that he had a difficult time communicating with AGRICORP. He said he had to mail AGRICORP a copy of the December 14, 1998 letter from Brian Hazard three times before Mr. Barkovic acknowledged that it was received. Ms. Rounds told the Board that she had also sent a copy of this same letter to AGRICORP and that copy also was “lost in the shuffle”.

Mr. John Barkovic, territory manager for AGRICORP, told the Board that AGRICORP’s position is that there was a drought affecting the corn crop, but there were other circumstances that lead to the loss of Mr. Leonhardt’s crop that could have been mitigated and were not. Therefore, Mr. Leonhardt’s claim was adjusted.

Mr. Doug Green, AGRICORP Adjuster for Oxford and parts of adjoining counties since 1991, told the Board that he did the majority of adjusting in the area where Mr. Leonhardt farms.

Mr. Green told the Board:

He was first made aware of this claim when the yield was picked up November 21, 1998, when the yield for an insured soybean crop was also picked up by AGRICORP. This is normal procedure when AGRICORP is not informed that a claim may be pending.
The corn was harvested October 20, 1998
On page 12 of the crop pamphlet, there is the direction on making a damage report. Insured customers are supposed to call AGRICORP at their Guelph office to report damage.
Mr. Leonhardt had three claims prior to 1998 so should be aware of the policy for reporting damage. It is the same policy.
He took photos of the Leonhardt field on November 28, 1998 while on route to another farm. The field was in the process of being fall ploughed so he could not inspect the entire field. These photos show a field with a lot of grass, mainly yellow foxtail (90%), and not many corn stalks.
The corn stalks that were visible were spindly, short and consistent with serious weed pressure and lack of moisture.
There was a lot of grass problems in the neighborhood, but this was the worst field he saw.
He went to talk to Mr. Leonhardt on December 3, 1998. After discussions, they agreed that the damage to the corn crop was severe.
In his opinion, the primary cause of damage was weeds and the secondary cause was drought.
The agreed upon harvest yield was 32 bushels per acre.
No attempt was made to control the weeds after the first chemicals applied failed to control the infestation, therefore he reduced the guarantee by 43 bushels per acre for failure to control grass.
The lowest corn yield in the general area was 79.2 bushels on similar acreage but these were part of a larger insured acreage. One 50 acre parcel directly across from Mr. Leonhardt had a yield of 80 bushels per acre.
He adjusted the yield to the actual 32 bushels per acre harvested plus 43 bushels per acre reduction due to weed infestation for a total yield of 75 bushels per acre and calculated the claim based on that yield.
The insured farmers in the township averaged 136.98 bushels per acre, with the five year average yield for the township being 135 bushels per acre. He concluded that the corn yield in 1998 was normal for the township.
There was a lot of re-spraying done in the area since the pre-emergence chemicals did not work due to lack of moisture.
The area received a general rain early July and another about mid July. The late flush of grasses reduced the yield. There is no chemical available to use on late grasses in corn.
There is no indication that Hutton Farm Supply – the contractor that did the weed control in the spring – was on this farm after spraying until November.
The chemicals used for weed control in the spring were the proper chemicals for this area and crop.
In September, Mr. Leonhardt received compensation from Novartis, as a goodwill gesture, under their guaranteed crop protection program,
Mr. Leonhardt did not notify AGRICORP before harvest that the crop was damaged so there was no opportunity to inspect to determine if the loss was due to an insured peril.

In response to questions from the Board, Mr. Green said that emergence was not a problem in the area in 1998. He was not certain what had happened in this field because he did not see it until after harvest when most of the field was ploughed. He did note that the soil surface was lumpy, indicating to him that there might have been a problem with seed bed preparation and soil-to-seed contact for germination. AGRICORP takes no issue with Mr. Leonhardt’s management or farming practices. The practice of growing continuous corn does affect the yield but that is reflected in Mr. Leonhardt’s individual farm average yield.

The Board examined the evidence presented. In examining the evidence the Board focused on deciding the main cause of the reduced yield experienced by Mr. Leonhardt.

Mr. Leonhardt claimed he followed his normal planting practices and he used Primextra Light and Banvel as herbicide. He looked at the field after application of the seed, fertilizer and chemicals and felt that the herbicide worked. He felt he had about 90% emergence of his crop.

AGRICORP had no concern with the tillage practices used by Mr. Leonhardt and no concerns on the herbicides selected or the application rate in 1998. There was rain in early July.

Both parties acknowledged that the late flush of weeds, mainly yellow foxtail, could have happened after the rain. There is no chemical available to control a late flush of weeds in corn.

The Board drew the following conclusions:

The evidence of lumpy soil at the November inspection by AGRICORP indicates to the Board that there was insufficient rainfall during the season to break down the lumps left from spring cultivation. This is evidence of drought, an insured peril.
The lack of broad leaf weeds in the field when inspected in the fall is an indication to the Board that the spring application of herbicide did in fact control the early weeds in this field.
There was conflicting evidence as to whether Hutton visited this field during the growing season, however, the fact that Novartis made a payment in September indicates that someone had inspected the field during the growing season.
Dry weather at soil preparation time, seeding time, and throughout the growing season is the primary cause of reduced yield. When the July rain fell on a drought stress crop that had poor canopy, it generated a flush of grass that was prevalent at harvest. This grass is also the result of the dry spring and summer weather.
In comparing the yield of adjacent farms to the yield on the Leonhardt farm, it appeared that AGRICORP may not have taken into account the difference in the long term averages of the individual farm yields. Comparing Mr. Leonhardt’s actual yield to an adjacent owner who uses different management on different soils that may result in a higher long term average yield has to be tempered with the results Mr. Leonhardt achieves in the long term using his management practices on his farm.
The contract of insurance places the responsibility on the grower for reporting crop damage in time for AGRICORP to inspect the crop and determine the cause of the damage and whether an insured peril is involved. Well prior to harvest the reduced yield should have been obvious to Mr. Leonhardt and he should have reported to AGRICORP.

In the opinion of the Board, had Mr. Leonhardt reported the damage to his crop to AGRICORP earlier in the year he may well have had 100% coverage due to drought. His claim should be calculated on this basis, but the claim should then be reduced by a penalty for not reporting to AGRICORP in a timely manner the obvious damage to this crop.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal decided to grant the appeal.

The Board directs that AGRICORP calculate a claim based on an actual yield of 32 bushels per acre and a guaranteed yield of 109.23 bushels per acre. Once the total claim is calculated, AGRICORP is to reduce the amount of the claim by 25% as a penalty for not reporting what should have been an obvious reduction in yield in time for AGRICORP to conduct a proper inspection of the crop.

The reason for this decision is:

In the opinion of the Board, the reduced yield was entirely due to an insured peril, namely drought. The 25% penalty is imposed on Mr. Leonhardt for not reporting obvious damage to AGRICORP in time for a field inspection of the damaged crop. The figure of 25% is used because the Board is not aware of a clear, consistent practice by AGRICORP when there is a late reporting of crop damage. If the Board had been informed of a clear consistent practice, it would have tended to follow that practice rather than selecting the rather arbitrary 25% figure.

DATED AT Guelph, Ontario this 22nd day of June, 1999.

Leonhardt v. Agricorp, 1999 ONAFRAAT 13

Case Summary