Agriculture, Food and Rural Affairs Appeal Tribunal

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

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

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL: Spencer et al. v Agricorp Spencer et al. v Agricorp 2000 ONAFRAAT 21

STATUTE: Crop Insurance Act

HEARING: August 29, 2000

DATE OF DECISION: September 12, 2000

2000-21

NEUTRAL CITATION: 2000 ONAFRAAT 21

Spencer 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 Agriculture, Food and Rural Affairs Appeal Tribunal by Douglas Spencer, Charles Foster, Denton Meiklejohn, William Broek and William Barnum from the decision of AGRICORP to deny a claim concerning their 1999 hay crop under Regulation 380/97 and the Crop Insurance Plan For Hay and Forage.

Before: Denis O’Connor, Vice-Chair; Ed Mailloux, Vice-Chair; Andrew Osyany, Vice-Chair; Gertrude Levac, Member.

Appearances: Douglas Spencer, appellant. Charles Foster, appellant. Denton Meiklejohn, appellant. William Broek, appellant. William Barnum, appellant. Judith Kay-Schecter, Director of Claims for AGRICORP. Husseinali Shivji, Crop Insurance Commodity Specialist for AGRICORP.

DECISION OF THE BOARD

This appeal was heard in Tweed, Ontario, on Tuesday, August 29, 2000. It is an appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal (the Tribunal) by Douglas Spencer, Charles Foster, Denton Meiklejohn, William Broek and William Barnum from the decision of AGRICORP concerning adjustment of the 1999 hay crop under Regulation 380/97 and the Crop Insurance Plan For Hay and Forage.

The Background

The Forage Plan covers loss against drought only. It is an area-based plan based on a computer model that simulates forage growth. The individuals may experience yields that are significantly different from the simulated yields. 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.

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 computer program called “Soil Moisture-Based Simulation of Forage Yield” (SYMFOY) has been used to calculate area averages for the purposes of the Forage Plan.

The SYMFOY simulation is based on the following variables:

• soil moisture at the beginning of the growing season
• rainfall
• temperature
• sunshine

Based on these variables, the SYMFOY 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
• a specified species mix

Each grower is tied to a main weather station and a substation 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 SYMFOY 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 SYMFOY model by reference to the average date of the first cut. In the area of the province where the appellants live, three cuts are assumed.

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

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 SYMFOY 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 SYMFOY 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 percentage yield by the 30 year average yield simulated by the SYMFOY model at the producer’s main station.

The second cut yield is simulated by the SYMFOY 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. Similar calculations are performed for the third cut. The resulting percentage is the simulated yield for the insured.

The simulated yield is then averaged with the simulated yield of other insureds’ 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 insureds’ 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 1999.

The role of the Tribunal 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 with respect to the matter in dispute, and shall make a decision on the matter.

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

The Issue

The issue before the Tribunal is:

Did AGRICORP calculate the forage growth for the five appellants in accordance with the coverage purchased, and according to the requirements of the plan?

The Evidence

Mr. Doug Spencer, appellant, told the Tribunal that he operates a 60 cow dairy herd with a current annual production of 10,200 kilograms per cow. He uses a top quality three cut haylage system to produce feed for his cows. His normal rotation is three to four years in hay, two years in corn and small grains underseeded to hay to re-establish his forage crop. He keeps records of his farm production, by field, and has participated in the Farm Management Analysis project since 1985. He told the Tribunal he was appealing because the SYMFOY model simulated his 1999 yield at 77.31% of normal and he did not have that large a crop.

He told the Tribunal that his Farm Management Analysis data has a long term average forage yield of 1.45 metric tons per acre of dry matter. The same data shows his 1999 yield at 1.05 metric tons per acre, 72.4% of his 15-year average yield. He said that, in 1999 his first cut yielded 44 forage wagons, compared to his normal 70 to 85 wagons. For his second cut only 61 acres were worth harvesting and the rest was clipped hoping to stimulate growth for a third cut. There was no third cut in 1999.

Mr. Spencer provided his rainfall record for 1999 showing that his land received 214-mm total rainfall for 1999, or 71.31% of normal. The only other year that he came close to this little rainfall was 1995 when SYMFOY simulated a yield 67% of normal. He said that, in his opinion, the beginning soil moisture AGRICORP used in the simulation was wrong. AGRICORP used 97.9% of normal beginning soil moisture while the land was very dry in the spring of 1999.

Mr. Spencer told the Tribunal that his mother keeps a diary of weather. Her diary shows rain on April 16th and 19th in 1999. The April 19th rain did little good as he planted grain on April 20th.

He said that March and April of 1999 were sunny compared to normal and that April 1999 was the driest and sunniest on record. He filed with the Tribunal a number of other documents addressing the issue of beginning moisture. Some of these documents he obtained from Environment Canada and some from the Internet sites relating to the Great Lakes. All of the documents point to a dry spring in 1999. In addition, he told the Tribunal that he was able to spread liquid manure on 130 acres on May 3, 1999 and he has never had this much land ready so early before. He noted that the beginning soil moisture figure used by AGRICORP was based on a sample taken 50 miles from his home while a sample in the neighbouring county of Northumberland about six miles from his home was not used. He has been unable to find out why the closer sample was not used since it would be more representative of the beginning soil moisture on his farm. He also said that the simulated yield for his second cut was 93.31% of normal. He agreed that AGRICORP had used his record of 104 mm of rain during this period but pointed out that 65 mm of this fell in one two hour storm and was of little use to his crop.

In response to questions Mr. Spencer said that:

1. He had a good crop of grain and corn in 1999, but the growing conditions necessary for these crops is significantly different than for hay. For good hay the timing of the rainfall and the amount of rainfall is critical.

2. He got a yield of about 70% of normal, rather than the simulated 77% of normal, and his claim should be based on 70% yield.

3. He did not have an initial soil moisture test for 1999 and so could not provide an alternate figure for the Tribunal to use.

4. He submitted all of his rainfall records for May 1, 1999 to August 31, 1999 to AGRICORP as required. He supplemented this information using his mother’s diary as history of the rain that would affect the beginning soil moisture so the Tribunal would understand how dry it was at his farm in the spring of 1999.

5. He agreed that AGRICORP used his rainfall records in the simulation and that he understood the fixed assumptions in the model but the species mix in the model had more grass than he grew. A more representative mix for his farm has a higher alfalfa content.

6. In 1995 his simulated yield was 67% of normal and he had a claim that year. In that year he reported 205 mm of rain.

Mr. William Broek, appellant, told the Tribunal that he farms east of Tweed near the Hastings – Lennox & Addington county line. He owns 255 acres and rents another 800 acres. He runs about 70 beef cows and finishes 300 cattle per year. He puts his hay into haylage for his stock. He said he has been on this farm since 1972 and 1999 was the driest year since he came. He told the Tribunal that water levels have been declining for the past four or five years and were getting close to critical levels for him in 1998. There was little or no snow in the winter of 1998/1999 so there was no moisture to replenish the soil water. There was virtually no rain in April 1999 and in May his cows went out to graze on crusty brown pastures. He said he has never seen such a poor first cut of hay and feels his yield was only 70% of normal. He said the SYMFOY model needs adjusting for fairness in 1999.

Mr. Denton Meiklejohn, appellant, told the Tribunal that he is a retired schoolteacher and operates a beef farm with 36 cows. He owns 146 acres, 40 workable, and rents other land. His crops are hay and corn (six to eight acres of corn normally). His herd is geared to his forage production and in a normal year he produces all the feed he needs for his animals. In 1999 he had to purchase feed for his herd. In total be bought:

1. four loads of corn silage at $300 per load
2. 132 large round bales at $16 each
3. 35 large square bales at $20 each

Mr. Meiklejohn told the Tribunal that he is an AGRICORP cooperator. In 1999 his field produced 81.52% of normal for a first cut but this production was on pampered ground. He said this field should have produced over 100% of normal since much of this field was first and second year alfalfa. He fertilised this field in the fall but there was not enough moisture in the fall of 1998 and spring of 1999 to release the nutrients to produce good stands of hay. Mr. Meiklejohn was frustrated that, while he is a cooperator and supplies information to AGRICORP on his actual yield, he does not receive reports from AGRICORP so he can verify what is recorded as his yield. He argued that this information should be readily available to cooperators for verification since it affects the yield of the cooperators neighbours. He noted that the AGRICORP records show his yield at 2.04 tons per acre but he was not left any data to prove that figure.

Mr. Meiklejohn said that he does not believe the initial soil moisture test for 1999 is accurate. He complained to the Tribunal that AGRICORP would not readily provide this data and he received it too late in the process to assist in preparing for the hearing. In response to questions Mr. Meiklejohn said that he has no evidence showing that the sample collection or analysis for the initial soil moisture used in SYMFOY in 1999 in Hastings County was flawed.

Mr. Charles Foster, appellant, told the Tribunal that the figures for his rainfall and simulated yield for the past three years do not correspond. He said in 1997, 235.7 mm of rain gave a simulated yield of 43.7% of normal. In 1998, 272.6 mm of rain simulated 76.51% of normal yield. In 1999, 241.3 mm of rain simulated 92.75% of normal. He pointed out that 5.6 mm more rain in 1999 than 1997 produced a difference of almost a 50% increase in simulated yield. He questioned the accuracy of the model used to calculate these results.

Mr. Foster said that he has 180 acres of hay, most of which he sells standing in the field. He runs 15 to 20 cows and calves in the summer on pasture. He is also a maple syrup producer. In 1999 he had only three days of sap because the bush was so dry the trees could not produce. Based on this he concluded that the initial soil moisture measurement used by AGRICORP had to be in error.

Mr. Barnum, appellant, told the Tribunal that he is a dairy farmer producing 100 acres of hay that he uses as silage and for dry feed. He supported the evidence of the other appellants that the spring of 1999 was very dry. He noted that the majority of the rain for his second cut crop fell on July 4th and it totalled 80 mm. This rain was of little use to the crop because it fell in a short time. He said that his only complaint with the data used in the SYMFOY calculation was the beginning soil moisture.

Mr. Husseinali Shivji, Crop Insurance Commodity Specialist, gave evidence for AGRICORP. Mr. Shivji described the 1999 Forage Plan in general terms as outlined in the preceding “Background” segment of this Decision. In doing so, he summarized that 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 and may not reflect the actual production that an insured experiences on their own farm. He said that while the plan has its flaws, none of the provinces have a plan that can accurately predict forage yields and SYMFOY is the best that Ontario has developed so far.

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 Tribunal that he had checked the information used to calculate the appellant’s results for the 1999 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.

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 said that weather information is received from Environment Canada electronically thus eliminating keying errors for this data. Initial soil moisture samples are taken by field staff and delivered to the University of Guelph for analysis. The plan states that the sample for the county is to be used in determining the initial soil moisture in the model so, if a good sample is obtained, that one is used. In using the sample, AGRICORP looks at the adjoining county information to see if the data looks right, and if not, staff discusses the data with the staff at the University to see what adjustments need to be made in the model. Initial soil moisture is not adjusted unless the value is below 55% of average. In 1999, the initial soil moisture for Hastings County was 97.9% so no adjustment was made. The sample from Northumberland County arrived at the University damaged and could not be used. Northumberland was assigned an initial soil moisture based on the samples from the adjoining counties.

Hastings County simulation was adjusted for initial soil moisture in 1996. That was the only year Mr. Shivji recalled that an adjustment was applied in the county.

Mr. Shivji readily admitted that there are shortcomings in the model. For example, he said that the model accepts all rainfall as entering the soil and filling the soil to field capacity and then, if necessary, draining through. In some rainfall events, this does not happen and the moisture runs off the soil surface or could be evaporated before it gets to the soil profile. However, that is how the model works and it is used consistently by AGRICORP.

In response to questions from appellants about the apparent discrepancies in the yield calculation with little variation in rainfall, Mr. Shivji said that staff put the climate information into the model and it calculates a yield based on all the data. The rainfall is entered on a daily basis, and the model calculates yield on a daily basis starting in April and running through August. Each day the model calculates soil moisture level, how much moisture is depleted, the stage of development of the plant, temperature on the day, sunshine on the day, etc. He said a lot of different factors influence the daily yield simulation so he cannot pinpoint with certainty why the yields are different in those years.

Ms. Judith Kay-Schecter, Director of Claims for AGRICORP, said that AGRICORP has consistently presented and delivered the plan as an area-based plan utilizing the SYMFOY model to predict forage yield. She 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 to the plan and therefore the appeals should be denied.

The Findings

The Tribunal commends the appellants and AGRICORP for presenting the information for this hearing in a concise manner. While the process may be new and somewhat frustrating to the appellants, the Tribunal is restricted to deciding disputes arising from an adjustment of loss under a contract of insurance and has no authority to alter a plan of insurance or to change the methodology of the plan. While this may seem restrictive, the Tribunal appreciated the adjustments that the appellants made in their presentation once they realized that the Tribunal could not assist them with the inequities they perceived in the plan. The Tribunal acknowledges the frustrations that this created for the appellants.

The appellants and AGRICORP agreed that the current plan is not working satisfactorily. Mr. Meiklejohn offered some suggestions on how the simulation model could be improved. The Tribunal encourages him to put those suggestions in writing and submit them to AGRICORP for consideration.

In the opinion of the Tribunal, 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. In this case, the Tribunal is convinced that the appellants’ farms experienced a drought in 1999. However, the application of the SYMFOY model did not indicate the severity of drought as claimed by the appellants.

The Tribunal 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 other than the initial soil moisture level but no other data appears to be available.

The Tribunal is satisfied that AGRICORP has applied the Forage Plan in an even-handed way and 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 Tribunal 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.

DATED at Lindsay, Ontario this 12th day of September, 2000.