Hodgins v. Agricorp, 2003 ONAFRAAT 39

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: Hodgins v Agricorp

Hodgins v Agricorp 2003 ONAFRAAT 39

STATUTE: Crop Insurance Act

HEARING: December 2, 2003

DATE OF DECISION: December 30, 2003

2003-39

NEUTRAL CITATION: 2003 ONAFRAAT 39

Hodgins v Agricorp

IN THE MATTER OF: The Crop Insurance Act (Ontario) and Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) 1996, S.O. 1996, C. 17, Schedule C.

AND IN THE MATTER OF: An Appeal to the Agriculture Food and Rural Affairs Appeal Tribunal by Burt Hodgins, Kincardine, Ontario, from the decision of AGRICORP concerning the adjustment of his claim for his 2002 soybean crop under Regulation 380/97 and the Crop Insurance Plan For Grain and Oilseeds.

Before: Murray Cardiff, Chair; Andrew Osyany Vice Chair; Rob Scouller, Member.

Appearances: Burt Hodgins, Appellant Fred Thomson Regional Manager, on behalf of AGRICORP. Barry Roberts Regional Manager, on behalf of AGRICORP. Bart Derbis, Manager, Geographical Informations Systems on behalf of AGRICORP. Peter Edisbury, Claims Adjuster, on behalf of AGRICORP.

DECISION OF THE TRIBUNAL

This appeal was heard in Listowel, Ontario on Tuesday December 2, 2003. Mr. Burt Hodgins appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal from the decision of AGRICORP concerning the adjustment of loss under Ontario Regulation 380/97 and the Crop Insurance Plan for Soybeans for the 2002 crop year.

Statutory Context

Section 10 of the Crop Insurance Act (Ontario), 1996, states:

10 (1) If AGRICORP and a person disagree whether the person qualifies for a contract of insurance, except if the disagreement relates to the time during which a person may apply for a contract of insurance or file a final acreage report or its equivalent, or if AGRICORP and an insured person fail to resolve a dispute arising out of the adjustment of a claim under a contract of insurance, either may appeal the matter in dispute to the Tribunal.

10(2) To appeal a matter in dispute, the appellant shall file a written notice of appeal with the Tribunal and send a copy of the notice to the other party within the time specified by the regulations made under this Act.

Ontario Regulation 380/97, Sections 3 states:

3 (1) A contract of insurance consists of,

(a) the application;

(b) the renewal notice and change notice, if any;

(c) the final acreage report or its equivalent;

(d) the terms fixed by AGRICORP under section 5 of the Act; and

(e) this Regulation.

3 (2) In the event of a conflict between the terms of a contract of insurance and this Regulation, this Regulation prevails. O. Reg. 380/97, s. 3.

The Issue

The issue before the Tribunal is:

Should AGRICORP adjust the amount of claim for Mr. Hodgins 2002 soybeans from 50% of the shortfall, as offered in April 2003 to 100% of Mr. Hodgins total guaranteed production?

The Evidence

Mr. Burt Hodgins testified before the Tribunal that he grows soybeans organically. He explained that in spring 2002 he planted soybeans in two different fields: one 85-acre field and one 45-acre field. He said that the larger field was plowed in fall 2001 whereas the smaller field was plowed in spring 2002. Mr. Hodgins said that:

• He obtained an Ontario Ministry of Agriculture and Food (OMAF) publication for best practices for producing organic soybeans. He obtained the publication after his crop was planted but found that his practices were consistent with the recommendations, however they were planted a few days earlier than the optimal time, which is late May.
• The beans were planted in rows 20 inches apart, the crop was cultivated once in June and once in July.
• The soybeans were harvested by a custom combine service as his combine was not appropriately equipped. He was present at the beginning of the harvest.
• He became aware of the short fall at the time the soybeans were being weighed and he contacted AGRICORP immediately.
• AGRICORP staff did not come to inspect the crop or the field in which it was grown, until late December.
• Mr. Edisbury and Mr. Roberts attended at the farm in late December; they accused him of harvesting in an untimely fashion and badgered him with questions about his poor yield.
• During the December visit, a field of solid seeded industrial hemp was unfairly compared with soybeans.
• Mr. Edisbury and Mr. Roberts offered a settlement of 50% of his guaranteed production indemnity because they decided that the poor yield was due to poor management practices and strong weed pressure.
• His contract of insurance contained an agreement discounting his guaranteed production by 10% because the soybeans were grown organically.
• Mr. Edisbury and Mr. Roberts said that they would contact Mr. Mark Robinson who combined the soybeans to ask him about the conditions at harvest. Mr. Robinson was never contacted by AGRICORP.
• No measuring frame was used to quantify the density of weeds purported to have pressured the crop, nor were any percentage figures for the amounts of foxtail weeds advanced.
• Mr. Edisbury and Mr. Roberts returned to the farm in February to inquire if he wished to change his position and accept the adjustment previously offered in December. He said that he had not changed his mind.
• In March 2003, Mr. Roberts came to the farm with some yield data from a 10 km radius circle in Kincardine Township. He indicated to Mr. Roberts that he was skeptical of yield data that was not derived from statistics for organically grown soybeans.
• He understands that there was some weed pressure but he does not agree that it was acute nor have the effect of weeds on the yield been determined.
• The density of weeds in comparison to the density of crop and the time at which weeds emerge has varying effects on the crop. He believes that there was little to moderate weed pressure in the soybeans for 2002.
• He was offended by the attitude of AGRICORP and may have been inclined to settle if the staff with whom he dealt, were not so confrontational.
• He is not satisfied that the presence of moderate amounts of weeds reduced the yield so dramatically.

In response to questions Mr. Hodgins told the Tribunal that:

• He began the transition to a fully organic operation in 1996.
• He understands that organic methods require diligence against weeds and strict management with regard to nutrient application.
• He fertilizes his fields with composted manure.
• He follows a regimen of organic crop rotation on a nine year cycle.
• The 2002 soybean crop was grown on systematically tiled land. The 2002 soybeans were grown on Perth clay loam which cannot be cultivated in wet conditions.
• None of the corn that he grew in 2002 was mapped in the 5 km radius map presented by AGRICORP.
• Some of his farmland is sandy soiled which yields about 1/3 less than the clay soil.
• He had no indication of how poor the yield was until the crop was weighed after harvest.
• In hindsight he realizes that the beans may have been planted as much as 10 days early.
• He does not know at what point in the season the damage to the yield occurred.
• He would not be surprised to learn that a load of soybeans had been stolen as an explanation for the extremely poor yield.
• It was drier than normal in 2002; a smaller harvest was expected and the plants were shorter than usual which indicated a lower than normal yield.
• His practice is to routinely walk the fields to inspect the crop. He noticed that the concentration of weeds varied across the field.
• He used a bio-organic soybean seed sowing 80 to 90 pounds of seed per acre. He has grown soybeans for 20 years and has never had a large insurance claim for soybeans.
• He previously had an insurance claim for corn but could not remember if he had a soybean claim prior to 2001.
• He knew that his guaranteed production was 28 bushels per acre so that when the combine operator estimated a harvest of just over 20 bushels an acre he was not greatly concerned.
• He believes drought contributed to the low yield but does not believe that it is the sole cause.
• He was completely bewildered about the cause of the extremely low yield.

Mr. Bart Derbis testified before the Tribunal. He stated that he was the Manager of Geographical Information Systems for AGRICORP. He said that he had created the map submitted in the AGRICORP document brief. He said that the map was of Mr. Hodgins home farm and his neighbours who grew soybeans on their farms within a 5 km radius. He described the customer information legend for the map as containing data such as crop type, yield reported, average farm yield, and amount of acres insured. He said that the statistics indicated that Mr. Hodgins harvested 29.67% of the yields averaged within the 5 km radius area. He explained to the Tribunal that Mr. Hodgins harvested an average of 8.62 bushels, in contrast to his neighbours who averaged yields of 28.7 bushels of soybeans per acre. Mr. Derbis told the Tribunal that the data collected for the circle mapping was a highly accurate and clearly indicative method of determining yield performance for policy holders.

Mr. Derbis responded to questions that:

• The circle radius map did not include yield information for organically grown soybeans only.
• The data for the 2002 soybean circle radius map was collated in November 2003 however the data was collected before November 2003. There was an error in the date of the map as it indicated a date of February 2002, a date that the 2002 soybean crop would not yet have been grown.
• Mr. Hodgins produced 29.7 % of his historic yield of soybeans in 2002 whereas his neighbours produced 82% of their historic yields.
• Data was not obtained for a 2 km radius circle as there were too few insured customers in an area that size.
• He is not certain if data could be mapped for organically grown soybeans within a 5 km radius circle.
• He produced maps of producers' home farms within a specific circle radius though he was not certain where the actual crop was produced.
• The acreage with the 5 km circle is measured by AGRICORP; the customers statement of acreage grown in not relied upon.
• AGRICORP compares data from one customer to another it does not compare data from one field to another.

Mr. Peter Edisbury testified before the Tribunal. He stated that he is a Claims Adjuster. He stated that he has been a claims adjuster since 1991, covering South Bruce and North Huron Counties. Mr. Edisbury said that he had farmed in South Bruce for 18 years, producing corn, white beans and sunflowers.

Mr. Edisbury told the Tribunal that:

• 2002 was a dry year in the Kincardine area.
• There was very little rainfall in June, July and August which, combined with high heat compounded the drought.
• He first became aware of Mr. Hodgins difficulties November 11, 2002 when he was served with a Notice of Claim. He did not go immediately to investigate the circumstances.
• Upon discussion of the situation with his supervisor, Mr. Barry Roberts, a decision was made to wait until yield data for neighbouring organic soybeans harvests were available for comparison.
• He and Mr. Roberts visited the Hodgins farm together December 20, 2002. They verified the yield and walked the fields which were snow covered to a depth of four to six inches.
• The fields were sown with wheat but large weed clumps were visible when the snow was scraped away. It was evident that there was an infestation of foxtail; there were frozen clumps of ragweed and pigweed jutting up.
• He indicated on the Crop Inspection Report the findings of significant weed pressure as the cause of the poor yields however, Mr. Hodgins refused an offer of reduced claim and refused to sign the Crop Inspection Report indicating his agreement with the findings.
• At the time of the December 20, 2002 farm visit he saw a field beside the barnyard with plant stalks sticking up in, he examined the field for weeds.
• He remembers driving past the farm in August and observing a very weedy field. He did not know until the time of the farm inspection that the fields were Mr. Hodgins soybean crop.
• He returned to the Hodgins farm on February 14, 2003 in an effort to settle the claim but Mr. Hodgins adamantly refused to accept the reduced claim offered.

Mr. Edisbury responded to questions that:

• When he inspected the fields at the Hodgins farm in December 2002, conditions were wet, so that he and Mr. Roberts made most of their observations from the fence line.
• He did not walk to the back section of the field to make any comparisons of the density of weeds.
• Many organic soybean yields were poor in 2002 but none were as low as the yields from the Hodgins farm.
• The yields of organically grown soybeans from about seven other farms were compared with the Hodgins yield. The comparison yields ranged from as few as 14 bushels per acre to as many as 30 bushels per acre.
• It is generally accepted that organically produced crops yield less than conventionally grown crops.
• He estimates that in 2002 the average yield losses were 25% for organically grown crops and 20% for conventionally grown crops.
• It is much easier to estimate corn and spring wheat yields when the crop is on the stalk than it is to estimate soybean yields however, the very low yield from the Hodgins crop would have been identifiable before harvest.
• Weed escapes for conventional methods were not unduly high in 2002. Undoubtedly there were drought conditions in 2002 but among the poorest performances for organically grown soybeans in 2002, the common denominator was weed pressure.

Mr. Fred Thomson, Regional Manager, AGRICORP, submitted to the Tribunal that the date specified on the 5 km radius map for soybean production referred to earlier in the proceedings by Mr. Derbis should read February 2003.

Mr. Barry Roberts Regional Manager for AGRICORP explained to the Tribunal that he accompanied Claims Adjuster, Mr. Edisbury, to the Hodgins farm on December 20, 2002. He said that as normal practice dictated they inspected the area where the disputed crop was grown. He said that he and Mr. Edisbury walked the margin of one of the Hodgins fields and swept snow away with their hands to view the soil. He said that they saw foxtail and perennial grass weeds. Mr. Roberts said that the inspection took place almost two months from the filing of the proof of loss form because he wanted ensure that he could make a suitable comparisons between the Hodgins soybean yield and the lower yields of several other organic producers. Mr. Roberts stated that he was very busy and did not want to make a hasty decision with regard to any claim settlement offer to Mr. Hodgins.

Mr. Roberts submitted that:

• Mr. Hodgins was very resistant to settling the claim, and he was not willing to compromise and accept anything less than 100% of his guaranteed yield.
• He left a copy of a standard yield form with Mr. Hodgins so that he might see the rationale for reducing the claim. He provided Mr. Hodgins with a copy of his crop history report from AGRICORP from 1998. He offered to split the claim for half the yield shortfall and half for the failure to report loss from drought. Loss caused by drought is an insured peril.
• Weeds are not an insured peril.
• AGRICORP policy states that producers must use proper management techniques. Mr. Hodgins yields for organically grown soybeans in 1999 were very good, indicating that good management practices were employed.

Mr. Roberts responded to questions that:

• Only one settlement offer, at 50% of the insured guarantee was made to Mr. Hodgins.
• The settlement offer was made before the field inspection was done.
• No measuring frames were used to count the number of weeds per square meter. Weather conditions prevented a thorough inspection of the fields on December 20, 2002.
• He calculated the amount of settlement offered by averaging Mr. Hodgins yield against his neighbours. Mr. Hodgin's neighbours who grew organic soybeans had yields of 14 to 15 bushels per acre, therefore, his loss was assumed to be twice that as his yield was 8 bushels per acre which is 50 percent less than that of other producers in the area.
• Rain fall data based on the forage plan was considered in making the calculation for the offer of settlement. It is possible that the rainfall data from the forage program is not directly correlative with soybean yields but, it is certainly indicative of soybean yields.
• The farm was not inspected until December 20, 2002 because of numerous claims being made and the busyness of field staff. He wanted to have some yield results for other organic farmers available to make comparisons and he believed that Mr. Edisbury would need some assistance.
• It is possible to make an assessment of conditions with snow on the ground however, the conditions would affect the accuracy of any assessment.
• He was not involved with any aspect of a claim by Mr. Hodgins from 2001, though the affect of aphids and drought on soybeans were more severe in 2001 than in 2002. Mr. Hodgins had three crop insurance claims over five years.
• If Mr. Hodgins had shown some indication of compromising his position, the 50% claim offered may have been re-adjusted in his favour, however, Mr. Hodgins refused to consider anything less that 100% of his guaranteed production.
• AGRICORP does not treat organically produced crops any differently than conventionally produced crops. It is not always the case that organically grown crops yield less than their conventionally grown counterparts.
• In the case of Mr. Hodgins' 2002 soybeans he cannot accept that the poor yield was due solely to drought. To the best of his recollection organic producers harvested on average, 14 to 16 bushels per acre of soybeans in 2002. Mr. Hodgins yield of only 8 bushels per acre was extremely low.
• With regard to the 10% deduction from the level of guaranteed production for organically produced soybeans, he is not familiar with Mr. Hodgins particular insurance arrangements.
• AGRICORP did not request that Mr. Hodgins delay tilling or planting winter wheat, pending the delayed farm inspection.

Summation

Mr. Hodgins stated that he was grateful to AGRICORP for not having insinuated that his yield was low due to theft of soybeans after harvest. Mr. Hodgins argued that Mr. Edisbury and Mr. Roberts arrived at his farm on December 20, 2002 with a preconceived opinion that the soybeans were harvested too late and that they would offer a settlement of only 50% of the guaranteed production. Mr. Hodgins stated that Mr. Roberts and Mr. Edisbury then changed their beliefs about the shortfall and said that it was due to weed pressure. Mr. Hodgins said that the accuracy of the circle maps is a questionable indication of yields for neighbouring growers. He stated that AGRICORP was negligent in that it did not obtain any information from the contracted harvester of the soybeans regarding the conditions of the crop at time of harvest. Mr. Hodgins submitted that, AGRICORP has not substantiated its finding of weed pressure as the cause of loss. He submitted that it was stated in OMAF Publication 811 that the impact of weeds could best be determined by measuring the amount of weeds per meter squared. He submitted that the weed population was 5 plants per meter squared, not 25 plants per meter squared.

Mr. Hodgins told the Tribunal that the maximum amount of claim was needed during an economically difficult time. He stated that he would have been better served if AGRICORP had taken proactive measures to determine the cause of the reduced yield and that accurate methods of measuring the weeds that resulted in the calculation of the claim should have been employed.

Mr. Fred Thomson told the Tribunal that Mr. Hodgins had submitted that the crop was subjected to intermediate weed pressure. He reviewed AGRICORP's policy regarding Insured Perils pointing out that weed pressure is not an insured peril and neither is poor management. Mr. Thomson argued that Mr. Hodgins planted the soybeans in mid-May, which is not a recommended time for planting. Mr. Thomson said that it is stated in the AGRICORP Policy Manual which practices are not acceptable. He said that Mr. Hodgins had admittedly failed to report the peril in time for AGRICORP to attend at the farm and make a thorough examination of the circumstances. He argued that the crop had been harvested before the proof of loss form had been filed. Mr. Thomson told the Tribunal that AGRICORP offered a claim consistent with its published policies regarding loss caused by non insured perils. Mr. Hodgins yield was not consistent with other yields in the area and the loss was not caused by drought. He asked the Tribunal to make a determination in AGRICORP's favour.

At the request of the Tribunal, Mr. Thomson clarified that all insured customers are provided with an AGRICORP Policy Book and some Fact Sheets. He said that all customers have access by telephone to the Customer Action Center and the Regional Managers are available to assist and advise as necessary. Mr. Thomson explained that customers are expected to read the policy book so that they understand their obligations under a contract of insurance.

Mr. Hodgins stated that a 'handbook' for organic soybean production recommended planting soybeans in Ontario from May 15 through May 31. He said that his 2002 soybeans were not planted outside this range.

The Findings

The Tribunal accepts that Mr. Hodgins farming operation is defined as organic farming. He has been an insured producer with AGRICORP since 1998. Mr. Hodgins produced his 2002 soybean crop on systematically tiled clay soil. He planted the soybeans in rows 20 inches apart mid-May, 2002. The soybeans were cultivated in June and July.

Evidence presented indicates that Mr. Hodgins was insured to an amount of 24.7 bushels of soybeans per acre. He harvested 8.26 bushels per acre in 2002. Crop production reports submitted to the Tribunal showed that Mr. Hodgins had produced as many as 43 bushels per acre of soybeans, he testified that he had as many as 20 years experience in producing soybeans using conventional and organic methods. Mr. Hodgins had access to publications stating instructions in best practices for producing organic soybeans. He did not dispute that he had access to the AGRICORP Policy book as well as the Customer Action Center and AGRICORP field staff.

The Tribunal cannot accept that given his experience and the resources available to him that Mr. Hodgins was unable to recognize that the yield for his 2002 soybean crop would be substantially below his average and well below the insured guarantee. The Tribunal accepts the testimony of Mr. Edisbury that a visual inspection of the crop would have given some indication though not accurate, of the yield to be expected.

The Tribunal finds that though field assessment methods were not optimum for determining the cause of loss and thence calculating the claim, AGRICORP endeavoured to settle the matter using yield for neighbouring soybean growers as comparisons to Mr. Hodgins yield.

The Tribunal was presented with evidence indicating that the AGRICORP Policy Manual sets out for the insured, acceptable management practices and the specific Insured Perils for each crop type. The Tribunal was presented with evidence that Mr. Hodgins had previously negotiated settlements of insurance from crop loss as recently as 2001. The Tribunal is therefore satisfied that Mr. Hodgins had knowledge of his obligations as an insured.

The Tribunal was not provided with incontrovertible evidence by either party, regarding a definitive cause for the loss. It is however satisfied, that AGRICORP recognized that drought was a contributing factor to the poor yield, while maintaining its opinion that the cause of the loss was weed pressure. The Tribunal accepts that AGRICORP made an offer to settle based on its findings and what it believed were Mr. Hodgins failure to fulfill his obligations regarding notification of the insurer and employment of good management practices.

Decision and Reasons

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

The Tribunal accepts that weed pressure and drought contributed to the loss, but it is not convinced that drought was the only reason for the very low yields. Mr. Hodgins did not provide convincing evidence that the losses were caused solely, by insured perils.

The Tribunal orders that the claim be settled on the following basis:

• Total 2002 Soybean Guaranteed Production is 2099.59 bushels.
• Total Actual 2002 Soybean Production 733 bushels.
• Adjustment is made due to loss from uninsured perils; failure to report damage prior to harvest and failure to control competition from weeds of 683.3 bushels (50% of 1366.59 bushel shortfall)
• Shortfall in production below guaranteed production 2099.59 - 733 = 1416.29 bushels.
• Revised Guaranteed Production of 2099.59 - 683.3 =1416.29 bushels
• 1416.29 - 733 bushels actual production = 683.29 bushels shortfall.
• Crop insurance claim payable to Mr. Hodgins, 683.29 x $6.00 = $4099.74
• The offer of claim is conditional upon Mr. Hodgins signing the Proof of Loss and Final Release forms.

DATED AT Guelph Ontario, this 30^th^ day of December, 2003.