AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Watson v Agricorp

Watson v Agricorp 2005 ONAFRAAT 25

STATUTE:

Crop Insurance Act

HEARING:

September 8, 2005

DATE OF DECISION:

September 20, 2005

2005-25

NEUTRAL CITATION:

2005 ONAFRAAT 25

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 Don Watson, Millgrove, Ontario from a decision of Agricorp concerning the adjustment of his claim for his 2004 forage crop under Regulation 380/97 and the Crop Insurance Plan for Hay and Forage.

Appearances:

Don Watson, appellant

John Barkovic, representing the respondent, Agricorp

Sam McGee, witness for the respondent

Husseinali Shivji, witness for the respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on September 8, 2005. Mr. Don Watson appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal from the decision of Agricorp concerning the adjustment of loss on his 2004 hay crop.

Statutory Context

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

(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.

Notice of appeal

(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.

Exclusive jurisdiction

(3) The Tribunal has exclusive jurisdiction to hear and determine all appeals arising under subsection (1).

Decision binding

(4) The decision of the Tribunal in an appeal is binding on the parties. 1999, c. 12, Sched. A, s. 7 (2).

Preliminary Matters

Mr. John Barkovic pointed out three typographical errors in Agricorp’s documentary evidence to be corrected and indicated that one map that was submitted was incorrect and should be disregarded (Exhibit 2, tab 6, page 24).

The Issue

The issue before the Tribunal is:

Did Agricorp properly apply the rules of the SIMFOY program in calculating Mr. Watson’s crop insurance claim?

The Evidence

Don Watson

Mr. Don Watson told the Tribunal that he believed he was in a claim position as he had a good first cut but no second or third cuts of hay in 2004, He said that he had kept rainfall records and submitted them to Agricorp. Mr. Watson said that the producer that Agricorp compared his yield to was too far away. Mr. Watson said he had not been told the name of that grower but understood he lived on the second concession near Linden which was more than six miles away from his own farm (the Watson farm). Mr. Watson said Douglas Butter, a farmer identified in the Agricorp advance documentation was even farther away from the Watson farm.

Mr. Watson told the Tribunal that the crop insurance contract he purchased provided that when there is no other insured grower within a six mile radius of the insured, only the insured’s simulated yield was used to calculate the insurance claim. He said he paid his premium and submitted the required rainfall data and said Agricorp should pay his claim. He said there were no other insured growers within 6 miles of his farm.

Mr. Watson also indicated that Agricorp estimated hay to cost $1 per bale but it was not available at that price. He said he purchased hay for $1.50 per bale from a relative, and exchanged labour for hay. He said that the norm is $2 per bale of hay standing in the field.

Sam McGee

Mr. Sam McGee told the Tribunal Mr. Watson called Agricorp to inquire about forage insurance on April 30, 2005. He said he was sent to visit the client and would have taken fact sheets, a rain gauge and application forms to sign a client up with him. He said he assumed he would have left a fact sheet with Mr. Watson. He explained that he discussed the number of acres of forage grown and the expected yield with Mr. Watson and he applied for coverage in the amount of $20,000. He said Mr. Watson had to discuss the matter with his wife so he held the application until Mr. Watson telephoned him to confirm that he wanted to insure the forage crop, then sent it to Guelph.

Mr. McGee said Agricorp calculated the first cut yield of certain growers – called co-operators – who grow at least ten acres. He said co-operators are spread across the province. He explained that Agricorp relied on co-operators to record the number of bales of hay they harvest but that Agricorp adjusters weigh the bales and calculate the yield. He said he calculated the first cut yield of co-operator Douglas Butter on July 23, 2004. He said Mr. Butter’s farm was 12-15 miles from the Watson farm.

Mr. McGee said he had been an adjustor with Agricorp for 11 years. He said the $1 per bale estimate used by Agricorp had been used since he started adjusting. He explained the premium was based on the dollar value of the contract of insurance, not the number of bales. Mr. McGee said he did not walk the fields on the Watson farm and so was not familiar with his forage mix.

Husseinali Shivji

Mr. Husseinali Shivji told the Tribunal he was the Administrator of the Forage Program and it was his responsibility to ensure that all the parameters are input correctly to the SIMFOY computer model. He explained that the SIMFOY plan insured against a single peril – drought – and that it was an area based plan which uses specified climatic data and a scientific model to simulate forage yield in a geographic area. Mr. Shivji directed the Tribunal to sections of the policy and the fact sheet which indicated the forage plan was based on simulated yields, not actual yields, and that an insured grower’s simulated yields were averaged with simulated yields of other growers in the area.

Mr. Shivji explained that the SIMFOY model incorporated:

daily temperatures measured by a division of Environment Canada
hours of sunshine measured by a division of Environment Canada
rainfall reported by insured growers
rainfall in April measured by a division of Environment Canada
a cutting date of June 15, plus or minus up to ten days, depending on local conditions
the predominant soil type in each township, as determined by the University of Guelph
30 inch minimum soil depth, and
an assumption of good agronomic practices by the insured grower.

He explained that the first cut yield was an average of the yield projected by the SIMFOY model and that of a co-operator located within 15 miles of the insured grower, and that the second and third cut yields were strictly simulated. He said the co-operator Mr. Butter’s actual first cut yield of 123% was averaged with SIMFOY’s projected yield of 120% to get the simulated first cut yield for Mr. Watson’s area. He testified that SIMFOY projected a yield of 50% for the second cut and no yield for the third cut in Mr. Watson’s area to give a simulated yield of 67.31% for the Watson farm.

Mr. Shivji said there were no insured growers within a three-mile radius of the Watson farm, but there were two insured growers within a six-mile radius of the Watson farm. Of those two growers, only one submitted rainfall data to Agricorp so his simulated yield was the only one that could be averaged with Mr. Watson’s simulated yield. He explained that where there was only one other insured grower used, there was a straight average taken of the two simulated yields – in this case, Mr. Watson’s simulated yield and the yield of a grower located to the Southeast of the Watson farm. Mr. Shivji said the simulated yields of growers were averaged because it was an area based plan and averaging protected the integrity of the plan. Mr. Shivji explained that when Mr. Watson’s simulated yield was averaged with that of the other insured grower the simulated yield for the area was 80.91%. He said a claim was only paid if the average simulated yield was less than 80%.

Mr. Shivji explained that the actual soil type, soil depth and species mix on the Watson farm was not measured, as the SIMFOY model used the same parameters for the entire township. He said co-operator growers were selected to be representative of the area and had a cut of forage every year. He said rainfall data from Environment Canada from the latter part of April was used in the formula.

Summations:

Mr. Watson reiterated that he had met his obligations under the SIMFOY program and asked that his claim be paid on the basis of his yield alone, on the grounds that the other insured grower who was averaged with him was more than six miles from his farm. He said he calculated his claim to be worth $13,575 based on 67.5% yield on the first cut, no second or third cut and 150 bales per acre at $1.50 per bale. He argued that Agricorp had not shown where the grower whose yield was being averaged with his was located.

Mr. Barkovic said Agricorp was not disputing that Mr. Watson had a short crop of hay in 2004 but that it maintained that the correct information was put in the computer program and the SIMFOY program was accurate within its parameters. He said the program was not flawed, but that it did have its limitations. He submitted that, as an area based plan, SIMFOY did not always reflect each individual grower’s results. Mr. Barkovic argued that the program balances itself out over time. He said the benefit of the program was that it had a very low premium and was therefore affordable for growers. He also pointed out that the SIMFOY program projected a good first yield and poor second and third yields, which was similar to Mr. Watson’s actual results. Mr. Barkovic said there was another grower within a six-mile radius of the Watson farm and Agricorp was obligated to average that grower’s simulated yield with that of Mr. Watson. He asked that the Tribunal uphold Agricorp’s decision to deny the claim.

Mr. Barkovic told the Tribunal that under the Freedom of Information and Protection of Privacy Act Agricorp could not release the name of the other insured grower, or his lot and concession number as that could identify him. He said Mr. Butter could be identified because when he signed up as a co-operator he gave Agricorp the right to use his name.

The Findings

This dispute centres on the location of an insured grower whose simulated yield was averaged with Mr. Watson’s simulated yield by Agricorp, bringing Mr. Watson’s area out of a claim position. Mr. Watson’s position was that, based on information he received from Agricorp, this grower was located more than six miles from the Watson farm. Agricorp witnesses testified that the other insured grower was within a six-mile radius of the Watson farm, but they could not provide details as to the exact location or the name of the producer. If the other insured grower is within a six-mile radius of the Watson farm, then that grower’s simulated yield should be averaged with that of Mr. Watson; if not then Mr. Watson’s actual rainful alone should be the basis of the adjustment of his claim.

Agricorp provided the Tribunal with a map which it said indicated the locations of two insured growers located within six miles of the Watson farm. There was no scale in the map and no roads marked. The Tribunal heard that Agricorp did not want to release information that would identify the insured grower whose simulated yield was averaged with that of Mr. Watson, because of the Freedom of Information and Protection of Privacy Act. Yet Agricorp was able to release the name of Mr. Butter, one of its voluntary co-operators, as he had apparently signed a release when agreeing to become a cooperator. There was no evidence that Agricorp attempted to obtain a similar release from the insured grower whose simulated yield affected Mr. Watson’s claim. The Tribunal has reviewed the Freedom of Information and Protection of Privacy Act and is of the view that it allows for such a release to be obtained. The Tribunal finds in favour of the appellant, Mr. Watson, with respect to the location of the other insured grower.

Mr. Watson asked the Tribunal to order that he be paid a claim in the amount of $13,575, based on his calculation of his losses. The Hay and Forage Plan is an area based plan, and payment of claims is based on a computer program which simulates area yields. The payment of Mr. Watson’s claim must be based on that model.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal decided to grant the appeal in part for the following reasons:

The Tribunal was not persuaded that an unidentified insured grower was located within a six-mile radius of the Watson farm.

Order of the Tribunal

The Tribunal orders Agricorp to re-calculate the claim payable to Mr. Don Watson under the 2004 Plan for Hay and Forage, using his simulated yield of 67.31%, with no other growers’ yields averaged with this simulated yield.

DATED AT Essex, Ontario this 20th day of September, 2005.

Watson v. Agricorp, 2005 ONAFRAAT 25

Case Summary