Wright v. Agricorp, 2008 ONAFRAAT 1

Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email:appeals.tribunal.omaf@ontario.ca

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1, chemin Stone Ouest Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: appeals.tribunal.omaf@

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL: Wright v Agricorp

Wright v Agricorp 2008 ONAFRAAT 01

STATUTE: Crop Insurance Act

HEARING: November 21, 2007

DATE OF DECISION: January 2, 2008

2008-01

NEUTRAL CITATION: 2008 ONAFRAAT 01

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 Mark Wright, Granton, Ontario from a decision of Agricorp concerning the adjustment of its claim for its 2006 white kidney bean crop under Regulation 380/97 and the Crop Insurance Plan for White Beans.

Before:

• Kirk Walstedt, Vice Chair
• Jane Sadler Richards, Member
• Euclid Mailloux, Member

Appearances:

• Mark Wright, appellant
• John Langlois, counsel to the appellant
• David Wright, witness for the appellant
• Wayne Dobinson, witness for the appellant
• Fred Thomson, representative for Agricorp
• Karin Rasmussen, counsel to Agricorp
• Peter Lenders, witness for Agricorp
• David Connery, witness for Agricorp

Statutory Context

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

Referral of disputes 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.

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).

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on November 21, 2007. Mr. Wright appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal from the decision of Agricorp concerning the adjustment of claim for his 2006 kidney bean crop.

The Issue

Did Mr. Wright breach the conditions of his crop insurance contract by failing to harvest his crop?

Preliminary Matters

It was clarified for the benefit of all parties that the reference in the Tribunal’s Amended Notice of Rescheduling of Hearing, dated October 2, 2007 should have referenced “white kidney beans”, as opposed to “white beans”.

Correspondence dated April 5, 2007 from Wayne Dobinson to Mark Wright was faxed to the Tribunal on November 20, 2007. There being no objection to the tabling of this correspondence as evidence, the Panel received it as “Exhibit 1”.

Counsel for the appellant asked that Wayne Dobinson be treated as an Expert Witness. Counsel for Agricorp objected to this, as the Tribunal’s Rule #22 was not met. The panel sustained this objection and though Mr. Dobinson was not permitted to act as an Expert Witness, he was permitted to testify on behalf of the appellant.

Counsel for Agricorp requested that witnesses wait outside the hearing room prior to being called to testify. The Panel granted this request and witnesses who were waiting to testify were asked to vacate the hearing room until called.

The Evidence

Mark Wright

In response to questioning from Mr. Langlois, Mark Wright testified:

• He had had been farming since 1988
• He had purchased a farm in 2000
• 2006 was the first year he had grown coloured beans
• He had noticed nothing unusual about the 2006 growing season until the harvest.
• He had managed to harvest most of his coloured beans as well as his soy beans in the period following the Thanksgiving weekend.
• His 220 acres of soybeans were harvested on November 22, 23 and 24; he tried to harvest the white kidney beans immediately after the soys, but, found they were mud tagged
• “Hilling” the white kidney beans had been a detriment to the 2006 harvest.
• He also had a problem havesting his dark bean crop due to mud on the roots.
• Mr. Dobinson of the Great Canadian Bean Company came to the farm on November 25 , 2006 and spoke to Mark Wright’s parents. Mr. Dobinson indicated that the harvest would have to wait until a frost.
• Crop conditions did not improve over the next few days; pods on the beans were soft, there was a lot of rotten ones and they smelled bad.
• The weather was foggy in the mornings with some precipitation and mud continued to be a problem,

In response to questioning from Mr. Thomson, Mark Wright testified:

• That he had started his harvest around Thanksgiving
• That soybeans would be harvested at roughly the same time as kidney beans.
• During the time in question, he was checking his field daily and mud was a problem.
• That a sample of the white kidney beans had gone to the Great Canadian Bean Company.

In response to questions from the Tribunal, Mr. Wright testified:

• Ideally, beans would have been harvested from the middle to the end of October
• This was the first year he had planted kidney beans and that he had planned to harvest them around Thanksgiving.
• Though the dark red kidney beans were harvested in mid-October, the subsequent wet weather prevented him from harvesting the white kidney beans.
• The field in question is a clay loam, with random tile drain; a good field – flat with a little gully.
• The weather in November was not normal; it seemed to rain every day. When the sun did come out, it did not stay out long enough to dry the field.

David Wright

In response to questioning from Mr. Langlois, David Wright testified:

• The growing season in 2006 was good for corn and beans, but, then turned very wet. This created problems for getting the harvest in.
• He and his son Mark started to harvest dark red kidney beans on the Thanksgiving weekend; roughly 80 acres were pulled and combined. 43 acres were combined directly. Rain started around midnight and they were forced to leave them.
• Later, with respect to the white kidney beans, he contacted Wayne Dobinson to advise them on what to do. The beans were muddy and the ground was tacky.
• On the Monday, there was no real sun; checked the beans three times that day. Finally agreed to try harvesting the beans, but, then it started to rain again.

In response to questioning from Fred Thomson, David Wright testified:

• On the Saturday morning when Mr. Dobinson had met with David Wright, Mr. Dobinson had not seen the field of white kidney beans. David Wright had a sample of the white kidney beans in a bucket, some of which he gave to Mr. Dobinson.

In response to questions from the Tribunal, David Wright testified:

• He could not recall a time after Thanksgiving, 2006 when the kidney beans in his area could have been harvested. He could recall a time in previous years when this had also happened.
• When working on the farm, he and Mark talk together to jointly make management decisions.
• Agricorp staff had been on the farm one day regarding the white kidney beans; other than that, they had not seen Agricorp staff.

Wayne Dobinson

In response to questions from Mr. Langlois, Mr. Dobinson testified:

• He is currently the plant manager at the Great Canadian Bean Company (GCBC) in London and has been at this location since 1967. He has had many years of experience meeting with growers evaluating and grading beans.
• He met with David Wright in November of 2006 and took a sample of beans from the Mark Wright farm. He advised David Wright that the beans were of a quality that would not be acceptable to Mr. Dobinson’s customers. The beans were too heavily mud tagged to be useable.
• The high moisture content of the white kidney beans would have prevented them from drying properly; if dried, the beans are subject to “fish mouthing”, which is undesireable to the package trades.
• He recalled the weather of November 25 was a nicer day – foggy morning . However, the fields were very greasy and slippery; boots were covered in mud.
• Kidney beans in particular require a dry field to be properly harvested.
• He had suggested to David Wright that they wait to harvest after a frost. In his experience, the frost sometimes allowed some harvest, without mud tagging. However, the weather stayed the same until the first snow fall.
• Even with a frost, the sun would have to come out in order to reduce the moisture content of the beans in the field.

In response to questions from Fred Thomson, Mr. Dobinson:

• agreed that for some beans that do not meet quality standards, there may be alternate markets, e.g. the feed trade for cull beans at a considerably reduced price.
• Stated that GCBC may dry beans, if they are at 22% moisture. May accept beans with higher moisture depending on quality, presence of mud tagging, etc.
• Agreed that depending on the conditions the operator is dealing with, there could be more dirt on the beans, even in dry conditions.

In response to questioning from the Tribunal, Mr. Dobinson:

• Acknowledged that in some cases there is a possibility to blend lower and higher quality beans. However, in his opinion, the Wright beans could not be blended due to quality concerns. These beans may have been suitable for the feed trade, but, drying costs would have been excessive.
• Stated that he had six growers bringing him white kidney beans in 2006, all near London. Other than the Wrights, one producer had beans that were rejected. This producer harvested the beans and sold them to the feed trade.
• Described the 2006 growing year as good, but, one of the worst years for harvest. October conditions were very trying, with few opportunities for harvest. In November, things just got worse.
• Agreed that for white kidney beans, the normal practice would be to plant the beans in rows, hill the beans and pull them, as opposed to direct cutting.

In response to questioning from Fred Thomson, Mr. Dobinson:

• Indicated that the four other growers who grew white beans for GCBC in 2006 met grade, but, had beans of variable quality.
• Suggested the difference in quality between the six producers could be attributable to a number of factors, including: time of planting, the amount of Nitrogen applied and management practices.

Peter Lenders

In response to questioning from Fred Thomson, Mr. Lenders:

• Identified himself as an adjuster for Agricorp and a farmer
• testified that he and David Connery had inspected Mark Wright’s white kidney beans on November 22.
• Described the white kidney beans as somewhat weathered, but, still harvestable; soil condition was too sticky to allow combining; nothing had been harvested, but, some beans had been pulled.
• Testified that the crop was marketable and that he had discussed the crop with David Wright and there was an intention to harvest.
• Confirmed that because of the intention to harvest, that no sample was taken.
• Testified that he did not visit the Wright farm again following the November 22 visit up to and including November 28, 2006.
• Indicated that based on the Report from the Environment Canada weather station at Exeter (Exhibit 2, Tab 7) the white kidney beans would have dried down to some extent, however, he was not sure by how much.
• Testified that other farmers in the area were harvesting kidney beans; he was not aware of any other claims.

In response to questions from the Tribunal, Mr. Lenders testified:

• He was aware of one other white kidney bean producer in the area near Mr. Wright.
• The growth pattern and management practices for different types of kidney beans were basically similar, though different compared to soybeans.
• In his experience farming, he had observed different levels of precipitation in different fields.
• He could say with confidence that the weather records from Exeter would be reasonably close to what occurred on the Wright farm.

David Connery

In response to questioning from Fred Thomson, Mr. Connery testified:

• he has been a regional manager with Agricorp since 1994 and that he had done the underwriting for the white kidney bean crop when Mark Wright had enrolled.
• He learned that action was needed on the crop when attending the Wright farm on November 22.
• That in his judgement, the kidney beans were of marketable quality and the intent was to harvest the crop.
• Agricorp paid claims on kidney beans in the area near the Wright Farm. Mark Wright was the only claimant that did not harvest his kidney beans.
• Agricorp had offered to reduce the loss from 700 lb to 350 lb however, this offer was rejected by Mr.Wright. A counteroffer from Mr. Wright of reducing the loss to 200 lb was rejected by Agricorp.
• Other kidney bean producers in the immediate area were harvesting their crops in the period following November 22.

In response to questioning from Mr. Langlois, Mr. Connery testified:

• The acreage of wheat planted in Ontario in 2006 was 1/3 to ½ of average due to wet conditions
• The decision that 700 lb should be deducted was based on the November 22 visit to the Wright farm. The decision was not based on what was happening out in the field. Mr. Wright should have combined each day after November 22 and collected samples.

In response to questions from the Tribunal, Mr. Connery testified:

• In reviewing the weather data from the Exeter station, the “normals” for the area were not reviewed.
• He had not requested weather data that may have been closer to the Wright farm.
• That rainfall in a specific field could have been different than at the Exeter station.
• He could not confirm whether other kidney bean growers in the area of the Wright farm were growing white kidney beans.
• It was possible that the Wright farm had significantly higher rainfall than the Exeter station.
• Agricorp is not concerned where an insured producer markets their crop.

Summation

Mark Wright

Mr. Langlois stated that the question left, in the end, was whether there had been a breach of the conditions under the crop insurance contract. He suggested that despite all the equipment that was available for the harvest, the Wrights were unable to harvest the white kidney beans. Mr. Dobinson’s testimony that the beans would have been rejected was compelling evidence that the beans would have been rejected anywhere. In addition, the cost of drying the beans for any market – including the cull market – would have exceeded the value of the beans.

There was significant variability in the rainfall in the area. The micro-climate of the Wright farm is unknown. Mr. Connery was not able to tell the Panel whether a similar field of beans was harvested during those days in November (November 22 – 27).

The Wrights had done everything that good farmers would have done on this matter. Mr. Langlois stated that in his view, the continuous rainfall in the fall of 2006 was an insured peril that should apply to Mr. Wright’s claim.

Agricorp

In his summation, Fred Thomson acknowledged that, based on what he had heard, the Wrights were good farmers trying to do a good job. He stated that it was known that the fall weather was challenging; claims had been paid due to losses; Mr. Wright did not harvest 90 acres of white kidney beans; the beans were of harvestable quality; the Exeter weather station reported no precipitation for the period November 19 – 27 and recorded temperatures were warm for that time of year.

He continued by stating that the beans could have dried down to a lower moisture content; that of the coloured bean growers in the area near the Wright farm, two had rejected crops, while the others had crops that were OK. No further samples of beans were drawn and checked by an expert. Other producers successfully harvested a crop. Other activities, including the hauling of manure, were occurring on the Wright farm during the period in question. Mr. Wright was the only producer in the immediate area who was not able to harvest. Therefore, Mr. Thomson stated that Agricorp felt that inadequate farm practices – not an insured peril - was the cause of the losses to the 2006 white kidney bean crop.

Mark Wright Response to Agricorp

Mr. Langlois responded by stating the fact that other producers could harvest, should not reflect on Mark Wright. Hauling manure was not an impediment or a factor in harvesting; the Wrights would have harvested if they had had the opportunity. However, they just did not have the conditions to do so.

Decision and Reasons

It was agreed by all parties that weather conditions in the fall of 2006 were unusually wet. However, in spite of these conditions, Mark Wright was able to successfully harvest the majority of his field crops, with the exception of 90 acres of white kidney beans and 10 acres of light red kidney beans.

We heard evidence that hilling white kidney beans is the preferred management practice for this crop. Mr. Wright included hilling in his crop management practices. It was also noted that hilling may be problematic and can make harvesting more difficult if harvesting practices are switched from pulling out the beans to direct cutting. Wet weather significantly increases the severity of this problem.

It was observed from evidence provided by Agricorp that Mr. Wright has been a client of Agricorp’s for some time, has had experience in crop production, and that for some of his crops he has been entitled to a discount on his crop insurance premiums.

We therefore find that Mr. Wright has used good farm management practices in the past and that these practices continued in the fall of 2006.

With respect to the weather, evidence before the Tribunal was inconclusive. Testimony from Mark Wright, David Wright and Wayne Dobinson indicated that the wet weather made the harvesting of the white kidney beans impractical, if not impossible. “Greasy” conditions in the field contributed to mud tagging of the beans and created difficulty in operating the combine. Mark Wright testified that the combine was ready to harvest the white kidney beans as soon as the weather improved enough to do so.

Agricorp tabled evidence which included weather data from the Exeter weather station, some 15 – 20 kilometres from the field in question. The data showed no precipitation for the period November 22, 2006 to November 27, 2006. In addition, the weather data showed temperatures ranging from lows of -3C to highs of 13.5C. However, Agricorp conceded that the weather may have been different in Mr. Wright’s field than at Exeter.

Mark Wright and David Wright were on-site at the Wright farm from November 22 to November 27 and had first hand knowledge of the local weather, soil and crop conditions. Agricorp staff only visited the field once on November 22 and relied on the Exeter weather station data to reach a conclusion regarding the weather at Mr. Wright’s field. Agricorp staff were unable to confirm that conditions in Mr. Wright’s field had improved enough to harvest the white kidney beans.

We find Wayne Dobinson to be very experienced with respect to the evaluating and grading of white kidney beans. He has worked in the industry for over 40 years. His testimony, regarding the very poor and unmarketable condition of the white kidney beans sampled from the Wright farm, supported the testimony of Mark and David Wright that the crop was not harvestable due to excessive rainfall and very wet field conditions. He noted a high degree of mud tagging and a high moisture content in the white kidney beans.

In support of this testimony is Agricorp’s December 18, 2006 Crop Insurance Report regarding kidney beans at the Wright farm which described the severity of damage to the crop as “severe”; the primary cause of loss as due to “excess rain”; and, the weather history as “extremely wet”.

We therefore find that excess rain - and the resulting wet conditions faced by Mr. Wright with respect to his white kidney beans - does represent an insurable peril under Mr. Wright’s crop insurance contract with Agricorp.

ORDER OF THE TRIBUNAL

The Tribunal orders that the appeal of Mark Wright with respect to his crop insurance claim for his 2006 white kidney bean crop be granted and that Agricorp pay the full value of the claim to Mr. Wright.

DATED AT Maidstone, Ontario this 2nd day of January, 2008.