AgriInsurance - Fisheries, Forestry and Agriculture

Introduction
Crops Insured
How Crop Insurance Works
Production Guarantee
Claim Benefits
Premiums
- Example
Application Procedure
Reports
Fact Sheets

A Risk Management Tool

Introduction

The Canada-Newfoundland and Labrador AgriInsurance Program is funded by the Sustainable Canadian Agricultural Partnership (Sustainable CAP). AgriInsurance is a part of the national Business Risk Management suite of programs designed to aid Canadian producers in managing the inherent risks of agricultural production.

AgriInsurance is designed as a management tool to provide producers with income protection against uncontrollable natural perils. The Newfoundland and Labrador Crop Insurance Agency offers crop-specific insurance coverage. Coverage offered to producers is available under two scenarios: the first is based on the producer’s pre-harvest cost of production; and the second is based on 70% of the five year average market price for the crop. Under both options, the producer’s investment is protected against the effects of drought, excessive moisture, wind, frost, hail, snow, wildlife, disease and insects. AgriInsurance does not cover losses due to poor farming practices, negligence or lack of insect, disease or weed control. The Agency further requires that insured producers follow control practices as recommended by the Department of Fisheries, Forestry and Agriculture for the control of late blight and clubroot.

The administration cost of the program is jointly funded under the Sustainable CAP Agreement between Agriculture and Agri-Food Canada and the provincial Department of Fisheries, Forestry and Agriculture on a 60:40 per cent basis respectively. The total premium costs are shared between the federal government, the provincial government and the producer on a 36:24:40 per cent basis respectively.

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Crops Insured

There are currently separate insurance plans for: potato, turnip, cabbage, beet, carrot on mineral soils, carrot on peat-based soils and parsnip. There is a basic requirement of one acre of crop and insurance must be purchased on the entire crop planted (not just the high risk areas).

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How Crop Insurance Works

A producer must apply for AgriInsurance prior to April 30 of that year. Producers select the coverage level and price option for which they intend to insure their crops at time of application. Those applicants who do not indicate their intentions will be offered the Agency’s default coverage of 60 percent at the Cost of Production price option. Once an application has been approved by the Crop Insurance Agency, an Agricultural Inspector meets with the producer and measures the planted acreage using a GPS and then creates a map of the planted acreage.

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Production Guarantee

The production guaranteed to a producer is based on the producer’s Probable Yield, which is a combination of the producer’s past yields and the area average yield (as provided by The Newfoundland and Labrador Crop Insurance Agency) over a fifteen (15) year period. The Agency adjusts the area average yield by applying a factor which better reflects actual AgriInsurance yields. The producer’s Production Guarantee is determined by multiplying the Probable Yield by the Coverage Level chosen by the producer, either 60, 70, or 80 percent. Field test plots are used to statistically determine the actual production achieved in a growing season. Product from a test plot is graded and weighed at the end of the season and this weight is converted to a total crop yield figure. If this figure indicates that production has fallen below the Production Guarantee due to one of the insured perils, then the producer may be in a claim position.

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Claim Benefits

The AgriInsurance program is equipped with two claim benefits. A Re-seeding Benefit is used in the event of a germination loss on insured crops. The grower may receive a claim adjustment enabling them to replant the crop in the same season if the crop was lost as a result of one of the insurable perils and the crop can be replanted up to the planting deadline. The regular insurance is available at the time of harvest. If a producer finds that the crop has been damaged by an insurable peril and yields are below the Production Guarantee, as determined by the Crop Insurance Agency, the producer must file a “Notice of Crop Damage and Request for Inspection” with the Agency. Once it has been established that the claim is justified, the producer will be paid an adjustment to cover the loss as agreed to in the Contract of Insurance. In both cases, the “Notice of Crop Damage and Request for Inspection” must be filed by the producer within five (5) days of noticing the loss.

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Premiums

The cost of insurance is dependent upon several variables. The first set of variables is the Coverage Level. The producer can choose one of three Coverage Levels, 60%, 70% or 80% for each crop. This percentage is multiplied by the producer’s Probable Yield to obtain the Production Guarantee.

The second set of variables is the Price Option. This is where the producer decides to insure his or her crop based on either the pre-harvest cost of production (i.e. seed, fertilizer, limestone) or on 70% of the five year average market price. This Price Option is multiplied by the Production Guarantee to determine a total Coverage Value. The total premium costs are then determined by multiplying the total Coverage Value by a pre-determined premium rate. Additionally, the final premium is adjusted to reflect an insured producer’s production history with the AgriInsurance program.

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Example:

The following example is for a potato producer who has not participated in the AgriInsurance program in the past and therefore has no program historical yield data from which to build Probable Yields or Premium Discounts or Surcharges.

POTATO	Cost of Production			Market Price
Coverage	60%	70%	80%	60%	70%	80%
Premium Rate	0.0590	0.0954	0.1293	0.0590	0.0954	0.1293
Probable Yield (lb/ac)	19,246	19,246	19,246	19,246	19,246	19,246
Production Guarantee (lb/ac)	11,548	13,472	15,397	11,548	13,472	15,397
Price Option (lb)	0.18	0.18	0.18	0.27	0.27	0.27
Coverage ($)	2,078	2,425	2,771	3,117	3,637	4,157
Total Premium ($/ac)	122.69	231.39	358.42	184.03	347.09	537.63
Federal Premium ($/ac)	44.17	83.30	129.03	66.25	124.95	193.55
Provincial Premium ($/ac)	29.45	55.53	86.02	44.17	83.30	129.03
Producer Premium ($/ac)	49.08	92.56	143.37	73.61	138.83	215.05

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Application Procedure

AgriInsurance applications are mailed out to producers in early April. If you do not receive an application by mail, you should contact your area Agricultural Inspector or your area Agricultural Representative. The application form may also be downloaded from this site. The application deadline is April 30 of each year. Completed forms should be sent to:

Newfoundland and Labrador Crop Insurance Agency
Department of Fisheries, Forestry and Agriculture
P.O. Box 2006 Corner Brook, NL
A2H 6J8
Tel: 1 (709) 637-2077
Fax: (709) 637-2591