Peter and Rensje Aablers v. Agricorp

In the matter of 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 Peter and Rensje Aalbers, in Thunder Bay, Ontario from a decision of Agricorp concerning the adjustment of their claim for their 2007 forage harvest.

Before: Kirk Walstedt, Chair; Denis Perrault, Member; John Rudics, Member

Appearances:
Peter Aalbers, appellant
Rensje Aalbers, appellant
Fred Thomson, representative of the respondent, Agricorp
Michael Smyth, witness for the respondent

Decision of the Tribunal

This appeal was held on Thursday, August 7, 2008, by way of video conference between the Ontario Government Building, at 1 Stone Road West, in Guelph, Ontario, and the Ministry of the Environment building, at 435 James Street, in Thunder Bay, Ontario.

Background

Mr. and Mrs. Aalbers are farmers in Thunder Bay, Ontario. They have purchased crop insurance continuously since the early 1980's. In 2007, low snowfall and relatively low rainfall in the spring resulted in a reduced hay and silage yield on their farm. The Aalbers submitted that Agricorp's rainfall station in nearby Oliver did not accurately reflect the rainfall levels they experienced on their farm. As a result, they contend that they were entitled to have their claim for their 2007 forage crop paid by Agricorp.

The Evidence

Mr. Aalbers submitted that:

• In a letter to Agricorp dated December 3, 2007, he had described his concerns regarding the Oliver rain station, which is located some 7 km from his farm. He had spoken to Agricorp representatives in 2005, 2006 and 2007 about the Oliver station, however, no changes were subsequently made to the station.
• He records the daily rainfall at his farm for the months of May, June, July and August. In 2007, he recorded a total rainfall for the four months of 209.9 mm. For the same period, the Oliver station recorded 268.8 mm.
• Another rain station at Paipoonge is closer and is located about 4.6 km from the farm. However, a river and mountains between the station and the farm influence the local rainfall.
• Due to the dry conditions and low forage yield on his farm in 2007, he had to incur additional expenses to buy hay and silage for his cattle. These included purchases from the following:

  Reidridge Farm - Corn Silage $3300.00
  Rossdale Farms - Hay 930.00
  Kamview Farms - Hay $3465.00
  Total $7695.00

• In addition, all of his previous year's surplus hay and silage was fed to the cattle.

In cross-examination by Fred Thomson, Mr. Aalbers testified that:

• He had first enrolled in the forage rainfall program in 2005; he picked the Oliver rain station; he remained with the Oliver site in 2006 and 2007;
• He agreed that the data from the Oliver rain station was accurate
• He understood that Agricorp uses the data from the Oliver site and not his, Mr. Aalbers's, data;
• He agreed that ultimately, he had the decision not to participate in the forage rainfall program;
• Moisture levels at his farm were down in the spring due to a lack of snow;
• He agreed that April is not factored into rainfall calculations and that the months in question were May, June, July and August of 2007;
• He agreed that: 1) he had made the decision to participate in the rainfall program in 2007; 2) had made the decision regarding the coverage level; 3) had decided on the option of weighting; and, 4) that all these are factors in determining whether or not a claim is payable by Agricorp; and
• He also agreed that his coverage for 2007 was at the 80% level and that this resulted in a deductible of 20%.

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

• He'd had some production problems with corn and forage since 2005;
• He'd had cut down his corn in 2007 at the recommendation of a crop advisor and therefore had had no claim for the corn;
• He had no claims in 2006; between 1984 and 2004, he'd had 2 or 3 claims; and
• In 2007, there would have been sufficient feed for his cattle, if there had been sufficient rainfall.

Michael Smyth

Mr. Smyth is a Production Insurance Account Lead with Agricorp. He has been with Agricorp for 9 ½ years and has held a number of positions within the organization. As the Account Lead, Mr. Smyth is familiar with the Aalbers' claim.

Under questioning from Mr. Thomson, Mr. Smyth testified that:

• Agricorp's Forage Rainfall Plan was first tested as a pilot program in designated areas of the province in 2000; the program was made available to all producers in 2005;
• Under the forage rainfall program, rainfall data collected at a designated site may not mirror the rainfall of an individual farmer;
• Forage presents challenges as an insured crop; yields need to be measured, which can be costly and difficult to determine;
• Under "Part X - Forage Rainfall Plan Insuring Agreement" of the Agricorp "Crop Insurance Policy: Contract of Insurance", the only insured peril that applies is "drought"; it is the customer's responsibility to select coverage and it is the selected coverage that will determine the claim payable;
• The plan has a 20% deductible;
• There are four options for coverage; customers must pick one of them;
• There are currently 350 rainfall collection sites across Ontario; the same number as in 2007;
• Agricorp, following consultations; selects the sites; customers must pick a site that they are eligible to use within their own geotownship or within a geotownship adjacent to their own;
• Agricorp is concerned with the "moral hazard" of allowing customers to use their own data in calculating rainfall;
• A third party company is contracted to set up the gauges and to collect the rainfall data; gauges are accurate; there is a triple redundancy built into each gauge;
• Agricorp is not obligated to place a rainfall collection site requested by a specific customer;
• The Aalbers chose the weighted rainfall option in 2007; of the four claim options available, two of them, the "Base" option and the "Bimonthly" option were in a claim position; the "Weighting" and the "Three Month" options were not in a claim position; and
• He agreed that Mr. Aalbers had a choice of three rainfall stations near his farm; one in Oliver and two in Paipoonge.

In cross-examination by Mr. Aalbers, Mr. Smyth testified that:

• The rain station collects, calculates and then drains the rainwater every day;
• Agricorp consulted with the third party contractor to determine where the rainfall stations would be placed; finding a landowner who will allow a rain station on their property is a consideration; and
• Claim options are initially explained to customers when they sign up for the program and each year, when an application is made, the Agricorp Call Centre follows up with customers regarding available options.

In response to questions from the Panel, Mr. Smyth testified that:

• Information regarding total claims for a particular rainfall station are available, but individual claims are not available to customers, due to confidentiality reasons;
• Agricorp's previous rainfall program had more variables that were input into a computer; the new system is simpler;
• It is possible that new rainfall stations could be established, but, this would be subject to the conditions of the current contract with the third party; and
• Agricorp tries to advise customers of any changes to their programs annually and urges customers to call in.

In response to questions from Mr. Thomson arising from questions from the Panel, Mr. Smyth testified:

• The location of rainfall stations is reviewed over time and may be changed for various reasons;
• He agreed that 40 years of Environment Canada weather data is a more accurate way of determining what might happen in a particular area;
• Renewal notices to customers contain fact sheets, including information on a five step enrollment process and a sample claim calculation; and
• Agricorp records show that Mrs. Aalbers had called Agricorp on April 27, 2006 to change their plan from the "Base" plan to a "Weighting" plan.

The Issue

Should Mr. Peter Aalbers's and Mrs. Rensje Aalbers's claim for $7695.00 for their 2007 forage crop be approved?

The Findings

The appellants requested that the Tribunal order that Agricorp relocate the rain station in question and/or establish an additional station. Although we are sympathetic to the appellants, it is not within the Tribunal's jurisdiction to order Agricorp to relocate their weather stations - we leave that to Agricorp through their customer service program.

Based on the evidence before it, the Tribunal finds that:

• the appellants' testimony with respect to drought conditions is credible;
• the appellants were sincere in their belief that customer rainfall data should be accepted by Agricorp, however, we agree with Agricorp that such a program could be open to moral hazard and cannot be used in assessing a claim;
• the details of the Forage Rainfall Plan are very specific and Agricorp keeps its customers well informed of changes to the plan as they are implemented;
• the customer chooses:
  • whether or not to have forage rainfall coverage at all,
  • one of the four claim options available,
  • the financial coverage level, and
  • the Agricorp rain station location;
• the system for measuring rainfall used by Agricorp is fair and equitable; and
• there is nothing to indicate that Agricorp had not dealt with the customers appropriately.

Order of the Tribunal

The Tribunal orders that the appeal be dismissed.

Dated at Maidstone, Ontario, this 26th day of August, 2008.