Good planning is good farming

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1 Production Insurance Plan Overview New Forage Seeding Good planning is good farming Connecting producers with programs

2 What you need to know about protecting your new forage seeding under Production Insurance. As an agency of the Government of Ontario, Agricorp works with partners to contribute to a vibrant and sustainable agriculture industry. We deliver programs that help producers manage risk and remain financially secure. About PRODUCTION INSURANCE Agricorp administers Production Insurance on behalf of the Government of Ontario and Agriculture and Agri-Food Canada. Production Insurance is available for 90 commercially grown crops in Ontario in the following sectors: Forage Fruit and honey Grains Oilseeds Vegetables Seed corn, sugar beets, hemp and tobacco About this publication The purpose of this overview is to provide general information about the new forage seeding plans available under Production Insurance. It includes plan-specific features, customers responsibilities, and general deadlines. This overview contains general information only and does not represent an insurance contract. Information contained within it is subject to change. Refer to the following for additional information about the Production Insurance plans for New Forage Seeding production: 1. Contract of Insurance 2. Production Insurance information sheet for new forage seeding for the current plan year For copies of these documents, visit or call Agricorp at Plan overviews are also available for the following crops: Fresh market vegetable production Grains and oilseed production Honey New forage rainfall production (see flip side of this publication) Seed corn production Strawberry production Tree fruit and grape production

3 Table of contents Why should I have Production Insurance?... 2 How do I get Production Insurance coverage?... 2 New applications... 2 Renewals... 2 What are my responsibilities?... 3 What are the plan details?... 4 Insurable crops... 4 Insured perils... 4 Plans... 4 How is Production Insurance coverage determined?... 5 Insurable acres... 5 How are Production Insurance premiums determined?... 5 Base premium rate... 5 Discounts and surcharges... 5 Example I: Calculating discount/surcharge and annual premium... 6 Final acreage reporting... 7 Cost sharing... 7 What happens when a crop is damaged?... 8 Reporting damage Claim eligibility... 8 Example II: Calculating an establishment benefit... 9 How do I resolve a Production Insurance dispute? Notes

4 Why should I have Production Insurance? As a producer, you have to deal with many factors that are beyond your control. Things like adverse weather, disease, wildlife, and insect infestations can have a serious impact on your production and your income. Production Insurance adds a measure of predictability to an unpredictable business. It protects your business from yield reductions and crop losses caused by insured perils. More than 16,000 Ontario producers with more than 5 million acres of farmland enjoy the financial security provided by Production Insurance. Production Insurance helps you: Maintain your cash flow in poor crop years with claim payments that compensate you for crop damage or low yields. Manage your operation with a more predictable cash flow. Provide collateral required to secure loans. Stabilize your AgriStability program reference margin over time. Gain affordable peace-of-mind by paying tax-deductible premiums that are cost-shared with government. The AgriStability and Production Insurance connection AgriStability, which protects your farm against large margin declines, and Production Insurance are complementary programs that address different risks faced by Ontario producers. Participating in both AgriStability and Production Insurance lets you maximize the benefits of the government risk management programs available to you: Production Insurance claim payments count as income in calculating your AgriStability reference margin. Depending on weather and/or market conditions, in a given year you could receive an AgriStability benefit, a Production Insurance claim or both. How do I get Production Insurance coverage? New applications If this is your first time applying, or if you are adding a crop to your account, contact Agricorp at The deadline to apply is May 1. An Agricorp representative may visit you to review your coverage and complete your application. Renewals If you are already enrolled, you will be automatically renewed with the same coverage as the previous year. Renewal notices are mailed to producers in March. If you want the same coverage as the previous year, no further confirmation is required. However, if you want Applications and renewals (including any changes to existing coverage) must be completed by May 1. If you decide to cancel your existing coverage, contact Agricorp by April 1. to make changes or cancel your contract, you must contact Agricorp by the deadline outlined in the following section. Your new forage seeding crops will be included with all other insured grain and oilseed crops. 2

5 What are my responsibilities? Important dates To ensure that your Production Insurance contract remains in good standing, please note these important dates and deadlines in the annual cycle of your insurance contract: Deadline Last day to cancel existing coverage. Date (Spring seeded) April 1 Date (Summer seeded) N/A New applications for insurance coverage. May 1 August 1 Report any questions, concerns, errors, or omissions on your coverage confirmation. Within 10 days of receipt N/A Report final planted acreage to Agricorp. June 30 September 1 Pay your premium. July 10 September 15 Good farm management practices You are expected to use good farm management practices at all times. If you use practices that contribute to a production loss, you may lose some or all of your insurance coverage. You must report to Agricorp, in advance, any significant changes in the scale of your operation or the farm management practices you use. Changes to your business structure If you make changes to your business structure, including changes to name, address, or shareholders, you must report them to Agricorp by May 1 of the insurance year. Reporting damage You must report crop damage to Agricorp as soon as it occurs. If you don t report damage immediately, your claim could be denied. An Agricorp adjuster may visit your farm to inspect the damage. 3

6 What are the plan details? The new forage seeding plan offers establishment protection. All acres seeded for the purpose of establishing long-term hay or pasture fields must be offered for insurance, whether seeded directly or with a nurse crop. Insurable crops Coverage is available for both spring-seeded and summer-seeded new forage seeding crops. Insured perils The Production Insurance plans for new forage seeding provides protection against these insured perils: Drought Insect infestation Excessive moisture Plant disease Excessive rainfall Wildlife Frost Wind Flood Winterkill* Hail * Direct new forage seeding that is cut for hay in the first year is insured against winterkill, provided good farm management practices are followed. Winterkill is not an insured peril if a cut has been taken after September 1. Plans There are two different Production Insurance plans for new forage seeding: 1. Premium new forage seeding plan Designed to ensure the establishment of high-quality, long term stands, this plan is intended for forage stands that contain a seed count of less than 50 per cent red clover and have a seed value of at least $35 per acre. 2. Standard new forage seeding plan This plan is intended for forage stands that contain a seed count of more than 50 per cent red clover and have a seed value of less than $35 per acre. Alfalfa under-seeded to winter wheat is not insurable. New forage seeding crops are not eligible for landlord-sharecrop arrangements. Each party should individually insure their share of any arrangement. 4

7 How is Production Insurance coverage determined? Coverage extends from seeding until May 31 of the following year, or until the first pasturing or cut of hay in the following year, whichever comes first. An establishment benefit may be paid if an insured peril causes damage to three or more adjoining acres. Insurable acres The new forage seeding plan offers establishment protection. All acres seeded for the purpose of establishing long-term hay or pasture fields must be offered for insurance, whether seeded directly or with a nurse crop. How are Production Insurance premiums determined? Your annual Production Insurance premium calculation is based on: Base premium rate Discounts/surcharges Final acreage reporting Base premium rate Base premium rates are determined annually at the time of renewal. Rates may change based on factors like past performance of the plan, changes to the claim price and the level of the Production Insurance Reserve Fund. Discounts and surcharges Refer to agricorp.com or your renewal notice for base premium rates specific to the crop year. If you have been enrolled in a Production Insurance plan for more than one year, your premium rate may be discounted or surcharged. Discounts and surcharges are determined by comparing your individual claim rate to the claim rate for the crop plan as a whole: If your individual claim rate is greater than the claim rate for the crop plan, you may have a surcharge applied to your premium. If your individual claim rate is less than the claim rate for the crop plan, you may have a discount applied to your premium. The claim rate measures the total dollar value of all claims paid, as a percentage of the total insured liability. Liability is the total guaranteed production value of the insured crop multiplied by the claim price, or the amount your Production Insurance would pay if you had a total crop loss. 5

8 Your individual claim rate takes into account the total value of all the claims you have received and the total liability you have insured during your enrolment in the plan. The claim rate for the plan takes into account the value of all claims paid over the years that the plan has been in existence and the total liability insured. Calculating discount or surcharge = 100 # of years enrolled in plan ( individual claim rate 1) # of years in base plan claim rate Notes: The number of years in base is capped at 20 years. For new forage seeding crops, the maximum annual surcharge is capped at +25 per cent of the base premium rate and the maximum annual discount is capped at 25 per cent. Discounts and surcharges are phased in at a maximum of five per cent per year. These discount and surcharge caps are phased in to protect new producers, who have not had the opportunity to build up a significant amount of insured liability, from the impact of major claims in their first few years of enrolment. Example I: Calculating discount/surcharge and annual premium Over several years, Wallace Farms insured $25,000 in liability and received $1,930 in claims. Their individual claim (IC) rate is calculated as: IC = = total claims total liability 1,930 25, = 7.72% If the crop plan has covered $25 million in liability and has paid out $1.95 million in claims during its existence, the plan claim (PC) rate is calculated as: PC = = total claims total liability 1,950,000 25,000, = 7.80% 6

9 Since Wallace Farms individual claim rate is less than the claim rate for the plan, they would receive a discount: Discount or surcharge percentage = 100 # of years enrolled in plan ( individual claim rate 1) # of years in base plan claim rate Discount or surcharge percentage = % = 0.37% ( 7.72% 1) For the current plan year, Wallace Farms reported 150 acres of spring-seeded, premium new forage seeding and the example base premium rate is $3.72. Based on a discount of 0.37%, the annual premium (AP) for Wallace Farms is calculated as: AP = number of reported acres (base premium rate discount percentage) = 150 ($ %) = 150 $3.71 = $ Final acreage reporting Report your planted acres to Agricorp immediately after you are finished planting. The deadline for reporting is 10 days after the completion of seeding or by June 30 for spring-seeded crops and September 1 for summer-seeded crops. Once you have reported your acres, an invoice will be sent for your portion of the annual premium. Cost sharing Premiums are cost-shared with the federal and provincial governments, who together pay up to 60 per cent of the annual premium, depending on the risk profile. Your portion does not include any fees for administrative costs, which are funded entirely by the provincial and federal governments. Report your acres as accurately as possible. Any discrepancies in acreage at the time of a claim may result in a decreased payment. The minimum annual premium is $25. 7

10 What happens when a crop is damaged? Reporting damage You must report crop damage to Agricorp as soon as it occurs. If you don t report damage immediately, your claim could be denied. An Agricorp adjuster may visit your farm to inspect the damage. Claim eligibility You are expected to follow the obligations outlined in the section What are my responsibilities? on page 3. A claim may be paid if, as the result of an insured peril, the crop fails to establish a stand. The amount of the establishment benefit is based on a per acre establishment benefit set by Agricorp. To qualify, at least three adjoining acres must be damaged and you must contact Agricorp to generate a damage report as soon as it occurs in order for a crop inspection to be completed before you reseed. Any claim payment is subject to a deductible, as follows: 10 per cent of seeded acres for premium new forage seeding 20 per cent of seeded acres for standard new forage seeding Refer to agricorp.com for current establishment benefit prices. 8

11 Example II: Calculating an establishment claim Recall that Wallace Farms planted 150 acres of spring-seeded, premium new forage seeding. Due to conditions after planting, 50 acres failed to establish a decent stand. The deductible for premium new forage seeding is 10 per cent of total liability (i.e % = 15 acres) and the example establishment benefit is $115 per acre. Based on this information, the establishment claim is calculated as follows: Damaged acres Deductible Acres eligible for a claim Establishment benefit ($/acre) Total establishment claim 50 acres 15 acres = 35 acres $115 = $4,025 9

12 How do I resolve a Production Insurance dispute? Agricorp has a dispute resolution process for Production Insurance disagreements: If you disagree with a decision about your file, a claim or your eligibility for Production Insurance, contact Agricorp at to speak to a customer care representative. If, after calling, your issue is unresolved, you may request that Agricorp review your issue further. A customer care representative will review the required steps with you. Contact us TTY: agricorp.com 7 a.m. to 5 p.m., Monday to Friday Version française disponible

13 Notes: 11

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