Production Insurance Plan Overview Strawberry Production. A berry good plan. Connecting producers with programs

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1 Production Insurance Plan Overview Strawberry Production A berry good plan Connecting producers with programs

2 What you need to know about protecting your strawberry production 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 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 strawberry plan available under Production Insurance. It includes planspecific features, customers responsibilities, and general deadlines. This plan 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 InsuranceI plan for strawberry production: 1. Contract of Insurance 2. Production Insurance Document for strawberries For copies of this document, visit or call Agricorp at Plan overviews are also available for the following crops: Forage production Grain and oilseed production Honey production Vegetables processing and fresh production Seed corn production Sugar beet 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... 3 What are my responsibilities?... 3 What are the plan details?... 4 Insured perils... 4 Coverage period... 4 First year plantings... 4 Winter protection of strawberry patches... 4 Coverage level options... 4 How is Production Insurance coverage determined?... 4 Final average yield... 5 Claim price... 6 Coverage level... 6 Guaranteed production... 6 Guaranteed value... 6 Red Farms: example I... 7 How are Production Insurance premiums determined?... 8 Base premium rate... 8 Discounts and surcharges... 8 Red Farms: example II... 9 Cost sharing... 9 Premium Deposit... 9 Red Farms: example III What happens when a crop is damaged? Reporting damage Claim eligibility Red Farms: example IV How do I resolve a Production Insurance dispute?

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 yield. 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, Self Directed Risk Management (SDRM) and Production Insurance connection AgriStability, SDRM and Production Insurance are complementary programs that address different risks faced by Ontario producers. Participating in AgriStability, SDRM 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 and allowable net sales for the SDRM. How do I get Production Insurance coverage? New applications If this is your first time applying, or if you are adding new crops, contact Agricorp at An Agricorp representative will then visit you to review your coverage and claim price options and complete your application. Applications and premium deposit for new coverage of strawberries must be received by December 20. 2

5 Renewing coverage If you already have Production Insurance coverage, a renewal notice will be sent to you in November that outlines your coverage options. To make coverage changes or cancel your coverage, contact Agricorp by December 20. Final premium payments are calculated by May 15. They are based on information gathered by the Agricorp adjuster while calculating your final average yield. What are my responsibilities? Deadlines To ensure that your Production Insurance contract remains in good standing, please note these important dates and deadlines in the life cycle of your insurance contract: DESCRIPTION Renewal notice sent to existing customers Date November Deadline to apply for Production Insurance December 20 Deadline to make coverage changes or cancel existing coverage December 20 Deadline to pay your premium deposit December 20 Deadline to pay your premium May 15 Agricorp adjuster visits your farm to collect your yields July - October 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 Changes to your business structure Agricorp in advance If you make changes to your business any significant changes structure, including changes to name, address, in the scale of your or shareholders, you must report them to operation or the farm management Agricorp by May 15 of the insurance year. practices you use. Reporting damage You must report all crop damage as soon as it occurs. An Agricorp adjuster may visit your farm to inspect the damage for the purposes of your claim. Failing to report damage as soon as it occurs may cause your claim to be denied. 3

6 What are the plan details? Insured perils The Production Insurance plan for strawberries provides protection for all fresh and processing crops against these insured perils: Excessive heat Hail Excessive rainfall Insect infestation* Flood Plant disease* Freezing Wildlife* Frost Wind * Provided you follow good farm management practices. For more details, refer to the Contract of Insurance, Part XV Strawberry Insuring Agreement. Coverage period Coverage for insured perils begins in the fall and ends when harvest is complete or the coverage period date is reached, whichever comes first. Coverage dates for day neutral varieties vary by area, depending on the available crop heat units and other specific geographical characteristics. Please review the map provided on the Strawberry Coverage Production Insurance Document to verify the geographical area for your farm. First year plantings Overwinter coverage is available on first year plantings. Coverage dates for first year plantings vary by area depending on the variety of strawberry and the planting location. Please refer to the strawberry coverage Production Insurance document to verify the geographical area for your farm. If you are unsure of your coverage period date, contact Agricorp. Winter protection of strawberry patches To maintain your coverage follow good farm management practices such as: Use adequate protective mulch/row cover to prevent heaving and crown injury Select healthy plants that are virus tested and disease and nematode free. Maintain practices to prevent the spread of virus Coverage level options You choose a coverage level of 70, 75, or 80 per cent for your fresh or fresh and processing crops. You must insure all of your strawberries (i.e. both fresh and processing). How is Production Insurance coverage determined? The following factors are used to determine how much damage you are protected against from insured perils: Final average yield Claim price Coverage level Guaranteed production Guaranteed valued 4

7 Final average yield Agricorp calculates a final average yield (FAY) for you that is used as a benchmark to determine if your actual production is below your historical average for insurance purposes. FAY for existing plan participants Your FAY is based on your six most recent years of your actual yields. FAY for new plan participants If you are new to the Production Insurance plan, you are assigned an underwritten FAY that is based on: Available production records Location Acreage Varieties grown Soil type Drainage Irrigation capabilities Regional weather patterns Management experience and practices Each year that you participate in the plan, your actual yield replaces an underwritten yield until your FAY is composed entirely of your own actual yields. Reporting intended acres From time to time, the strawberries you intend to harvest in the current crop season, may not have been planted by May 15. At the time of underwriting provide Agricorp with your intended acres and planting dates for all strawberries including crop not yet planted but expected to be harvested in the crop year. Upon completion of planting, contact your Agricorp adjuster to visit your farm and validate your acreage and plant stand for insurance purposes. Any difference between your intended acres and the accepted final planted acres will be adjusted on your underwriting report. Any premium difference generated will either be refunded or collected. Reporting yields You are expected to keep accurate yield records, which Agricorp adjusters use to collect your yields in July and October each year. It is important to keep daily picking records for accurate yield reporting. Agricorp will accept harvested yield as part of your declared yield beyond the coverage period date, however any damage caused by insured perils after this date is not insurable. 5

8 Claim price You select a claim price at the time of application or renewal. The claim price you choose is then used to determine your premiums and convert your yields in pounds to a dollar value for the purpose of calculating a claim. Only fresh production can be insured at the fresh claim price. Fresh and processing claim price options You can choose separate claim prices for your fresh and processing production: Fresh claim price option - your fresh production is valued at the fresh claim price and your processing production is valued at the processing claim price. Processing claim price option - both processing and fresh production are valued at the processing claim price. FYI Agricorp uses OMAFRA statistics and marketing information to determine claim prices by crop each year. The fresh claim price is based on a blend of pick-your-own and wholesale market prices less non-incurred costs suchas harvesting, delivery, and container costs. The processing price is based on the price received by growers from the primary processors in Ontario less harvesting and delivery costs. When choosing a claim price option, it is important to note that fresh crops can be insured at the lower processing claim price, but processing crops cannot be insured at the higher fresh claim price. Coverage level At the time of application or renewal, you choose a coverage level of 70, 75, or 80 per cent. The coverage level you choose will then be used in calculating the amount of your premium and, if applicable, your claim payment. Guaranteed production Guaranteed production is used to calculate your guaranteed value. It is determined by multiplying your FAY by your selected coverage level. Guaranteed value Guaranteed value converts your guaranteed production into a dollar amount for the purpose of calculating your premiums and paying a production claim. Guaranteed value is determined by multiplying your guaranteed production by your selected claim price. If an insured peril causes your yield to fall below your guaranteed value, a production claim may be paid on the difference. Your coverage is automatically renewed at the claim price option you chose the previous year. To choose a different claim price option, contact Agricorp by December 20. Refer to the current year s information sheet for strawberries in your renewal package or agricorp.com for year-specific coverage levels, claim prices, and other details. 6

9 Red Farms: example I Calculating FAY, guaranteed production, and guaranteed value Red Farms is a fresh strawberry customer in the process of renewing its insurance for the coming crop year. The production history for the past six years is listed. Final average yield (FAY) Since Red Farms has participated in the Production Insurance plan for more than six years, its FAY for the coming crop year is based on actual yields for the past six years. The adjuster has measured the number of eligible acres to be 5.5 acres. FAY = (sum of yields for each year number of eligible acres = (55,414 6) x 5.5 acres # of years) x Crop Year Yield (lbs) Year 1 12,541 Year 2 6,414 Year 3 10,966 Year 4 8,298 Year 5 11,386 Year 6 5,809 Total (LB) 55,414 = 50,796 lbs (rounded to the nearest pound) Guaranteed production (GP) Red Farms selected a coverage level of 80 per cent. The guaranteed production is calculated as: GP = FAY x coverage level = 50,796 x 80% = 40,637 lbs (rounded to the nearest pound) Guaranteed value (GV) Red Farms chose the fresh claim price option. For the coming crop year, the fresh claim price is $0.99/lb. GV = GP x claim price = 40,637 lb x $0.99/lb = $40, If Red Farms fresh strawberry Production Insurance yield is less than $40, a production claim may be paid. 7

10 How are Production Insurance premiums determined? Your annual Production Insurance premium calculation is based on: Guaranteed value Base premium rates Discounts or surcharges 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 claim price, and the level of the Production Insurance Reserve Fund. For base premium rates, refer to agricorp.com or the current year s information sheet on strawberries in your renewal notice. Discounts and surcharges 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 price. If your individual claim rate is less than the claim rate for the crop plan, you may have a discount applied to your premium price. 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 value of the insured crop, or the amount Agricorp would pay if you had a total crop loss. 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 and the total liability insured over the years that the plan has been in existence. Calculating discount or surcharge = 100 x # of years enrolled in plan ( x individual claim rate 1) 25 plan claim rate Notes: The maximum annual discount or surcharge is capped at +/- 25 per cent of the base premium. 8

11 Red Farms: example II Calculating premium surcharge/discount After five years of enrolment in the plan, Red Farms has accumulated $151,000 of insured liability ($30,200 per year) and received $30,000 in claims. As a result, in year six it had a surcharge of 8.79 per cent, which would translate to (100% %) or for premium calculation purposes. Over the next few years, the annual liability and the claim rate for the plan remained constant. Red Farms also enjoyed a number of claim-free years. As a result, its surcharge changed to a discount in just a few years. Years o f enrol. Customer s* accumulated liability Customer s accumulated claims Customer s claim rate (%) Plan claim rate (%) Customer s discount (-) or surcharge (+) 5 $151,000 $30, % 13.80% +8.79% 6 $181,200 $30, % 13.80% +4.79% 7 $211,400 $30, % 13.80% +0.79% 8 $241,600 $30, % 13.80% +3.21% 9 $271,800 $30, % 13.80% -7.21% Note: If the claim rate for the plan had been falling and if Red Farms had received any additional claims, or if its actual starting surcharge had been greater than the 25 per cent cap, it would have taken longer to move from a surcharge to a discount. FYI A small claim will have little or no effect on your discount or surcharge. In a year when many other plan participants are also in a claim situation, even a large claim may have little impact on your discount or surcharge, because the claim rate for the plan is also likely to increase. Cost sharing Premiums are cost-shared with the federal and provincial governments. Governments fund up to 60 per cent of the annual premium for production plans depending on the risk profile and plan design. Your annual premium does not include any fees for administrative costs, which are funded entirely by the provincial and federal governments. The minimum customer premium amount for strawberries is $300 Premium deposit Since your total premium is not calculated until the spring, a premium deposit is required to secure your coverage over the winter. If you are returning to the Production Insurance plan, your premium deposit is 25 per cent of the premium you paid last year. If you re new to the plan, the premium deposit is 25 per cent of an estimated premium. An adjuster will estimate a premium at time of application. A minimum premium deposit of $100 is required. 9

12 Red Farms: example III Calculating annual premium In Example I, the guaranteed value for Red Farms was calculated as $40, For the 2014 crop year, the base customer premium rate at 80 per cent coverage is 4.43 per cent. Based on a discount of 7.21 per cent or (100% % = ), the annual premium (AP) for Red Farms is calculated as: AP = guaranteed value x base customer premium rate x discount/surcharge = $40, x 4.43% x = $1, What happens when a crop is damaged? Reporting damage You must report crop damage to Agricorp as soon as it occurs by calling , Monday to Friday from 7 a.m. to 5 p.m. Claim eligibility Production claims cover reductions in yield caused by insured perils. Agricorp may pay a claim if: To be eligible for a claim, you must report damage to Agricorp before harvest You reported damage to Agricorp before harvest; Your declared yield falls below your guaranteed value; and Yield loss is due to an insured peril. To be eligible for a production claim, you must follow the obligations outlined in the section What are my responsibilities? on page 3. Red Farms: example IV Calculating claims In Example I, the guaranteed value for Red Farms was calculated as $40, Because its actual yield was 31,240 lbs, Red Farm is eligible for a production claim. A claim price of $0.99/lb is used to convert the actual yield to a dollar value: The amount of the production claim (PC) is calculated as follows: 31,240 lb x $0.99/lb = $30, PC = guaranteed value yield value = $40, $30, = $9,

13 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, please call us at If your issue remains unresolved after talking to us, you can request that Agricorp review your issue further. A customer service representative will review the required steps with you. For appeals on a claim, you must file your appeal with the Agriculture, Food and Rural Affairs Appeal Tribunal within one year from the day you submit your Proof of Loss form (or any equivalent form provided by Agricorp on which you are affirming details of a loss). 11

14 12 Plan overview for STRAWBERRY production

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16 Contact us Fax: TTY: Accessible formats available agricorp.com Monday to Friday, 7 a.m. to 5 p.m. Version française disponible