Severe weather impacts harvests
Growing grain in Alberta had its peaks and valleys this season. In a year full of changes for the grain industry, farmers were hit periodically with unexpected hail, tornado warnings and severe winds—blowing away millions of dollars worth of yields.
“Total hail claims have exceeded 10,000 claims, which will be a record,” said James Wright, risk analyst at Alberta Financial Services Corporation (AFSC). “The dollar value paid will be our highest by far. The worst year prior to 2012 was 2008 with hail endorsement payments of $190 million dollars.”
The severe weather has had a direct impact on farmers’ bottom lines.
“Hail took 800 acres away from us on July1, 2012,” said Donald Mueller, an Alberta Barley region two delegate from Three Hills, AB. “This amounted to one-third of our crop and it took a bit of pricing to break even after such a traumatic loss.
“When Mother Nature decides to give you a lesson, all you can do is sit there and take it.”
Although hail remains the main weather issue across the province, wind has been a notable culprit in some regions.
Because some farmers were worried wind damage would not be covered by insurance, district offices were overrun with phone calls following the Sept. 9–10, 2012 windstorm in south and north-central Alberta, but farmers need not worry.
According to Lorelei Hulston, AFSC manager of provincial and central region insurance operations, wind is an insured peril for all insured acres under the Annual Crop Agri-Insurance Coverage. Therefore, AFSC will take a client’s total production coverage, subtract the client’s total annual production, and compensate at the insured price for any production shortfall related to any insured cause of loss, including wind damage (see sidebar for more information).
Central Alberta was estimated to have the largest amount of crop damage due to severe weather, including hail and wind, said Wright, but AFSC will not have any accurate forecasts on the amount of damage or payments until after clients have filed their Harvested Production Reports (HPR). The deadline for the HPRs is November 15.
“It was a busy season of severe weather for Alberta,” said Environment Canada Meteorologist Dan Kulak. “The summer was active for hail and wind damage, especially in July, but we only had a total of eight tornadoes this year. This is a drop from the seasonal average of 10 or 11 tornadoes.”
Although many crops were affected drastically by hail and windstorms late in the harvesting season, barley is still expected to have a higher production and supply rate this year, according to Fred Oleson, chief of market analysis with the grains and oilseeds division of Agriculture and Agri-Food Canada (AAFC).
“The outlook is positive for barley in comparison to last year’s production and storage,” said Oleson. “This is mainly due to the increase in seeded acres. The only potential downfall is that the price of barley will be highly dependent on what grains will be approved as feed and as malt.”
Insured crop acreage is up by nine per cent from last year’s 25.2 million to 27.4 million acres in Alberta, according to Wright. He added that it’s too soon to know what the total payouts will be to farmers as the adjusters are just starting to conduct post harvest assessments.
“A final amount of claims due to wind damage should be available by spring of 2013,” he said.
How wind fits into AFSC insurance coverage
- Wind is an insured peril under the Crop Agri-Insurance Coverage Plan.
- According to Lorelei Hulston, AFSC manager of provincial and central region insurance operations, spot-loss coverage is not provided for wind damage. However, wind is an insured peril for all insured acres under annual crop agri-insurance coverage. Therefore, AFSC will take a client’s total production coverage, subtract the client’s total annual production, and compensate at the insured price for any production shortfall related to any insured cause of loss, including wind damage.
- A practical example using canola:
- A canola client has a 40 bushel/acre yield average on 100 acres.
- The client has an 80 per cent coverage plan, therefore AFSC will cover 3,200 bushels of canola (80 per cent of 40 bu/ac on 100 ac = 3,200 bu)
- If the client harvested only 2,800 bu, and the loss was related to an insured peril, the client would be compensated for 400 bu (3,200 bu – 2,800 bu = 400 bu).
- Under the Crop Agri-Insurance Program, producers have the option to be covered under a 50, 60, 70 or 80 per cent coverage plan.
- If the wind damage, combined with other insured losses, did not affect enough acres to reduce the total production below coverage, a yield-loss payment would not be triggered.