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Working in agriculture requires the ability to withstand unpredictable events. To protect producers from designated perils that lead to production loss, Agriculture Financial Services Corporation (AFSC) provides a suite of insurance programs.

These programs provide:

  • a production guarantee for hay crops based on average historical yields and the coverage option selected
  • coverage for pasture based on conditions in the area, determined by an indicator of production loss, such as precipitation or satellite imagery. This coverage is not directly related to losses to insured fields.

What’s New for 2020

  • Pasture normals increase: The historical pasture normal yields have been recalculated resulting in an increase to coverage for pasture insurance this year.
  • Pricing review: Price options for hay and pasture were reviewed and increased to include a transportation cost of $13 per ton to reflect the cost of trucking replacement feed. This increase will be reflected in the spring insurance price as well as the fall market price.
  • Weather stations: Clients may choose one, two or three weather stations to best represent conditions on their farm, and within proximity of their land base. Since weather station information may be subject to change, visit www.afsc.ca or contact your AFSC branch for a current list of weather stations.

Hay

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AFSC offers insurance for both dryland and irrigated hay and provides a production guarantee based on the average of historical yields and coverage option selected.

When hay production, both harvested and appraised combined, falls below the guarantee, and the loss is due to an insured peril, the shortfall amount will be paid at the selected price option.

Hay Insurance does not compensate for quality loss. The Variable Price Benefit is included with Hay Insurance and is triggered when the fall market price for hay increases by at least 10 per cent above the spring insurance price for hay and the client suffers a production loss.

Moisture Deficiency Endorsement is an option available for purchase with Hay Insurance.

Hail insurance can be purchased on viable crops online or at any AFSC office. Hail insurance sales open May 1.

Hay that will be mechanically harvested for use as livestock feed is eligible for Hay Insurance. This includes perennial tame grasses, legumes and grass-legume mixes which are insurable under the following crop types:

  • Dryland – Alfalfa (>50 per cent alfalfa) intended for two cuts, in designated areas only; Legume (>50 per cent), including alfalfa, red clover, alsike clover, sainfoin, sweet clover and milkvetch, intended for one cut; Grass (<=50 per cent legume), including brome grass, wild rye grass, wheat grass, fescue, timothy, orchard grass, rye grass,
  • Irrigated – Alfalfa (>50 per cent alfalfa) intended for multi-cuts, insurable in all forage risk areas.

Clients can customize their coverage by selecting an insurance price and a coverage level of 50, 60, 70 or 80 per cent of the long-term average yield. Different coverage levels may be selected for dryland and irrigated hay but both types are required to be elected at the same insurance price.

Clients must insure a minimum of 20 acres and are required to insure all acres, both dryland and irrigated, whether the land is owned, rented or leased.

Hay crops grown on irrigated land are eligible for separate coverage only when irrigated with an adequate source of water applied on a timely basis and an irrigation log is maintained with dates and approximate amounts of rainfall and irrigation water applied to each field.

All dryland crop types and acres are combined to create total dryland coverage, and all irrigated crop acres are combined to create total irrigated coverage. Dryland and irrigated hay losses are not offset for indemnity calculations.

Clients’ annual yields by crop type are compared to the risk area average yield for the same crop types. Following a one-year lag, this comparison is used to update a separate coverage adjustment for dryland and irrigated hay. The coverage adjustment is multiplied by the risk area long-term average yield to calculate the crop’s normal yield. The average of up to 10 of the most recent yield records are used when there are four or more yield records available.

Clients new to Hay Insurance will start with four years of risk area average yields. As the client’s annual yields become available, they replace the risk area average yields and each client develops their own coverage adjustment.

Yield records are gathered in different ways, including information from Harvested Production Reports provided by the client, yield information gathered by AFSC inspectors who visit the farm, and random audits conducted by AFSC to confirm the accuracy of Harvested Production Report information.

To reduce the impact of low yields on future coverage, yields that are less than 70 per cent of the coverage adjusted risk area average yield for the same year are cushioned using a progressive formula. Cushioning has the effect of stabilizing coverage by reducing year-to-year fluctuations. The actual yield is used to calculate an indemnity, and the cushioned yield will be used to set future coverage.

Hay Insurance offers two prices based on forecasted market prices and transportation costs for the year that allow clients to customize their insurance. Click to view the 2020 Spring Price Options for Hay, Pasture & Export Timothy Hay.

Variable Price Benefit: This feature is included in Hay Insurance. It compensates the client when the client has a production shortfall below their insurance coverage and the price of hay increases by at least 10 per cent during the growing season.

The fall market price of hay based on Alberta Agriculture and Forestry’s hay price from the Farm Input Survey for the month of October must increase by at least 10 per cent above the production insurance spring price for hay for the Variable Price Benefit to trigger. The hay price collected on the Farm Input Survey is meant to represent good quality hay, over 50 per cent alfalfa at the farmgate for the month of October, expressed in $/ton. The indemnities are paid using the increased price up to a maximum increase of 50 per cent.

Premium rates are set annually based on historical losses and reflect the likelihood of future production losses. Premium rates vary by crop type, risk area and coverage option. The client’s premium is calculated by multiplying the dollar coverage by the client’s share of the premium rate and applying any applicable premium adjustments.

Designated perils: Only yield losses due to the following designated perils – drought on dryland crops, excessive moisture, fire by lightning (in field only, not stacked, baled or in yard), flood, frost, hail, insect infestations, plant disease, Richardson ground squirrel (gopher), snow, waterfowl and wildlife, wind – are covered

Winterkill provision: Clients must have an active policy for the acres that are damaged in the year the claim is requested and must have insured these acres in the previous year. Acres cannot have more than five years of production for alfalfa and legumes, and no more than eight years of production for grass.

When perennial acres are left insured, claims are handled like any other loss. Damage caused by winterkill will reduce the yield and, if it is below coverage, will result in a claim. Alternatively, premiums may be refunded and these acres become eligible for annual crop insurance if the damaged acres are adequately sprayed out and/or ploughed down and seeded to an elected annual crop, by the applicable seeding deadline for the annual crop.

Uninsured causes of loss may be applied to acres when clients fail to comply with the rules of the insuring agreement, including where recommended farm management practices are not followed. When uninsured causes of loss are determined, claims may be reduced or denied, reflecting the amount of production loss due to the uninsured causes. The acres remain insured and the full premium remains payable.

If clients fail to request an inspection prior to putting acres to a use other than baling, AFSC will apply uninsured causes equal to coverage on the affected acres. The premium for the year must still be paid.

April 30 is the last day to spring-graze insured hay fields. Acres that are grazed after this date, will have uninsured causes applied.

Total production for all hay types must fall below the total coverage to qualify for a payment. There is no adjustment for hay quality.

An indemnity is calculated separately for dryland and irrigated hay and losses are not offset for claim calculations.

Example 1: indemnity calculation prior to Variable Price Benefit triggering

Risk area normal of 2,000 lbs/acre for grass hay and 3,000 lbs/acre for legume hay
Client’s coverage adjustment of 1.05
Coverage option of 70 per cent and $0.040/lb price option selected
Client insured 1,000 acres of dryland grass and 500 acres of dryland legume hay
Determined yield of 1,500 lbs/acre for grass hay and 1,200 lbs/acre for legume hay

Coverage = Risk area normal x client’s coverage adjustment x selected coverage option x number of insured acres.

Grass hay coverage
2,000 lbs/ac x 1.05 x 70% x 1,000 acres = 1,470,000 lbs
Legume hay coverage
3,000 lbs/ac x 1.05 x 70% x 500 acres = 1,102,500 lbs
Total lbs coverage = 2,572,500 lbs

Production = Determined yield x number of acres
Grass hay
1,500 lbs/ac x 1,000 acres = 1,500,000 lbs
Legume hay
1,200 lbs/ac x 500 acres = 600,000 lbs
Total Production = 2,100,000 lbs

Indemnity calculation = coverage – production x price option
Total coverage 2,572,500 lbs
Less total production – 2,100,000 lbs
Shortfall (loss) = 472,500 lbs
Insured price option x $0.040
Indemnity = $18,900

Example 2: indemnity calculation when Variable Price Benefit triggers

There is an increase from the spring insurance price of hay to the fall market price of 15 per cent
Therefore the spring insured price of hay at $0.040/lb multiplied by 1.15 is $0.046/lb
The shortfall (total coverage less total production) remains the same and the indemnity is recalculated at the higher price.

Variable Price Benefit revised indemnity calculation
Shortfall = 472,500 lbs
Variable Price Benefit price x $0.046

Revised indemnity = $21,735
Less previous indemnity – $18,900
Additional indemnity payable = $2,835

Acceptance inspections: Insurable hay crops may be subject to an acceptance inspection based on the following criteria:

  • Fields in the first year of production
  • Newly insured fields
  • Hay stands that are older than the age criteria established as calculated from the first year of production;
    • Alfalfa, legume and irrigated alfalfa hay older than five years
    • Grass hay older than eight years
  • Hay fields that are grazed past April 30
  • Hay fields have not been hayed for two years
  • Other risk criteria as determined by AFSC

Based on a completed acceptance inspection, coverage on acres and crop type may be increased, reduced or rejected.

Special inspections: AFSC may inspect any field at any time of the year after AFSC has accepted liability on the field.

Preharvest inspections: If clients choose to put hay acres to a use other than baling dry, measurable bales – example: pasture, plough under, loose stack, high moisture bales greater than 60 per cent moisture, hay silage, haylage or any type of immeasurable state — the following guidelines apply:

  • With AFSC approval, the client may have the option to set up a defined number of exclosures on acres being pastured, to allow AFSC to conduct a preharvest appraisal once haying is general in the area;
  • With AFSC approval, the client may have the option to leave standing inspection strips on acres being put to another use, to allow AFSC to conduct a preharvest appraisal once haying is general in the area. Information on leaving inspection strips can be found on the Inspection Strips page;
  • Prior to haying being general in the area, as determined by AFSC, a production amount not less than 50 per cent of coverage will be assessed on acres put to another use; a premium refund may be requested only if the acres put to another use incurred damage;
  • Once haying is general in the area, an appraisal of the standing crop will be conducted;
  • If a two-cut alfalfa hay crop is put to any alternate use after first cut haying is general in the area but prior to second cut haying being general in the area, coverage and the premium on these acres will be reduced to one-cut legume hay and any claims will be finalized based on the production from the first cut.

Acres put to an alternate use without authorization from AFSC, will be charged the premium, claims may be reduced or denied, and future coverage could be affected.

Post-harvest inspections: The Harvested Production Report information provided by clients and the appraisal information provided from field inspections are used to determine whether there is a potential production loss.

An AFSC inspector may visit the farm to verify reported information and determine the cause of loss. When hay production is measured, bales from each type of hay are randomly selected, weighed and standardized to 15 per cent moisture.

Owned, rented and leased land: Clients must insure a minimum of 20 acres and are required to insure all acres of dryland and irrigated hay acres that they operate. The last day of February is the deadline for adding or deleting rented land.

Clients who sell or purchase land between March 1 and May 31, are required to provide written proof of the transaction before AFSC will reduce or increase insured acres. Review Deadlines for perennial programs on the inside front cover of this booklet to ensure coverage.

Transfer of acres: If Hay Insurance acres are rejected on an acceptance inspection, these acres can be insured under Moisture Deficiency Insurance or Satellite Yield Insurance as improved pasture if one of the following conditions is met:

  • If the client has improved pasture acres insured under Moisture Deficiency Insurance or Satellite Yield Insurance, the rejected acres can be transferred to the pasture insurance program.
  • If the client does not have improved pasture acres, but has Moisture Deficiency Insurance or Satellite Yield Insurance, the election can be revised to include improved pasture and these acres can be transferred to the pasture insurance program.

If hay acres are taken out of production in the spring and seeded to an annual crop, the premium can be transferred:

  • If the client has Annual Crop Insurance, has elected the seeded annual crop and the seeding deadlines are met, the acres and premium will be removed from the hay contract and transferred to an Annual Crop Insurance contract.
  • If the client does not have Annual Crop Insurance, the acres and premium stay on the Perennial Crop Insurance contract, but the client will not be eligible for a payment.

Preharvest – reporting alternate crop use: Clients are required to contact AFSC five days in advance of putting an insured crop to a use other than putting up dry, measurable bales. Alternate uses include pasture, plough under, loose stack, high moisture bales greater than 60 per cent moisture, hay silage, haylage or any type of immeasurable state.

Once authorized by AFSC, clients have the option to set up a defined number of exclosures if pasturing hay acres, or leave standing inspection strips if putting acres to another use.

  • Exclosures are representative sites that are fenced off. A minimum of two sites for fields up to 40 acres, and a minimum of one site for every additional 40 acres in that field, is required.
  • Inspection strips are standing strips of insured crop left in from the edges of the field, a distance of about one-third (1/3) of the width of the field, for the length of the field and a minimum of 10 feet in width, for inspection by AFSC. On fields of 100 acres or more, an additional strip must be left in the middle of the field. More information can be found on the Inspection Strips page. 

The client is responsible for the maintenance of all exclosures and inspection strips, and to advise AFSC upon completion of the alternate use.

Inspection strips: If the crop is damaged when mature enough to harvest, clients may be advised to leave standing representative inspection strips for AFSC to use to assess the damage. More information on size and number of strips can be found on the Inspection Strips page. 

Carryover inventory: All carryover hay, including purchased and uninsured hay production, must be reported to AFSC prior to the commencement of harvest and not later than July 15 on a Report of Hay in Storage Prior to Harvest form. Clients must identify carryover, purchased and uninsured production sold since June 1 on sales receipts.

Clients can account for any carryover inventory acquired, fed or sold after filing the Report of Hay in Storage Prior to Harvest form on their Harvested Production Report.

Harvested Production Report: A Harvested Production Report must be filed when harvest is complete. Clients can file their HPR online or submit on paper to AFSC not later than October 15. A late filing fee will be applied for HPRs filed between October 16 and December 31. Failure to file an HPR by December 31 will result in a yield recorded as zero and no indemnity will be calculated.

  • Notification of an insurance claim and any required loss adjustment procedures are based on the information provided by clients on the HPR.
  • It is important for AFSC to be able to weigh bales and adjust moisture separately by hay type, land location and cut (first and second). So when practical, clients are asked to store production separately allowing AFSC inspectors reasonable access.
  • If there is a shortfall of production, contact AFSC prior to feeding any insured hay

Winter grazing: Clients are asked to contact an AFSC insurance representative when they intend to pasture insured hay acres. Damage resulting from grazing will be considered an uninsured cause of loss, and reduce total coverage. For Hay Insurance, livestock must be taken out of the fields by April 30.

Irrigated hay acres: For irrigated hay acres, clients are required to maintain an Irrigation Log showing the dates of precipitation and approximate amounts of water applied. The Irrigation Log must be provided to an inspector when there is a claim.

Export Timothy Hay

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Export Timothy Hay Insurance provides production insurance for first-cut irrigated and dryland pure timothy hay stands intended for export.

Protection is provided to clients when the first cut of export timothy hay production, both harvested and appraised combined, falls below the coverage level selected and the loss is due to an insured peril.

Adjustments to yields are made when the grade falls below ‘Choice’ as determined by the TrueGrade HayScan System or another method AFSC considers to be acceptable.

Hail insurance can be purchased on viable crops online or at any AFSC office. Hail insurance sales open May 1.

Coverage only applies to first-cut pure timothy hay grown for the export market on dryland export timothy hay and irrigated export timothy hay.

Clients can customize their coverage by selecting a coverage level of 70 or 80 per cent of the long-term average yield. Both dryland and irrigated export timothy hay are required to have the same coverage level.

Clients must insure a minimum of 20 acres and are required to insure all acres, both dryland and irrigated, whether the land is owned, rented or leased.

Export timothy hay crops grown on irrigated land are eligible for separate coverage only when irrigated with an adequate source of water applied on a timely basis, and an irrigation log is maintained with dates and approximate amounts of rainfall and irrigation water applied to each field.

All dryland crop acres are combined to create total dryland coverage, and all irrigated crop acres are combined to create total irrigated coverage. Dryland and irrigated hay losses are not offset for indemnity calculations.

Each designated risk area under this program has its own long-term average yield, based on the average of yields reported by export timothy hay clients and export timothy hay processing plants in that area. Insurance coverage for each client is initially based on the long-term average yield for the risk area where the farm is located. The average of up to 10 years of the most recent yield records are used when there are four or more yield records available. In time, coverage for clients is adjusted upward or downward to reflect their individual experience.

Clients new to Export Timothy Hay Insurance will start with four years of risk area average yields. As client yields are reported, they replace the risk area average yields and each client develops their own coverage adjustment.

Yield records are gathered in different ways including information from Harvested Production Reports provided by the insured client, yield information gathered by an AFSC inspector who visits the farm and random audits conducted by AFSC to confirm the accuracy of the Harvested Production Report information.

To reduce the impact of low yields on future coverage, yields that are less than 70 per cent of the coverage adjusted risk area average yield for the same year are cushioned using a progressive formula. Cushioning has the effect of stabilizing coverage by reducing year to year fluctuations. The actual yield is used to calculate an indemnity, and the cushioned yield will be used to set future coverage.

The insurance price used to establish dollar coverage and claim payments for both dryland and irrigated timothy hay, is based on the average expected farm gate price for the ‘Choice’ grade.

Variable Price Benefit is not available for Export Timothy Hay Insurance.

Premium rates are set annually based on historical losses and reflect the likelihood of future production losses. Premium rates vary by risk area, between irrigation and dryland and coverage options. The client’s premium is calculated by multiplying the dollar coverage by the client’s share of the premium rate and applying any applicable premium adjustments.

Designated perils: Yield losses due to the following designated perils – drought on dryland crops, excessive moisture, fire by lightning (in field only, not stacked, baled or in yard), flood, frost, hail, insect infestations, plant disease, Richardson ground squirrel (gopher), snow, waterfowl and wildlife, wind – are insured for irrigated and dryland pure timothy hay stands covered under Export Timothy Hay Insurance policies

Winterkill provision: Clients must have an active insurance policy for the acres that are damaged in the year the claim is requested and must have insured these acres in the previous year. The stand cannot have more than five years of production.

When perennial acres are left insured, claims are handled like any other loss. Damage caused by winterkill will reduce the yield and, if it is below coverage, will result in a claim. Alternatively, premium may be refunded and these acres are eligible for Annual Crop Insurance if the damaged acres are adequately sprayed out and/or ploughed down and seeded to an elected annual crop, by the applicable seeding deadline for the annual crop.

Uninsured causes of loss: Uninsured causes of loss may be applied to acres when clients fail to comply with the rules of the insuring agreement, including where recommended farm management practices are not followed.

When uninsured causes of loss are determined, claims may be reduced or denied, reflecting the amount of production lost due to the uninsured causes. The acres remain insured and full premium remains payable.

If clients fail to request an inspection prior to putting acres to a use other than baling, AFSC will apply uninsured causes equal to coverage on the affected acres. The premium for the year must still be paid.

The last day of February is the last day to fall/winter graze insured export timothy hay fields, however, when fields are damaged prior to that date uninsured causes may be assessed.

Total production of export timothy hay adjusted by grade from all insured dryland acres has to fall below the total coverage for the dryland export timothy hay to qualify for indemnity. The same calculation is done for insured acres of irrigated export timothy hay as indemnities are calculated separately for dryland and irrigated hay and losses do not offset claim calculations.

In addition to production, quality is also considered when calculating a loss. If the quality of export timothy hay produced falls below Choice due to a designated peril, the production is adjusted by a quality factor. The adjusted production is used to calculate the loss.

Grading is based on the Canadian Hay Association (CHA) Grading System corresponding to the “greenness colour analysis score” of the hay sample as determined by the TrueGrade HayScan System, as follows:

  • Supreme (greenness score of >100)
  • Premium (>80 to 100)
  • Choice (>60 to 80)
  • Standard (>40 to 60)
  • Fair (>24 to 40)
  • Utility (0 to 24)
  • High Utility grade (greenness score of >10 to 24)
  • Low Utility

Grade factors will be determined by AFSC in September based on the survey of prices by CHA Grade (relative to Designated Grade price) from the hay processing plants in Alberta.

Representative samples of export timothy hay obtained by AFSC inspectors from the client’s bales are graded by AFSC.

Acceptance inspections: Insurable export timothy crops may be subject to an acceptance inspection based on the following criteria:

  • Fields in the first year of production
  • Newly insured fields
  • Fields older than five years
  • Fields that were grazed between harvest and the last day of February
  • Other risk criteria as determined by AFSC

Based on a completed acceptance inspection, coverage on acres and crop type may be increased, reduced or rejected.

Special inspections: AFSC may inspect any field at any time during the crop year after AFSC has accepted liability on the field.

Preharvest inspections: If clients choose to put export timothy hay acres to a use other than baling dry, measurable bales, example pasture, plough under, loose stack, high moisture bales, hay silage, haylage or other type of immeasurable state, the following guidelines apply

  • With AFSC approval, the client may have the option to set up a defined number of exclosures on acres being pastured, to allow AFSC to conduct a preharvest appraisal once haying is general in the area.
  • With AFSC approval, the client may have the option to leave standing inspection strips on acres being put to another use, to allow AFSC to conduct a preharvest appraisal once haying is general in the area. Information on Inspection Strips can be found on the Inspection Strips page.
  • Prior to haying being general in the area, as determined by AFSC, a production amount of no less than 50 per cent of coverage will be assigned to acres put to another use; a premium refund may be requested only if the acres put to another use incurred damage.
  • Once haying is general in the area, an appraisal of the standing crop will be conducted.

Acres put to an alternate use without authorization from AFSC will be charged premium, claims may be reduced or denied, and future coverage will be reduced.

Post-harvest inspections: The Harvested Production Report information provided by clients and the appraisal information provided from field inspections are used to determine whether there is a potential production loss.

An AFSC inspector may visit the farm to verify reported information and determine the cause of loss. When export timothy hay production is measured, bales from each lot are randomly selected and weighed and standardized to 10 per cent moisture. Production by lot is adjusted based on the grade of a hay sample under dryland or under irrigation.

Any hay sold prior to an inspection by an AFSC inspector is not eligible for grade loss adjustments.

Owned, rented and leased land: Clients must insure a minimum of 20 acres and are required to insure all acres of dryland and irrigated hay acres that they operate. The last day of February is the deadline for adding or deleting rented land.

Clients who sell or purchase land between March 1 and May 31, are required to provide written proof of the transaction before AFSC will reduce or increase insured acres.

Transfer of acres: If Export Timothy Hay Insurance acres are rejected on an acceptance inspection, these acres can be insured under Hay Insurance as grass when the client has an active subscription. Or, if the acres will be pastured they can be insured under Moisture Deficiency Insurance or Satellite Yield Insurance as improved pasture if one of the following conditions is met:

  • If the client has improved pasture acres insured under Moisture Deficiency Insurance or Satellite Yield Insurance, the rejected acres can be transferred to the pasture insurance program.
  • If the client does not have improved pasture acres, but has Moisture Deficiency Insurance or Satellite Yield Insurance, the election can be revised to include improved pasture and these acres can be transferred to the pasture insurance program.

If Export Timothy Hay acres are taken out of production in the spring and seeded to an annual crop, the premium can be transferred:

  • If the client has annual crop insurance, has elected the seeded annual crop and the seeding deadlines are met, the acres and premium will be removed from the Export Timothy Hay Insurance contract and transferred to an annual crop insurance contract.
  • If the client does not have annual crop insurance, the acres and premium stay on the perennial crop insurance contract, but the client will not be eligible for a payment.

Preharvest – reporting alternate crop use: Clients are required to contact AFSC five days in advance of putting an insured crop to a use other than putting up dry, measurable bales. Alternate uses include pasture, plough under, loose stack, high moisture bales, hay silage, haylage or other type of immeasurable state.

Once authorized by AFSC, clients have the option to set up a defined number of exclosures if pasturing export timothy hay acres, or leave standing inspection strips if putting acres to another use.

  • Exclosures are representative sites that are fenced off. A minimum of two sites for fields up to 40 acres, and a minimum of one site for every additional 40 acres in that field, is required.
  • Inspection strips are standing strips of insured crop left in from the edges of the field, a distance of about one-third of the width of the field, for the length of the field and a minimum of 10 feet in width, for inspection by AFSC. On fields of 100 acres or more, an additional strip must be left in the middle of the field. More information can be found on the Inspection Strips page.

The client is responsible for the maintenance of all exclosures and inspection strips, and to advise AFSC upon completion of the alternate use.

Inspection strips: If the crop is damaged when mature enough to harvest, clients may be advised to leave standing representative inspection strips for AFSC to use to assess the damage. For more information on size and number of strips, (link to Inspection Strips: Perennial resource).

Carryover inventory: All carryover export timothy hay production, including purchased and uninsured production, must be reported to AFSC prior to the commencement of harvest and not later than July 15 on a Report of Export Timothy Hay in Storage Prior to Harvest form. Clients must identify carryover, purchased and uninsured production sold since June 1 on sales receipts. Clients are to account for any carryover inventory acquired, fed or sold after filing the Report of Export Timothy Hay in Storage Prior to Harvest form on their Harvested Production Report.

Harvested Production Reports: A Harvested Production Report must be filed when harvest is complete and submitted to the AFSC within 15 days of completing harvest and no later than October 15. Clients must also file their Export Hay Inventory by Field, Lot & Grade form along with their HPR.

  • A late filing fee will be applied for HPRs filed between October 16 and December 31. Failure to file an HPR by December 31 will result in a yield recorded as zero and no indemnity will be calculated.
  • Notification of an insurance claim and any required loss adjustment procedures are based on the information provided by clients on the HPR.
  • Clients are asked to store production from different lots separately so it can be easily measured and grade identified.
  • If export timothy hay is sold prior to AFSC taking representative samples and there is a production shortfall, there will be no grade adjustment applied.

Winter grazing: Clients are asked to contact an AFSC insurance representative when they intend to pasture acres. Damage resulting from grazing will be considered an uninsured cause of loss, and reduce total coverage.

For Export Timothy Hay Insurance, livestock must be taken out of the fields by the last day of February.

Irrigated hay acres: For irrigated hay acres, clients are required to maintain an irrigation log showing the dates of precipitation and approximate amounts of water applied. The irrigation log must be provided to an inspector when there is a claim.

Other responsibilities: Export Timothy Hay Insurance clients must adhere to the required agronomic practices as outlined in the Timothy Production Handbook of the Canadian Hay Association. Clients are also required to maintain an up-to-date Pride in Production Field Book (produced by the Canadian Hay Association) or an equivalent field record document on export timothy hay crops. (Where do people access these resources? I tried searching for them online so we could link to them but can’t find them.) In addition, clients will be asked for scale tickets and receipts when production is sold through a processor and/or when exchanged for services, crop share or rent.

Pasture Insurance

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AFSC provides coverage for pasture based on conditions in the area, typically based upon an indicator of production loss, such as precipitation or satellite imagery. This coverage is not directly related to losses to insured fields.

Moisture Deficiency Insurance is an area-based program which provides coverage on pasture. This program uses precipitation information from a network of weather stations across the province to reflect moisture conditions.

Losses are paid when accumulated precipitation at a selected weather station in a given year falls below the normal expected precipitation for that weather station according to the payment schedule. It is not based on actual pasture production and conditions at the weather stations may not reflect conditions on client’s insured fields.

Pasture acres insured under Moisture Deficiency Insurance cannot be insured under Satellite Yield Insurance.

What Can Be Insured

Clients are eligible to insure the following dryland pasture crops – native pasture, improved pasture, bush pasture, community pasture and forestry grazing leases (optional)

Coverage

Moisture Deficiency Insurance is available in all 35 Forage Risk Areas in the province. Each risk area has a long-term average yield for each pasture type based on recommended cattle carrying capacity.

Eighty per cent of the risk area long-term average yield is used as the base yield, setting coverage for each client in the risk area. The insured price, multiplied by the base yield for each insured pasture type in the risk area, establishes the dollar coverage for each pasture type. For community pastures, coverage is based on the risk area cattle carrying capacity and the client’s allocation for that pasture.

Weather stations: A network of weather stations is established across the province. Clients may choose one, two or three weather stations that best represent conditions on their farm, and within proximity of their landbase. Clients are not allowed to skip a weather station and weather station selection is subject to approval by AFSC. The long-term normal precipitation for weather stations is available to clients.

Coverage options: While coverage determines the value of the insurance contract, there are options for clients to customize the insurance for their individual situation.

  • Length of season: Clients choose first between short split season or long split season, that best represents pasture growth and supports their management strategies — Short Split Season: May, June and July precipitation or Long Split Season: May, June, July and August precipitation.

Split season allows clients to divide their growing season and dollar coverage into two parts:

  • Short Split Season option: the early split includes precipitation from May 1 through June 15, and the late split includes precipitation from June 16 through July 31.
  • Long Split Season option: the early split includes precipitation from May 1 through June 30, and the late split includes precipitation from July 1 through August 31.

Clients could be eligible for an insurance payment on one part of the season regardless of what happens in the other.

  • Weighting options: Clients have the choice of different weighting options within the growing season. Weighting the precipitation in each month allows clients to select the weighting option that best reflects their area, pasture type and management practices. There are four different options available to clients; two for each the Short Season Split and Long Season Split. More information can be found on the Moisture Deficiency Insurance option information sheet.

Spot-Loss Fire Benefit: The Spot-Loss Fire Benefit is included with Moisture Deficiency Insurance for insured pasture acres and protects against both accidental fire and fire caused by lightning.

  • The total dollar coverage, including Variable Price Benefit, is based on the client’s Moisture Deficiency coverage. Spot-Loss Fire payments are intended to compensate for production losses in the current and ensuing year, as it is recognized burned land generally takes at least two years to recover.
  • The Spot-Loss Fire Benefit protects clients against accidental fire and fire caused by lightning.
  • A client must have a minimum of 100 insured acres burned to qualify for compensation.
  • Once informed of the fire, AFSC will verify whether the fire was started accidentally or was caused by lightning. When a claim is triggered, spot-loss fire indemnities are calculated after the corresponding pasture program payments have been finalized in the fall. A 10 per cent deductible is applied to all spot-loss fire indemnities.
  • Client responsibilities: Clients must notify AFSC within 14 days of the start of the fire on their land and provide any relevant documentation from the fire department. Clients need to complete the Fire Damage Claim Form

Example – Indemnity Calculation

Moisture Deficiency Insurance, Option C selected (Short Season – Split)
Fire occurred in August and 7,000 acres were burnt.
4,000 acres insured at $8 per acre = $32,000
3,000 acres insured at $6 per acre = $18,000
Total Coverage = $50,000

Any potential insurance payments will be calculated prior to spot-loss fire benefits being calculated

Moisture Deficiency Insurance Spot-Loss Fire Benefit examples

 

Price Options

Moisture Deficiency Insurance has two prices based upon a forecast of hay market prices for the year, allowing clients to customize their insurance. Click to view the 2020 Spring Price Options for Hay, Pasture & Export Timothy Hay.

Variable Price Benefit: is automatically included and increases the dollar coverage if there is a significant increase in the cost of hay during the growing season. However, Moisture Deficiency Insurance only pays the benefit if the measured precipitation at the selected weather station(s) for the current year is less than the long term average and the client qualified for a payment.

  • Alberta Agriculture and Forestry’s hay price from the Farm Input Survey for the month of October is used to determine the Variable Price Benefit trigger as pasture is a difficult commodity to price accurately.
  • The fall market price of hay reported for the month of October must increase by at least 10 per cent above the spring insurance price for hay, for the benefit to trigger. The indemnities are paid using the increased price up to a maximum increase of 50 per cent.

Premiums

Premium rates are set annually based on the long-term variability of weather station data. Premium rates vary by weather station and coverage option. The client’s premium is calculated by multiplying the dollar coverage by the client’s share of the premium rate, applying the premium adjustments, when applicable.

Causes of Loss

Designated perils: Lack of moisture at the selected weather station(s) is the only peril insured.

Indemnity

Payments under Moisture Deficiency Insurance are based on a comparison between annual measured precipitation at the selected weather station(s) relative to the long-term average precipitation for the same station(s), described as a ‘per cent of normal’. If the per cent of normal is less than the trigger point of 70 per cent an indemnity is automatically paid.

The Moisture Deficiency Insurance program includes the full season benefit that generates an additional payment if the full season calculates more than the sum of the split season options. When the claim payments are calculated, each split season claim payment is calculated and added together for the total payment. Then the full season payment is calculated using the corresponding weighting option without the split season. If the payment for the full season is higher than the combined split season payments, the client will receive the additional amount at the end of the season.

Example: Indemnity calculation

1,000 acres of improved pasture insured at $30.75 per acre = total coverage $30,750 Option B selected; Short Split Season (May, June, July precipitation)

Coverage is split to match the weighting option chosen from the Moisture Deficiency Insurance Weather Coverage Options table.

Calculate the payment using the information in the Example Information for Weather Stations table at the weather station(s) selected using the weighting for Option B.

Early Split Coverage
Total Coverage x (May Moisture Weighting + half of June Moisture Weighting) = $30,750 x (40% + 15%) = $30,750 x 55% of coverage = $16,912.50 coverage

Late Split Coverage
Total Coverage x (half of June Moisture Weighting + July Moisture Weighting) = $30,750 x (15% + 30%) = $30,750 x 45% of coverage = $13,837.50 coverage

Monthly Calculation of Weighted % of Normal (for the month of May)
Weighted % of Normal = Measured Moisture / Normal Moisture x Monthly Weighting
= 40 / 52 x 40%
= 30.8%

*Daily moisture is capped at an amount equal to the normal moisture for the month
**Monthly moisture is capped at 150 per cent of the normal moisture for the month
***Rounded down for payment calculation

Early Split
= 30.8% + 10.5%
= 41.3% / 55% of coverage
= 75% or 75% of normal

Late Split
= 10.7% + 3.5%
= 14.2% / 45% of coverage
= 31.5% or 31% of normal

MDI Payment Schedule example

Early Split 75% of normal results in 0% payment rate
$16,912.50 x 0% payment rate
= $0

Late Split 31% of normal results in 100% payment rate
$13,837.50 x 100% payment rate
= $13,837.50
Total Split Season Indemnity
$0 + $13,837.50

Then the payment for the full season is calculated and if it is higher than the sum of the split season payments, the client will receive the extra amount at the end of the season.

Full Season Comparison of the same months
30.8% + 21.2% + 3.5%
= 55.5% or 55% of normal = 65% payment rate
Full Coverage x Payment Rate
$30,750 x 65%
= $19,987.50

Additional Indemnity Full Season indemnity less the total Split Season Indemnity
$19,987.50 – $13,837.50
= $6,150

As the full season indemnity calculates higher than the total split season indemnity, an additional payment of $6,150 would be made at the end of the season.

Disclaimer: Daily precipitation measurements under 0.1 mm will be considered 0.0 mm, and will not be included in determining the precipitation for the month.

Client Responsibilities

Owned, rented and leased land: Clients must insure a minimum of 20 acres and are required to insure all acres of the elected pasture type(s) they operate whether the land is owned, rented or leased. Community pastures and forestry grazing leases are optional to insure. The last day of February is the deadline for adding or deleting land whether it is rented, purchased or sold by that date.

Clients who sell or purchase land between March 1 and May 31 are required to provide written proof of the transaction before AFSC will reduce or increase insured acres.

Transfer of acres: If pasture acres are taken out of production in the spring and seeded to an annual crop the premium can be transferred:

  • If the client has Annual Crop Insurance, has elected the seeded annual crop and the seeding deadlines are met, the acres and premium will be removed from the pasture contract and transferred to the annual crop contract.
  • If the client does not have Annual Crop Insurance, the acres, premium and coverage remain on the pasture contract.

 

Satellite Yield Insurance is an area-based program which provides coverage on pasture. This program uses satellite measurements of light absorbed and reflected by the pasture vegetation to estimate pasture growth.

Losses are paid when the determined annual township-wide pasture growth falls below the insured normal pasture growth for that specified area according to Payment Schedule A and B. Satellite Yield Insurance does not cover individual farm losses. Annual pasture growth and the extent of loss within the township are considered to be the same for each client.

Pasture acres insured under this insurance cannot be insured under Moisture Deficiency Insurance.

What Can Be Insured

Clients are eligible to insure the following dryland pasture crops – native pasture, improved pasture, bush pasture, community pasture and forestry grazing leases (optional)

Coverage

Satellite Yield Insurance uses information from nine risk areas in the southern parts of the province. These areas can be seen on the Forage Risk Area map. Each risk area has a long-term average yield for each pasture type based on recommended cattle carrying capacity.

Eighty per cent of this long-term average yield is used as the base yield, setting coverage for each client in the risk area. The insured price multiplied by the base yield for each insured pasture type establishes the dollar coverage for each pasture type insured. For community pastures, coverage is based on the risk area cattle carrying capacity and the client’s allocation for that pasture.

While coverage determines the value of the insurance contract, there are three choices for clients to customize insurance to meet their individual situation.

  • Length of the growing season: Pasture grows differently in different areas of the province and AFSC understands that producers develop their own management strategies to utilize their pasture crop. Some producers rely on pasture growth in the spring while others depend on pasture growth over a longer growing season.

Satellite Yield Season Chart

Clients can choose between:

  • Short Full Season: mid-May until late July (weeks 1 – 11); or
  • Long Full Season: mid-May until late August (weeks 1 – 15).

More information can be found on the Satellite Yield Insurance option information sheet.

  • Split season option: Splitting the season allows clients to divide their growing season and dollar coverage into two parts. An indemnity is calculated for each split and one is not offset against the other. Clients pay an additional premium for this option, and indemnities are based on a different payment schedule
  • Weighting options: Clients who purchase a Split Season can choose how to divide their coverage:
    • Allocate 60 per cent of coverage to the weeks included in the first part of the growing season (early split) and 40 per cent of coverage to the weeks included in the second part of the growing season (late split) or
    • Allocate 50 per cent of coverage to the weeks included in each part of the growing season.

Spot-Loss Fire Benefit: The Spot-Loss Fire Benefit is included with Satellite Yield Insurance for insured pasture acres and protects against both accidental fire and fire caused by lightning.

  • The total dollar coverage, including Variable Price Benefit, is based on the client’s Satellite Yield Insurance coverage. Spot-Loss Fire payments are intended to compensate for production losses in the current and ensuing year, as it is recognized burned land generally takes at least two years to recover.
  • The Spot-Loss Fire Benefit protects clients against accidental fire and fire caused by lightning.
  • A client must have a minimum of 100 insured acres burned to qualify for compensation.
  • Once informed of the fire, AFSC will verify whether the fire was started accidentally or was caused by lightning. Once informed of the fire, AFSC will verify whether the fire was started accidentally or was caused by lightning. When a claim is triggered, spot-loss fire indemnities are calculated after the corresponding pasture program payments have been finalized in the fall. A 10 per cent deductible is applied to all spot-loss fire indemnities.
  • Client Responsibilities: Clients must notify AFSC within 14 days of the start of the fire on their land and provide any relevant documentation from the fire department. Clients need to complete the Fire Damage Claim Form

Example – Indemnity Calculation

Satellite Yield Insurance, Option C selected (Short Season – Split)
Fire occurred in August and 7,000 acres were burnt.
4,000 acres insured at $8 per acre = $32,000
3,000 acres insured at $6 per acre = $18,000
Total Coverage = $50,000

Any potential insurance payments will be calculated prior to spot-loss fire benefits being calculated

Satellite Yield Insurance Spot-Loss Fire Benefit examples

Price Options

Satellite Yield Insurance has two prices based upon a forecast of hay market prices for the year, allowing clients to customize their insurance. Click to view the 2020 Spring Price Options for Hay, Pasture & Export Timothy Hay.

Variable Price Benefit: is automatically included in Satellite Yield Insurance and increases the dollar coverage if there has been a significant increase in the cost of hay during the growing season. However, Satellite Yield Insurance only pays Variable Price Benefit if the township growth determination for the current year is less than the long term average.

  • Alberta Agriculture and Forestry’s hay price from the Farm Input Survey for the month of October is used to determine the Variable Price Benefit trigger as pasture is a difficult commodity to price accurately.
  • The fall market price of hay reported for the month of October must increase by at least 10 per cent above the spring insurance price for hay, for the benefit to trigger. The indemnities are paid using the increased price up to a maximum increase of 50 per cent.

Premiums

Premium rates are set annually reflecting the likelihood of a loss for all pasture types, and vary by eligible risk area and coverage option. The client’s portion of the premium is their selected dollar coverage multiplied by the client’s share of the premium rate and any applicable premium adjustments. Split season premium rates are higher than full season premium rates.

Causes of Loss

Designated perils: Lack of pasture growth determined by satellite measurements is the only peril insured.

Indemnity

Payments under Satellite Yield Insurance are based on a comparison of the determined township growth from the current growing season and the long-term average determined growth, described as a ‘per cent of normal’. If the per cent of normal is less than the trigger point (90 per cent for full season; 85 per cent for split season) an indemnity is automatically paid.

Split season can generate payments that are higher than full season, but they will never pay less. When clients select the split season and a payment is triggered, each split season claim payment is calculated and added together for the total payment. The full season payment is then calculated using the corresponding weighting option without the split season. If the payment for the full season is higher than the combined split season payments, the client will receive the additional amount at the end of the season.

AFSC will use a network of cage sites to monitor and estimate pasture plant growth. This information may be used to supplement the satellite information to revise payment rates.

Example – Indemnity calculation

1,000 acres of native pasture; coverage $6.84/acre = $6,840 total coverage
Option C selected; Short Season – Split

Coverage is split between the Early and Late Splits
Early Split = 60%
Late Split = 40%

Determined township growth = Payment Schedule B

Early Split 53% of normal = 80% payment rate
Late Split 125% of normal = 0% payment rate

Split Season Indemnity = Total Coverage x Coverage Allocation x Payment Rate
$6,840 x 60% x 80% = $3,283.20
|$6,840 x 40% x 0% = $0.00
Total Split Season Indemnity = $3,283.20

Full Season Indemnity Calculation: A. Short Season Full
Determined township growth = Payment Schedule A|
94% of normal = 0% payment rate

Full Season Indemnity = Total Coverage
x Coverage Allocation x Payment Rate
$6,840 x 100% x 0% = $0

As the split season indemnity calculates higher than the full season indemnity, there is no additional payment at the end of the season.

Client Responsibilities

Owned, rented and leased land: Clients must insure a minimum of 20 acres and are required to insure all acres of the elected pasture type(s) they operate whether the land is owned, rented or leased. Community pastures and forestry grazing leases are optional to insure. The last day of February is the deadline for adding or deleting land whether it is rented, purchased or sold by that date.

Clients who sell or purchase land between March 1 and May 31, are required to provide written proof of the transaction before AFSC will reduce or increase insured acres.

Transfer of acres: If pasture acres are taken out of production in the spring and seeded to an annual crop, the premium can be transferred:

  • If the client has Annual Crop Insurance, has elected the seeded annual crop and the seeding deadlines are met, the acres and premium will be removed from the pasture contract and transferred to the annual crop contract.
  • If the client does not have Annual Crop Insurance, the acres, premium and coverage remain on the pasture contract.

Endorsements

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The Moisture Deficiency Endorsement can be purchased with Hay Insurance, and provides additional coverage based on the current year’s precipitation over a specified period at selected weather station(s), compared to the long-term normal. It can be purchased on acres of dryland (alfalfa, legume and grass) hay. It is not available for irrigated alfalfa.

What can be insured

Moisture Deficiency Endorsement can be purchased on acres of dryland (alfalfa, legume and grass) hay. It is not available for irrigated alfalfa.

Coverage

The additional dollar coverage offered through this endorsement will be determined by AFSC for each risk area and eligible hay type. As Moisture Deficiency Endorsement is an area-based program, the claim trigger is the amount of annual precipitation, relative to the long-term normal at the selected weather station(s).

Weather stations: Clients may choose one, two or three weather stations that best represent conditions on their farm and within proximity of their land base. Clients are not allowed to skip a weather station and weather station selection is subject to approval by AFSC.  Moisture Normals for Weather Stations 2020 shows long-term normal precipitation information for weather stations, while Perennial Weather Stations shows a current list of weather stations.

Length of growing season: Clients can choose between a short season option which includes May, June and July precipitation or a long season option of May, June, July and August precipitation.

Moisture component weighting: Clients have the choice of different weighting options within the growing season. Weighting the precipitation in each month allows clients to select the weighting option that best reflects their area, crop type and management practices. After considering the length of growing season and the monthly weighting there are four different options available to clients.

More information can be found on the Moisture Deficiency Endorsement information sheet.

Price options

There are two prices based upon a forecast of hay market prices for the year, allowing clients to customize their insurance.  Click to view the 2020 Spring Price Options for Hay, Pasture & Export Timothy Hay.

Premium

Premium rates, which vary by weather station, are set annually based on the long-term variability of weather station data. The client’s premium is calculated by multiplying the dollar coverage by the client’s share of the premium rate, applying the early payment discount when applicable.

Indemnity

Payments are based on a comparison between accumulated precipitation at the weather station(s) selected, relative to the long-term normal accumulated precipitation at the same station(s). Claims trigger and are paid automatically when the current year’s precipitation data is less than 80 per cent of the long-term normal.

Example: Indemnity calculation

200 acres of hay insured at $20 per acre = $4,000 coverage
Option D (25% monthly weighting)

*Daily moisture is capped at an amount equal to the normal moisture for the month
**Monthly moisture is capped at 150 per cent of the normal moisture for the month
***Rounded down for payment calculation

Example: Monthly calculation of weighted per cent of normal (for the month of May)

Measured Moisture / Normal Moisture x Monthly Weighting = Weighted per cent of Normal = 17mm / 55mm x 25% = 7.7%

The weighted per cent of normal for each month is added together for the cumulative weighted per cent of normal for the long season, then rounded down, is 68 per cent of normal.

The Moisture Deficiency Endorsement payment schedule displays the payment rate for each per cent of normal moisture. The payment rate for 68 per cent of normal is 30 per cent.

Season claim payment calculation
total coverage x payment rate
$4,000 x 30 %
= $1,200

Disclaimer: Daily precipitation measurements under 0.1 mm will be considered 0.0 mm, and will not be included in determining the precipitation for the month.

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