As the 2023 harvest is upon us, clients may want to note the following items.
Harvested Production Report
The Harvested Production Report (HPR) is a key part of post-harvest reporting. This report, which must be filed by October 15 for perennial crop insurance and November 15 for annual crop insurance, gives the first sign if the client is in a production shortfall and eligible for coverage.
To speed up the review and calculation of losses, clients are encouraged to:
- submit their HPR as soon as possible after finishing harvest HPR by logging into their AFSC Connect account (HPRs may also be submitted by email, fax, mail or in person at their local AFSC office). To help with this, clients may want to take an acceptable grain sample to a primary or terminal elevator for accurate weight, grade and dockage.
- sign up for direct deposit by logging into their AFSC Connect account.
Clients who are in a claim position, may:
- qualify for faster payment through payment by declaration; or
- choose to receive an advance.
Payment by Declaration
When clients file their HPR, they are declaring their reported production for that crop year. If certain criteria are met, including the dollar amount of the shortfall and the grade (for annual crops) of the crop, clients can be compensated for their production loss through a payment by declaration. An on-farm inspection is not required and the full amount owing to the client can be paid sooner. In most situations, clients can choose to defer the indemnity to the following year.
Post-harvest advance
If, after the HPR has been filed, it is found that crops are in a production shortfall, clients may want to take advantage of post-harvest advance options. These options allow eligible clients to receive a part of their estimated shortfall as an early payment prior to adjusters completing an on-farm production review. Clients do not have to take an advance on all crops and can choose to defer their advances to the following year.
In the case of hay and export timothy hay crops, the advance is calculated based on 50 per cent of the estimated shortfall.
Annual crop post-harvest advance options include:
- a 50 per cent advance where clients receive half of their estimated shortfall; or
- a preliminary payment where eligible clients receive a higher percentage of their estimated shortfall.
Variable Price Benefit
Included with insurance is the Variable Price Benefit, a price protection feature, which increases coverage when fall market prices are higher than the spring insurance price. It applies to most crops and compensates the client when they have a production shortfall below their insurance coverage and the price increases by at least 10 per cent, to a maximum of 50 per cent, during the growing season. This benefit is also included in area-based programs such as Pasture and Silage Greenfeed Insurance.
Quality concerns
If a client’s crop has suffered grade degradation due to designated peril, AFSC will adjust total production for quality loss on most insured crops. If quality is a concern on annual crops, AFSC only accepts the receipted grade on sales from buyers who have a primary elevator or terminal elevator license from the Canadian Grain Commission.
Clients who intend to sell grain to a grain dealer, private buyer, or process elevator before an AFSC adjuster performs a post-harvest inspection should contact AFSC first for details on how to retain an acceptable sample. Export timothy also has an adjustment made to harvested yields when the grade falls below the designated grade of ‘Choice’ as determined by AFSC.
Abandoned acres
A client may decide to put the crop to use other than harvest, they may not be able to harvest, or, in some cases, they may choose to abandon the acres entirely. Clients declaring unharvested or abandoned acres on their Harvest Production Report must supply an estimated yield for those acres.
For perennial crops, the total baled production and the estimated yield on the acres declared abandoned are used to determine if there is a potential claim. For annual crops acres, the estimated yields on abandoned acres will be added to the harvested production to determine if there is a potential claim. In both cases, AFSC will assess the reported production and estimated yields on abandoned acres when completing the claim.
The estimated yields on unharvested acres and abandoned acres are used to determine an advance, preliminary payment or finalize a claim. Claims with a significant number of unharvested acres will be finalized after the unharvested acres are managed the following spring.
Future coverage impacts from losses
One feature of production insurance is cushioning of low yield records. Cushioning stabilizes coverage by reducing year-to-year fluctuations.
- Cushioning is a formula applied to a yield when a client’s production for the year is low. It minimizes the impact of abnormally low yields on the client’s individual normal yield.
- For the purposes of calculating future coverage, the low yield will be replaced with 70 per cent of the individual normal yield for that crop in the year in question.
For most annual crops, due to improvements in varieties and management practices, yields generally increase over time. In order to ensure that individual coverage reflects this trend, individual yield records are adjusted by a trend factor.
- Older yield records will be increased more than recent yield records.
- Adjustments will be made by multiplying individual actual or cushioned yields by a trend factor.
- The trend factor is a number which reflects the average annual increase in yield for a specific crop in a specific risk area.
For more information, please use Live Chat on our website or AFSC Connect, call our Client Care Centre at 1.877.899.2372 or contact your preferred branch office.
