Moisture Deficiency Insurance and Moisture Deficiency Endorsement Q&As
The Moisture Deficiency Insurance program (pasture) and Moisture Deficiency Endorsement (hay) programs are area-based programs that compensate clients when the accumulated precipitation at selected weather station(s) in a given year falls below the normal expected precipitation for that weather station according to the payment schedule. Given this year’s extreme heat and dry conditions, clients who have purchased the insurance through these programs may have questions about how they work.
Q: The Moisture Deficiency Insurance and Moisture Deficiency Endorsement programs do not reflect what happened on my farm. Do they work?
The Moisture Deficiency Insurance (MDI) and Moisture Deficiency Endorsement (MDE) programs are not based on actual pasture (hay) production. The programs are based on what happens at the weather station and may not reflect the conditions on the client’s insured fields.
Moisture Deficiency Insurance (MDI) is based on the amount of precipitation that falls at the elected weather station(s) and months chosen by the client for the months during the insurance period that the clients selected.
Losses are paid based on accumulated precipitation at the weather station(s) and not on actual pasture conditions or growth at the farm.
Q: The heat and wind has evaporated all the moisture out of the ground. Will I receive a payment?
The MDI/MDE programs insure only for one peril – precipitation recorded at the weather station(s) during the elected timeframe.
Coverage does not consider:
- Soil moisture reserves available to support the crop
- High temperatures that evaporate moisture from the air, soil and plant matter
- Winds that dry out soil and plants
- Pest invasions that develop due to the weather conditions (e.g. grasshoppers)
- Hail events damaging plant matter
Q: Why did I receive a different payment than my neighbour?
The payments a client receives are based on the selections made in February when the insurance was purchased. The differences in payments can vary due to:
- Weather coverage option
- Weather station(s)
- Pasture type (improved, native, bush)
- Price Option
- Location (risk area)
- Insured acres
Q: Where can I see how much precipitation fell at my selected weather station(s)?
The precipitation data for most of the insured weather stations is provided by Alberta Agriculture and Forestry and can be viewed at http://agriculture.alberta.ca/acis/weather-data-viewer.jsp
Q: What precipitation is used for the Moisture Deficiency Insurance and Moisture Deficiency Endorsement programs?
AFSC recognized that when a large amount of precipitation falls not all of it is useful. Therefore, there are two caps. The most precipitation that AFSC will count on a single day is 100 per cent of the monthly normal. The most precipitation that AFSC will count during a month is 150 per cent of the monthly normal.
Q: Why are the precipitation normals used for the Moisture Deficiency Insurance and Moisture Deficiency Endorsement programs different than those on Alberta Agriculture and Forestry’s website?
AFSC uses a 25-year (average) normal for precipitation calculations, whereas the Alberta Agriculture and Forestry website uses the average precipitation for 1961 to 2018.
Q: What are the differences between MDI and MDE?
MDI is an insurance program where the client to insure native, improved, bush, or community pasture.
MDE is an endorsement, where the client who elected to insure their dryland hay can purchase additional coverage (15% of 80% $dollar coverage for hay type).
Q: Why do I have to wait until the end of the growing season to get a payment from MDE while MDI payments come earlier?
The programs reflect how hay and pasture crops are harvested. MDE has full seasons because hay is harvested at the end of the growing season and stored for livestock feed over the winter. MDI has split season options because pasture is harvested throughout the growing season and feed shortages in one period cannot be offset with production in the other period.
Q: How is the hay price established?
The hay price options are established in January and estimate the probable price that it will be for the upcoming year. The variable price benefit (VPB) is automatically included and will increase the dollar coverage if there is a significant price increase with in the year.
The VPB for forage is based on the Alberta Agriculture and Forestry’s hay price from the Fam Input Survey for the month of October.
Q: When will I be receiving my Moisture Deficiency Insurance and Moisture Deficiency Endorsement indemnity payments?
The MDI and MDE indemnity payments are based on precipitation information from close to 250 weather stations throughout the province. This information is collected in near real time and is quality controlled by Alberta Agriculture and Forestry’s Climate Information Service.
When the insurable period (month) is over, the daily precipitation data is reviewed for completeness, accuracy, and usefulness. These processes take time. Therefore, the program payments are typically made within one month of the end of the insurance period.
Program Payment – Timing of Payments
- MDI Short, early split – mid July
- MDI Long, early split – late July
- MDI Short, late split – late August
- MDI Long, late split – late September
- MDE Short – late August
- MDE Long – late September
Q: What changes have been made to the MDI programs in the last few years to make them more relevant?
- The Variable Price Benefit for perennial crops is based on Alberta Agriculture and Forestry’s hay price from the Farm Input Survey for the month of October.
- A $13/ton benefit is added to the hay price to account for the added cost of transporting purchased feed when the client suffers a loss.
- Pasture yield normal were updated to be more reflective of the productive capabilities.