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Grain farmers in Ontario are facing one of the most severe mould infestation outbreaks in corn that the province has ever seen. According to the Grain Farmers of Ontario, the issue has reached “a catastrophic level,” with grain farmers potentially looking at a $200 million shortfall in sales.
The mould, called deoxynivalenol (DON), is one of several mycotoxins that frequently infect corn, wheat and other grains in the field or during storage. If humans or animals are exposed to DON, they can experience acute nausea, vomiting, diarrhea, abdominal pain, headache, dizziness and fever.
The financial impact upon farmers really depends on the severity of the infestation. If bushels are only partially infected with DON, a farmer will be able to sell their product at a discount, but if the problem is too severe, sales will be rejected so as not to put animals or humans at risk. While farmers can get insurance programs that will cover their grain / production claims from the provincial agency Agricorp, they’re struggling to find insurance coverage for the immediate shortfalls and loss of revenue they’re experiencing as a result of this DON infestation.
Corn farmer Maurice Chauvin told CBC News that about 85% of his corn was affected with high DON. He said the current insurance programs for Ontario farmers “simply don’t work […] they don’t release any compensation because they’re so underfunded”. Another corn and grain farmer, Kevin Girard, said that he would like to see a more “predictable” insurance program.
Agricorp has come out in defence of production insurance, describing it as both “predictable” and “stable”. Stephanie Charest, manager, customer communications, commented: “Producers hope they never have to use production insurance – but when they do, they’re glad it’s there. Production insurance has provided Ontario producers with reliable, affordable coverage for 50 years and it’s still a great value. More than 14,000 Ontario producers count on it every year to offset financial shortfalls when perils like adverse weather, pest infestation, disease and wildlife cause reduced yields or production losses.”
Ontario farmers on the Agricorp production insurance program receive a yield guarantee of up to 90% of their individual average yield. When their total final yield falls below their guarantee, they can turn to production insurance to compensate them for the shortfall, Charest explained. The program covers predetermined insured perils, including adverse weather, pest infestation, disease and wildlife-cause reduced yields.
“Production insurance is also designed to be a stable, sustainable and affordable program,” Charest told Insurance Business. “Even though over the past decade crops are yielding much higher than in previous decades, premium rates have remained stable and even decreased in some cases. Despite substantial increases in the liability covered by production insurance, premiums have remained very stable over the years, making it an affordable risk management option.
“Over the past 10 years, while claims have been manageable, the value of insured acres has more than doubled, mainly due to strong market prices. When comparing liability to premium rates, production insurance actually provides more value than it did a decade ago. Premiums are cost-shared with the federal and provincial governments to ensure the program remains affordable for Ontario farmers. In addition, the program is designed to spread out the impacts of severe claim years over a longer period, so one bad year won’t lead to premium spikes.”
