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Corn Growers Cry Foul Over Crop Insurance

“They feel that they were misled.”

– THERESA BERGSMA, MCGA

Manitoba corn growers are accusing the Manitoba Agricultural Services Corp. of reneging on a promised price incentive to encourage producers to harvest late, damaged corn last fall.

But the agency says there was no promise and the complaint is based on a misunderstanding.

The Manitoba Corn Growers Association is trying to meet with Agriculture Minister Stan Struthers to press their demands for the so-called incentive.

“They feel that they were misled,” said Theresa Bergsma, MCGA secretary-manager. “They at least thought they would have their additional drying costs covered.”

The disagreement stems from thousands of acres of corn left unharvested following a cool, wet summer which kept the crop from ripening properly.

MASC insured 161,000 acres of corn this year. The agency estimates only 31 per cent was actually harvested. Fifty-three per cent of acres were destroyed, six per cent were put to an alternate use (e. g., silage) and 10 per cent is still standing in the field.

Bergsma said MASC wanted farmers to harvest as much corn as possible, even if it was low quality, because of a potential market at the Husky Energy ethanol plant at Minnedosa.

MASC allows corn crops to be written off if more than five per cent of the cobs have more than 10 per cent mould.

But the agency felt a lot of mouldy corn was worth harvesting and gave farmers a financial incentive to do so.

In a letter in early November to 560 corn growers with crop insurance contracts, MASC used examples to illustrate.

If a farmer were to harvest 100 bushels of mouldy corn and get $2.50 a bushel for it when the insurance price for No. 2 CW corn was $4 a bushel, crop insurance

would adjust the yield to reflect the poorer quality and the lower returns, using a calculation called the grade factor.

By dividing what the farmer received by the crop insurance value and multiplying that by 100, the crop would be adjusted to 62 bushels ($2.50 divided by $4 x 100 = 62).

LES MCEWAN

EARS OF ETHANOL: Some insured Manitoba corn growers feel they were led to believe harvesting mouldy corn this fall instead of writing it off would net them more revenue.

Because of the unusual conditions, the grade factor would be 75 per cent of the market price for mouldy corn divided by the crop insurance corn price. This would make a farmer’s yield for crop insurance purposes 47 bushels an acre ($2.50 divided by $4 x 100 x .75).

Those were only examples and not meant to be cast in stone, according to MASC.

When MASC started getting prices from the marketplace and from Husky, it found the value of poor-quality and good-quality corn to be the same because of a corn shortage, said David Van Deynze, the agency’s claim services manager.

As a result, producers who believed they would get an extra price premium through crop insurance didn’t, he said.

“That’s where the confusion lies,” said Van Deynze. “The market didn’t discount for this poor-quality corn like they thought it was going to – like everyone thought it was going to.

“Producers really didn’t suffer a price loss because of poor-quality corn this year.”

“ADJUSTMENTS”

Van Deynze said MASC will still pay producers the difference between the current market value of good-quality corn and the price they actually get for mouldy corn, if there is a difference.

“If they are unable to sell it for what they thought they could sell it for, once they sell it, they can show us what they sold it for and we will make adjustments at that point.”

Van Deynze said harvesting late corn helps producers maintain future insurance coverage. Corn coverage is based on farmers’ individual yields over 10 years. If a crop is written off and destroyed, the yield is zero, which drags down a producer’s average yield and lowers the coverage.

But Bergsma said some producers still feel they were led to believe that harvesting mouldy corn instead of writing it off would net them more revenue.

Those producers incurred extra expense in time, fuel and labour by harvesting the corn while others simply destroyed the crop and took the insurance.

“The guys who destroyed their corn straight off the top got what they were guaranteed,” she said.

“The guys who didn’t destroy it are going to get that 0.75 and if it doesn’t put them in a claim position, they’re going to get nothing.”

(With files from Allan Dawson)

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