Elevator's Likely to Remember Last Year's Head Scab

Losses due to quality adjustments may be covered by insurance.

Spring 2009 weather has not been as conducive to the development of fusarium head blight, or head scab in the winter wheat crop as it was in 2008. Many wheat farmers, however, are not likely to forget last year's instances of head scab, which caused great difficulty for farmers trying to deliver wheat to the grain elevator during harvest.

Rebecca Davis, director of the Topeka regional office of USDA's Risk Management Agency, says that producers who carry multi-peril crop insurance policies subsidized and reinsured by the Federal Crop Insurance Corporation may be eligible for quality loss adjustments if the reason for the loss in value is due to a covered event, such as this spring's excess precipitation.

"To protect your rights, it is imperative that you always report any damage in the required timeframes and seek advice from your insurance company before proceeding with harvest or destruction of the damaged crop," Davis says. "Crop insurance policies require that farmers notify their company within 72 hours of noticing a loss. It is important that farmers be proactive in checking their fields to determine if there is any damage to the crop before harvest."

Quality adjustments are available for loss in value for conditions such as low test weight, damaged kernels, and shrunken or broken kernels. Discounts made for crop loss purposes may not be the same as those seen at the elevator. For example, quality discounts begin when the test weight is below 50 pounds per bushel, defects are above 15% or grade is U.S. No. 5 or worse. RMA discount factors for wheat are constructed by compiling and using loan discount data from the Farm Service Agency and national average loan rates for the past 10 years. These discount factors remain uniform between the Actual Production History, Crop Revenue Coverage, and Revenue Assurance plans of insurance throughout all counties in Kansas, Davis says.

Any production of extremely poor quality wheat that has a value not located on the discount factor charts in the Special Provisions of Insurance ("off the discount tables") is adjusted by taking the actual sale price based upon the Reduction In Value divided by the local market price to equal the discount factor for the production.

"In the event that the production has Zero-Market Value, RMA loss procedures require insurance providers to make every effort to find a market for the production before declaring a zero value. Therefore, insurance providers will not be making declarations of zero market value until they can firmly establish that there is no market for poor quality grain," Davis adds.

Quality adjustments are based on samples obtained by the adjuster or other disinterested parties previously authorized by the insurance provider, such as an elevator employee. Harvested and delivered production samples taken from each conveyance and then blended may be accepted under certain conditions.

Davis adds that if vomitoxin is suspected, the sample must be collected before the grain is placed in storage to be eligible for quality adjustment. Samples should be placed in a heavy paper bag for delivery to an approved laboratory for a determination of whether vomitoxin is present. RMA has established predetermined discount factors for vomitoxins in the range of 0.1 to 10.0 parts per million. If a load is rejected at harvest but the test reveals no vomitoxin, the wheat may be brought back to the elevator for possible delivery.

TAGS: Wheat
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