Aflatoxin and the insured farmer
Aflatoxin, the toxic and carcinogenic mycotoxin fungus, is a threat well known by corn farmers across the country. This olive-green or gray-green collection on kernels typically develops in corn, particularly drought-stressed corn, before harvest or during storage, and can be harmful to humans and fatal to livestock. It also can have serious implications on the viability of a farmer’s crop, as aflatoxins in excess of certain levels can result in absolute prohibitions on the sale of corn or even the required destruction of a corn crop. The instances of aflatoxin are expected to be exceptionally high this year due to the increased prevalence of drought conditions in the Midwest and other areas of the country.
Fortunately for the farmer whose crop is hit with aflatoxin, it is typically an insured cause of loss under the common crop insurance policies, even though the actual production yield may not be impacted. The claims are adjusted as a deduction percentage of actual yield, depending on the aflatoxin level (insurance coverage kicks in at 20.0 ppb).
Notably, if the aflatoxin is due to an uninsured factor, such as inadequate irrigation (under an irrigation practice), non-weather related delayed harvest, or inappropriately high plant populations, then the aflatoxin caused loss may not be insured. However, in most cases aflatoxin will result in an indemnity if proper procedure is followed.
Action steps if your crop has aflatoxin
The Risk Management Agency, which administers the federal crop insurance program, has released an information sheet to assist farmers potentially dealing with this issue on its website, www.rma.usda.gov, but the most important points to know are as follows:
- Notify your crop insurance agent immediately upon discovery of aflatoxin, before harvesting, storing or delivering corn for sale. Because aflatoxin can increase in storage, the insurance provider will not cover losses where testing does not occur before storage.
- Once notified, the insurance provider’s adjuster will either hand harvest ears from representative locations in the field (predetermined by RMA loss adjustment publications) or collect samples at harvest from trucks/wagons for testing at an approved facility. The adjuster may also require representative strips to be left for later harvest or hand sampling.
Insureds are also recommended to obtain written confirmation from their insurance agent and/ or provider regarding their instructions as to testing, harvesting and, especially, any destruction of the crop. If an insured is not able to show that he complied with the notification requirements and instructions of the insurer as to testing of the crop, then he runs the risk of being left with a contaminated corn crop that is unsellable and uninsured.