Frost Insurance - Cover

Frost Insurance Cover

Q: What does this cover? Is my entire crop value covered by the scheme? 
A: Only the contracted beet (either CTE or ICE) is covered for losses caused by an insured frost event, provided adequate area is planted.  If the area planted multiplied by the growers 5 year average yield plus yield trend (5%) is lower than the contracted tonnage, then the insurer will only cover this lower “insured tonnage”.  For growers that have not grown sugar beet for over 5 years, cover will be based on the factory 5 year average yield.

Q: What does the cover relate to and what are the conditions for paying out?

A: The cover is designed for early and severe frosts, such as those experienced in 2010/11 when a damaging frost event occurred early in the season.
The insurers have defined a severe “frost event” as the average minimum temperature of -4°C or lower for a rolling 10-day period up to and including 9th January. Once a ‘trigger’ frost event has occurred, payout under the policy for each beneficiary will be calculated following the end of the campaign. 
In order for a payout to be made, the farmer has to have incurred a loss that is higher than the deductible which is set at 15% of the Insured (Approved) Tonnage. This is in order to filter out the natural and normal volatility in yield. This deductible should avoid potential for many small losses and reduces the administrative costs and the insurance premium.

Q:  Is this a voluntary scheme? I always lift my beet and deliver it before the risk of frost occurs so why should I have to pay for insurance? 

A: The scheme would only be operated by the insurers if all growers participated. As risks of campaigns are spread by some growers delivering late, allowing others to deliver early, then the NFU considers it reasonable for all growers to contribute to the scheme and the policy has been designed on this basis. The cost of the insurance has been incorporated into the price for the following campaign.
The NFU, at the request of growers, investigated options for frost insurance for the UK sugar beet crop. 
In order to ensure the frost insurance costs was incorporated into the beet price model the policy also had to be applied to all growers to be counted as a cost of production.

Q: Is self-grow beet included? 

A: British Sugar’s self-grow sugar beet is included under the policy, and British Sugar are subject to the same terms on their self-grow beet as all other growers.

Q: Does the policy only cover beet which has not been lifted? 

A: The cover payable in the event of a frost occurrence will be calculated on the total beet not delivered by the end of the campaign under your contracted tonnage (ICE/CTE). There is no requirement for losses to have occurred in the ground only. Equally, once the frost trigger has been reached, any damage from subsequent frosts, in the same campaign, will also be covered.

Q: British Sugar have chosen to not open Cantley as early as the other factories meaning we are more exposed to frost risk this year again as in 2010. How does this impact my insurance? 

A: British Sugar has announced that the Cantley factory is opening one week later than originally scheduled. However the NFU have made arrangements to ensure that growers who still wish to lift beet and deliver can contact their area manager and ask to make arrangements to send their beet to Bury or Wissington instead. The NFU have also arranged that British Sugar will meet any cost difference in the haulage from the diversion to another factory for those growers.

Last edited on: 09:09:2012

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