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Wildfire and Smoke Taint Insurance

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By Shannon Antonini, VP, Customer Risk Management

As wildfires threaten communities in California and beyond, many grape growers have faced a difficult 2020 harvest made even more challenging by the fast-moving fires and smoke that has filled the region. Even for the vineyards that have been spared from the ravages of fire, extreme smoke conditions can taint the grapes.

As a general recommendation, producers who believe their crop has been impacted by fire, smoke or excessive heat should file a crop insurance claim with their crop insurance agent. To provide further guidance for our customers and other grape growers, we have compiled some of the most common questions about smoke taint and crop insurance.

All policyholders who believe their crop has been impacted should contact their insurance agent immediately upon recognizing potential impact and open a notice of damage.

A notice of damage is to be filed by the policyholder within 72 hours of the policyholder’s initial discovery of damage, but not later than 15 days after the end of the insurance period (for wine grapes in California, harvest or November 10th, whichever occurs earlier).

What happens next after I file a notice of damage?

After the insurance provider receives a notice of damage, it will be processed and, if necessary, a loss adjuster will be sent to inspect the damaged crop and gather information concerning the damage. If the policyholder wishes to destroy or not harvest the crop, the loss adjuster will gather the necessary information, conduct an appraisal to establish the crop’s remaining value and complete any forms needed.

If the crop has been harvested or will not be harvested by the end of the insurance period, and the policyholder wishes to file a claim for indemnity, the loss adjuster will gather the appropriate information and assist the policyholder in filing the claim for indemnity. It is the policyholder’s responsibility to establish the time, location, cause and amount of any loss.

How do I know if my grapes are eligible for a crop insurance claim?

There are three criteria used to determine if wine grapes have been tainted by smoke. At least one of these criteria must be met to be eligible for a crop insurance claim.

  1. The fruit is rejected prior to harvest.
    You will need to obtain a smoke taint test from a lab. You will also need a rejection letter from the winery stating what fruit is being rejected and the reason (smoke taint due to multiple wildfires, etc.). You will be assessed a harvest fee for unharvested fruit. That fee will vary based on the county; the fee in Sonoma County is $200/ton.
  2. Fruit is harvested and then juice needs to be disposed of.
    You still need the smoke taint test prior to harvest, weigh tags and a rejection letter from the winery. The winery will need to keep that juice separate and the insurance company has the right to witness disposal. We will need to notify the company where and when the disposal will take place. If the juice is mixed and loses its identity, it is no longer covered.
  3. Fruit is harvested and made into wine, but the price is reduced due to smoke.
    You may be eligible for payment based on the Quality Adjustment Calculation. This will depend on how many tons are harvested and the price. A smoke taint test is still needed prior to harvest accompanied by a letter from the winery.

There are a limited number of labs approved to handle smoke taint testing. Talk to your agent if you are not certain a lab is approved, and get samples sent in as soon as possible. If you are waiting for test results before you harvest and the fruit begins to deteriorate, you may run into issues with crop insurance. In this case, it is important to get an appraisal done if the fruit is ready to harvest. Be sure that you are asking for the appraisal when the fruit is ripe and ready to pick.

Crop insurance coverage deadlines are fast approaching for the 2021 season. Eligibility includes vines in their fourth growing season or third season after grafting. Minimum coverages begins at 50 percent and maximum coverage is 85 percent of the approved average yield. The last day to sign up for the 2021 crop year is January 31, 2021.

American AgCredit Shannon Antonini

Contact a Risk Management Specialist

Shannon Antonini is an experienced risk management specialist for the wine industry. American AgCredit’s Wine Country Crop Insurance agents are Emily Carvajal and Shannon Antonini based in Petaluma, CA. To open a notice of damage or inquire about crop insurance please contact them directly at 707.766.8498 or [email protected][email protected]. For a full FAQ about Smoke Taint and Crop Insurance, visit: https://www.agloan.com/smoke-taint-information-for-wine-producers/.

This material is for informational purposes only and cannot be relied on to replace your own judgment or that of the risk management professionals you work with, in assessing the accuracy or relevance of the information to your own operations.

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