Annex F: Probable yield determination and probable yield tests

The manner of determining probable yields (PY) shall be subject to the Regulations and The National Certification Guidelines (NCG), specifically in this Annex F, the "Guidelines for Actuarial Certification of Probable Yield Methodologies of AgriInsurance Programs, Agriculture and Agri-Food Canada, April 1, 2019".

Canada, at the request of a province, can assist a province to develop Requests for Proposal (RFPs) for actuarial services. Such collaboration could ensure that all NCG requirements are addressed in the RFPs.

The actuarial certification referenced in this annex remains valid, even if the methodologies are modified, where the Province and Canada mutually agree with the changes and they are attached to the certification.

1.0 Certification of Probable Yield Methodology

The last actuarial PY certification and the probable yield tests, as required under the Regulations, sections 9(1)(a) and 10(2) respectively, are provided in the document "Actuarial Certification of Probable Yield Methodologies (2018) prepared by Denise Cheung FCIA, FCAS, of IAO Actuarial Consulting Services, Aon Reed Stenhouse Inc., dated March 12, 2019.

2.0 Next Certification and PY

Tests Due Dates

Unless there is a major change in the probable yield methodology, the next PY certification and PY tests are not due until April 1, 2023. Based on risk assessment, the certification that is due on April 1, 2023 is for the methodology in the Crop Year 2023-24. Whenever a new methodology is developed or an existing PY methodology is revised, the probable yield methodology will need to be re-certified in accordance with the NCG noted above.

Although the due date of the certification report is April 1, 2023, federal contributions will be limited starting only on September 1, 2023. Extension beyond September 1, 2023 to address administrative challenges could be agreed upon by the parties. The holdback would be applied retroactively to contributions already made since April 1, 2023 and it would be applied until AAFC presents its preliminary approval of the report, which should be made no later than one month after the certification report is submitted.

3.0 Probable Yield Tests

• 3.1 The last probable yield tests per agricultural product, as required under the Regulations, section 10(2), are provided in the document "Actuarial Certification of Probable Yield Methodologies (2018) prepared by Denise Cheung FCIA, FCAS, of IAO Actuarial Consulting Service, Aon Reed Stenhouse Inc., dated March 12, 2019.
• 3.2 Agricultural Products that are in the tolerance zone or that failed both tests in any year shall be retested and the results submitted to Canada by April of the year listed in the table of section 3.3. Agricultural Products are deemed to be in the tolerance zone if the results of Test A are between 1.0 and 1.015 or the results of Test B are between 0.985 and 1.0. The next probable yield tests shall be completed prior to the Crop Year, according to the following schedule.
• 3.3 Ineligible amounts: For yield based plans the maximum Coverage Level that can be cost shared is 90%. If both PY Tests fail and effective coverage calculated according to the NCG is over 90%, ineligible amount shall be calculated. Ineligible amounts less than $50 shall be treated as zero.
  
  The Province shall, on an annual basis, calculate or cause to be calculated, ineligible amounts (as per the PY Tests) and submit the results to Canada for review and implementation.

4.0 Yield Trending

• 4.1 Yield trending is being utilized in the probable yield methodology for canola, soybeans, corn, soft white winter wheat, soft red winter wheat, hard red winter wheat, hard white winter wheat, and processing tomatoes. The long-term average yields for these agricultural products are being increased to account for changes in practices or technology.
• 4.2 The approved actuarial opinion of the yield trending methodology implemented is provided in the document "Actuarial Certification of Probable Yield Methodologies (2018)" prepared by Denise Cheung FCIA, FCAS, of IAO Actuarial Consulting Services, AON Reed Stenhouse Inc., dated March 12, 2019.

5.0 Probable Yield Methodology Description

A detailed description of the probable yield methodology including the procedures used to account for quality losses in the calculation of probable yield for (when applicable) each Agricultural Product are set out in: "Actuarial Certification of Probable Yield Methodologies (2018)" prepared by Denise Cheung FCIA, FCAS, of IAO Actuarial Consulting Services, AON Reed Stenhouse Inc., dated March 12, 2019.

6.0 Yield Cushioning

• 6.1 Yield buffering is being utilized for all agricultural products with an average farm yield, except apples, strawberries, and hemp.
• 6.2 The approved actuarial opinion for the methodology of implementing the yield cushioning program is provided in the document "Actuarial Certification of Probable Yield Methodologies (2018)" prepared by Denise Cheung FCIA, FCAS, of IAO Actuarial Consulting Services, AON Reed Stenhouse Inc., dated March 12, 2019.

7.0 Follow-up on Last Certification Recommendations and on Agreements for Modifications Requested by Canada

The Province shall implement or cause to be implemented, the recommendations made by the Provincial Actuary in actuarial certifications unless Canada has agreed with the Province in writing not to implement a particular recommendation. The Province shall make adjustments to reflect the modifications requested by Canada and agreed to by the Province.