Calif. Issues Declaration of Insurance Emergency in Agricultural Freeze

A recent proclamation by California’s Insurance Commissioner Steve Poizner is allowing out-of-state insurance adjusters to be dispatched to California’s agricultural community to assist in the state of emergency resulting from January’s five days of freezing temperatures.

The Commissioner said he issued the Emergency Declaration because he anticipated the magnitude of the agricultural freeze that devastated California’s crops would lead to a high number of insurance claims and create a shortage of qualified insurance adjusters.

“During this state of emergency, I want to ensure that our farming communities avoid the red tape and get paid quickly so they can get back to the business of farming,” Poizner said.

Governor Arnold Schwarzenegger proclaimed a state of emergency due to extreme low temperatures and freezing conditions that began January 11 and occurred for five days. California is the nation’s No. 1 producer of fresh citrus, growing about 86 percent of lemons and 21 percent of oranges sold in the United States, according to the California Farm Bureau.

Florida produces more citrus overall — about 55 percent of the nation’s total, according to the USDA — but most of that state’s oranges are processed for juice.

More than 70 percent of this season’s oranges, lemons and tangerines were still on the trees when nighttime temperatures in California’s Central Valley dipped into the low 20s and teens. The freeze ruined as much as three-quarters of the California citrus crop, growers say; the fruit is threatened whenever the mercury falls below 28 degrees.

Preliminary data indicates that there may be more than $1 billion in damage to California agricultural products, as well as extensive damage to avocado and strawberry crops.

Lee Cole, chief of Santa Paula-based Calavo Growers Inc., which sells 35 to 40 percent of the state’s $380 million avocado crop, agreed it’s too early to know how severe the losses will be. But the freeze could claim up to 40 percent of Calavo’s crop in Ventura County, with damage along the less-frigid coast between San Luis Obispo and Escondido hovering between 25 and 35 percent, he said.
Growers generally insure their crop for about 65 to 70 percent of its value, on average. Up to half of their insurance costs is subsidized by the federal government, said Bob Blakely, director of grower services for California Citrus Mutual. About 3,000 farmers — 90 percent of California citrus growers — will get some insurance payout from the cold snap, Blakely said.

With approximately 90 percent of crops in California covered by crop insurance, during a state of emergency, the state’s claims adjusters would be in high demand, causing severe delays, Poizner explained. The Commissioner issued the declaration in conformity with the requirements of Section 14022.5 of the California Insurance Code, which provides that such use is reasonably necessary to adequately respond to the emergency situation.

“We appreciate Commissioner Poizner’s effort to act quickly and decisively to assist California’s agricultural industry,” said Doug Mosebar, President of the California Farm Bureau.

“A large segment of California’s farming families have suffered a great blow with the recent freeze, as they did in 1990 and 1998,” said Senator Dave Cogdill, R-Fresno, Modesto. The declaration “will greatly assist California’s growers to get back on their feet and return to business. This is good for growers, good for California’s economy, and good for California’s consumers.”

The last time an Insurance Commissioner issued this type of declaration was in Nov. 2003 in response to wildfires in Southern California.

Meanwhile, state politicians are also trying to secure aid for some 12,500 workers who may lose their jobs because they will not be needed to process fruit because of the crop damage. Gov. Arnold Schwarzenegger has said the state would offer unemployment assistance. And U.S. Sen. Barbara Boxer’s staff planned to meet in January with aides to other elected officials to discuss plans for helping those affected by the freeze and ask the federal government for disaster aid.

The Associated Press and CDI contributed to this report.