(Dec. 18) With estimated losses from the November fires in Southern California ranging anywhere from $45 million to $100 million (counting buildings, rolling stock and irrigation systems), some avocado growers are beginning to realize they may be underinsured.

“Growers have a responsibility (to buy insurance), and we’ve always advised them to get at least the minimum coverage,” said Guy Witney, director of industry affairs for the Irvine-based California Avocado Commission.

Witney said the federally controlled avocado policy, which is sold through as many has nine crop insurance companies in California, was written eight years ago as a pilot policy. New crop policies normally stay in the pilot phase for five to six years “to work the bugs out” before becoming permanent.

Witney said the avocado policy has been a source of angst in the industry because the U.S. Department of Agriculture’s Risk Management Agency, which controls the program, has kept it in the pilot state while annual changes continued to be made that determine how payouts to claimants are made.

He said part of the problem is that because of internal cutbacks the Risk Management Agency put the program’s development out for bids to private contractors.

“It hasn’t worked as well as they anticipated,” he said. “I’ve been meeting for six years. Some think it’s corrupt and wonder were all the money is going.”

He said he discussed the formula to calculate payments to growers with AgriLogic Inc., Mansfield, Texas, which won the bid to develop the program.

“It was a very simple formula,” he said. “Now it’s confusing and convoluted. Nobody understands how the private agents who sell the policies come up with the payout amounts. Every year it’s different and it’s a quagmire of confusion, and as a consequence we have very low participation.”

Witney said fewer than 50% of growers have bought into the program, but said it is not completely without worth because it does provide growers with a gateway to federal assistance if disaster strikes.

Wayne Shortes, chief executive officer of Golden State Crop and Insurance Services, Hanford, Calif., agreed that contracting out the development of the policy has hampered the avocado industry’s efforts to make it easier to understand and to keep premiums affordable. He also said a revision to change the policy from being revenue based to production based has stalled.

“The present method guarantees growers a certain number of dollars per acre and is supposed to protect them from production loss and market price declines,” he said. “But the market price decline is based on the industry average, not on a grower’s individual price. The market price hasn’t gotten so bad that it’s been low enough to trigger the policy.”