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When Robert Cerda jumped into Louisiana oyster growers’ efforts to organize crop insurance in April 2005, the group relied on little more than prayers to protect their livelihood in the face of a hurricane.
“The oyster growers had nothing,” said Cerda, president of Crop Insurance Systems Inc. in Missouri.
This year, about 50 percent of Louisiana’s oyster crop is expected to fall under the U.S. Department of Agriculture’s group risk plan that Cerda and the Louisiana Oyster Task Force developed in 2009. Growers pay premiums based on how many pounds of oysters they haul in from oyster beds leased from the state and gain crop protection from hurricane, drought, flood damage — everything except crude oil.
Despite years spent designing an insurance policy to prop the industry up during disaster, participating oyster growers are back to nothing. The policy, designed to cover natural disasters, will not cover damage caused by millions of gallons of oil and chemical dispersant stemming from the site of the Deepwater Horizon rig explosion.
“It is a shame,” said John Tesvich, chairman of the Louisiana Oyster Task Force and owner of Port Sulphur Fisheries Co., which purchased coverage for about 4,000 acres of oyster bed leases this year.
With swaths of oyster harvesting areas closed and the impact of the oil and chemical dispersant on crops yet to be determined, Tesvich said it is unclear whether there will be a full crop to insure as of next April, when premiums are due.
“This season is pretty much going to be totally disrupted,” Tesvich said.
The Oyster Task Force is working with the USDA and Crop Insurance Systems to determine if premiums for this year can be forgiven in light of dead crops.
“It would be only fair if the premiums would be returned,” Tesvich said.
Cerda said growers and his company have informed the USDA of potential problems with the insurance for this year. But considering the long fight it took to get the department to offer the specialized insurance, he’s not sure what kind of appetite the federal government will have for suspending coverage or waiving premiums.
“The reality is crop insurance by law can only pay for natural disasters. This type of event, where an entire crop in an entire state is affected by something that’s not a natural disaster, has never happened before,” Cerda said.
As hurricane season starts, some growers are worried about what their policy will cover if their crops are hit by the natural disasters the insurance was designed to cover.
“What if we have a storm and that pushes the oil over? It’s kind of like the Katrina argument. Was it the wind that did it or the flood? Those people that bought wind insurance were sure hoping it was the wind,” said Mike Voisin, CEO of Houma-based Motivatit Seafoods Inc.
Motivatit, which is harvesting only a handful of its 10,000 leased acres, has purchased USDA crop insurance since it was first offered. Voisin said the policy should be amended to include oil-related disaster in the same way car insurance includes uninsured motorist coverage, though talks of modification haven’t gotten far.
“It would take the political will to change. We don’t have any energy or time for that now. We’re dealing with the moment,” Voisin said.
Still, growers need to explore all options for recovering losses, said Richard Shore, a partner with Washington, D.C.-based Gilbert Law Firm who specializes in insurance recovery.
Shore said the only clear option for growers without a form of business interruption coverage is claiming damages directly with BP, though those without access to their crop may not be able to assess full damage for several months.
Shore added that claims started now can be added to in the future. BP reported it received nearly 16,000 claims during the last week of May from a variety of plaintiffs.
“You want to get as far to the front of the line as you can and start dealing proactively. These kinds of claims don’t get better as time goes on,” Shore said.
But for Sam Slavich, a fourth-generation oyster grower, the focus has been about grabbing what harvest he can and waiting for the fallout.
Slavich said he hasn’t purchased oyster crop insurance because he was waiting for premiums to decrease, and he’s more worried about the lack of workers than a lack of crop.
About two-thirds of his beds are closed, but he is harvesting about 600 pounds per day from the rest with the help of his brother.
As for recovering losses from BP, Slavich said he’s not sure he’s up for a waiting game.
“Once lawyers get a hold of this, anyone can guess how it will end up. At 60 years (old), I can’t afford to wait 20 years for a settlement to come down. That’s just not in the cards for me.”•