[Federal Register Volume 62, Number 143 (Friday, July 25, 1997)]
[Rules and Regulations]
[Pages 39917-39926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19631]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 62, No. 143 / Friday, July 25, 1997 / Rules
and Regulations
[[Page 39917]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 403 and 457
General Crop Insurance Regulations; Peach Crop Insurance
Regulations, and Common Crop Insurance Regulations; and Peach Crop
Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
specific crop provisions for the insurance of peaches. The provisions
will be used in conjunction with the Common Crop Insurance Policy Basic
Provisions, which contain standard terms and conditions common to most
crops. The intended effect of this action is to provide policy changes
to better meet the needs of the insured, include the current peach
(fresh) crop insurance regulations with the Common Crop Insurance
Policy for ease of use and consistency of terms, and to restrict the
effect to the current peach crop insurance regulations to the 1997 and
prior crop years.
EFFECTIVE DATE: August 25, 1997.
FOR FURTHER INFORMATION CONTACT: Richard Brayton, Insurance Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, United States Department of
Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order No. 12866
The Office of Management and Budget (OMB) has determined this rule
to be exempt for the purposes of Executive Order No. 12866, and,
therefore, this rule has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Following publication of the proposed rule, the public was afforded
60 days to submit written comments and opinions on information
collection requirements being reviewed by OMB pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35) previously approved by OMB
under OMB control number 0563-0053. No public comments were received.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This rule contains no Federal
mandates (under the regulatory provisions of title II of the UMRA) for
State, local, and tribal governments or the private sector. Thus, this
rule is not subject to the requirements of sections 202 and 205 of the
UMRA.
Executive Order No. 12612
It has been determined under section 6(a) of Executive Order No.
12612, Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions, or on the
distribution of power and responsibilities among the various levels of
government.
Regulatory Flexibility Act
This regulation will not have a significant economic impact on a
substantial number of small entities. New provisions included in this
rule will not impact small entities to a greater extent than large
entities. Therefore, this action is determined to be exempt from the
provisions of the Regulatory Flexibility Act (5 U.S.C. 605), and no
Regulatory Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order No. 12372
This program is not subject to the provisions of Executive Order
No. 12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order No. 12988
The final rule has been reviewed in accordance with Executive Order
No. 12988. The provisions of this rule will not have a retroactive
effect prior to the effective date. The provisions of the rule will
preempt State and local laws to the extent such State and local laws
are inconsistent herewith. The administrative appeal provisions
published at 7 CFR part 11 must be exhausted before any action for
judicial review may be brought.
Environmental Evaluation
This action is not expected to have a significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review Initiative to eliminate unnecessary or duplicative
regulations and improve those that remain in force.
Background
On Tuesday, November 19, 1996, FCIC published a notice of proposed
rulemaking, in the Federal Register at 61 FR 58786 to add to the Common
Crop Insurance Regulations (7 CFR part 457), a new section, 7 CFR
457.153, Peach Crop Insurance Provisions. The new provisions will be
effective for the 1998 and succeeding crop years. These provisions will
replace and supersede the current provisions for insuring peaches found
at 7 CFR part 403 (Peach (Fresh) Crop Insurance Regulations). FCIC also
amends 7 CFR 403 to limit its effect to the 1997 and prior crop years.
Following publication of that proposed rule, the public was
afforded 60 days to submit written comments and opinions. A total of
116 comments were received from FCIC, the National Peach Council, state
peach councils, peach growers, and the reinsured companies. The
comments received, and FCIC's responses, are as follows:
[[Page 39918]]
Comment: The peach council made several recommendations on peach
appraisals: (a) Adjustments be made in the field, (b) quality
adjustments be made for all insured causes of loss, (c) signatures of
the producer and adjuster be required on all appraisals, (d)
arbitration or similar process be used for unsatisfactory adjustments,
and (e) regulations should clearly provide unencumbered ownership of
any remaining peaches after a claim is settled.
Response: Adopting recommendations in (a), (b) and (c) would
simplify the settlement of claims and result in earlier payment of an
indemnity, but they are not appropriate under insurance principles.
Although peach appraisal methods are believed to be reliable, they are
not as accurate as measured final production. Production to count of
peaches may change greatly during the last few days before maturity,
depending on how the peach sizes during the final swell stage. To
protect its interests, the insurance provider would be required to
assume that maximum sizing would occur. This may be contrary to the
producers' interests. Use of arbitration is mandated by section 17 of
the Common Crop Insurance Policy Basic Provisions whenever the crop is
insured under a contract reinsured by FCIC. When the producer and the
insurance provider agree on the settlement of the claim, insurance on
the unit will end. The producer owns any peaches that remain on the
unit. For these reasons, no changes have been made.
Comment: The peach council noted that the responsibilities of
producers are apparently even greater under the proposed peach policy
than in the current policy. Notification by the producer is required,
for each insured unit, on at least 5 occasions: (a) Within 72 hours of
initial discovery of damage; (b) ``any circumstance that may affect the
yield'; (c) 15 days prior to direct marketing; (d) within 3 days of the
date that harvest ``* * * should have started if the crop will not be
harvested'; and (e) ``* * * at least 15 days prior to the beginning of
harvest of the damaged variety, if you previously gave notice * * *''
The Regulatory Flexibility Act review section summarized in the Federal
Register notice states, ``this rule does not have any greater or lesser
impact on the producer,'' and thereby claims exemption to a Regulatory
Flexibility Analysis. The council contended that the impact to peach
producers is indeed greater under the proposed rule. The council
proposes, once initial notification of potential crop damage is
provided by the producer to the insurance provider, responsibility for
tracking crop status should be shared by the producer and the insurance
provider.
Response: FCIC does not agree that the burden on the typical
insured is materially greater under the proposed provisions than under
the current policy. The typical insured is not required to provide 5
notices for every insured unit. Only those notices that are appropriate
for each unit are required. The requirements that the producer give
notice of circumstances that may affect the yield compared to prior
years and within 15 days of direct marketing have been added.
Previously, direct marketed production was not insurable. With the
extension of insurance to such production appropriate notice provisions
were added. However, relatively few producers should be affected since
these conditions are the exception, not the norm. The other three
events requiring notice are contained in the present policy, but the
time of notice may have changed to assure that the insurance provider
has opportunity to timely assess the damage and determine the amount of
the loss. The insurance provider does have responsibility for tracking
the potential for loss adjustment activity once initial notices are
provided by producers. This assures that an adequate number of
adjusters will be available. However, only the producers know the stage
of development of the crop on a particular unit, and must bear the
responsibility for promptly advising the insurance provider so that the
loss adjustment can be performed in a timely manner. Therefore, no
change has been made.
Comment: The peach councils and peach growers proposed a change to
improve equity in the actual production history (APH) calculation.
These commenters maintain that more equitable APH determination must be
enacted in these regulations, and proposed that a 5-year APH be derived
by using 8 years of production history but eliminating the 2 lowest and
1 highest yields. They stated that this method of calculating APH will
help mitigate wild APH yield swings.
Response: There is no statutory authority to eliminate reported
production history. Therefore, no change has been made.
Comment: The peach councils proposed that the practice of devising
and assigning ``transitional yields'' be addressed in the peach policy
to offer guidelines that: (1) Are more consistent from region to
region; (2) are more closely related to APH and related to producing
areas within the respective regions; and (3) require favorable yield
adjustments for commercial producers with proven production skills and
sound management practices.
Responses: Transitional yields are determined in accordance with 7
CFR part 400, subpart G and are consistent for all crop policies. To
change the methodology for determining such yields on a crop, region,
or farm basis would significantly increase the administrative burden on
the program and subject it to greater program vulnerabilities.
Production capabilities are different between producers depending on a
myriad of factors including farming practices, soil types, climate,
etc. Use of standardize transitional yields will ensure that all
producers are treated equally until they establish their own yield
bases. Therefore, no change has been made.
Comment: The peach councils proposed to alleviate policy problems
by (1) excluding commercial peach packers from the definition of
``direct marketing;'' (2) identifying the intended marketing path of
insured peaches in the definition; (3) requiring that direct marketers
make their declaration in the insurance contract; (4) covering direct
marketers under a separate specialized peach policy, possibly through a
pilot program; (5) that pick-your-own operations be identified in the
insurance contract and be covered under a policy distinct from the
policy covering commercial peach producers. A separation of this sort
should streamline the process for the insured and insurance provider.
They also proposed that commercial producers should be excluded from
``Direct Marketing'' and that for producers declaring a direct
marketing intent, the proposed 15 day notification period is indeed
unreasonable and should be changed to require 7 days notice before the
actuarial practice of direct marketing begins; and (6) notification
that the 15 day notification requirement in section 10(b) be deleted.
Response: With respect to liability and risk, there is generally no
distinction between direct marketed production and production marketed
through a processor. The only difference is the insurance providers
ability to accurately determine the amount of production. The 15 day
notice requirement is intended to give insurance providers sufficient
time to appraise the loss of production prior to direct marketing. This
policy distinction is insufficient to justify the paperwork and
administrative burden of creating a separate policy. However, section
10 is modified by adding the provisions that the insured must notify us
at least 15 days before any production from any
[[Page 39919]]
unit will be sold by direct marketing, unless the producer will have
verifiable records to show that direct marketed peaches were harvested
and graded through a packing shed. Further, FCIC does not believe the
15 day notice to be unreasonable. The insurance provider needs adequate
time to schedule a site visit to appraise the production. Therefore, no
change has been made.
Comment: The peach councils recommended from a safety net
perspective, that FCIC delete all distinction between ``fresh'' and
``processing'' peaches and that FCIC should offer assurance of a level
of production, a price as agreed in the contract, and standardization
of loss adjustment procedure for fresh and processing peaches without
regard to how the peaches are marketed.
Response: Fresh and processing uses have different requirements for
quality as well as different prices and markets. Therefore, fresh and
processing peaches must be differentiated to provide a fair insurance
offer to producers and an actuarial sound insurance program for the
insurance providers. Therefore, no change has been made.
Comment: The peach councils pointed out that the peach industry may
move away from the \3/4\ bushel box, however, the \3/4\ bushel graded
equals 1 bushel ungraded as established by the insurance industry is
fair and realistic and the grade/ungraded equivalent relationship
should remain.
Response: FCIC recognizes that the unit of measurement for peaches
is not always a \3/4\ bushel. Any unit of measure can be converted to a
full 50 pound bushel. Therefore, references to a \3/4\ bushel carton
has been removed from these provisions.
Comment: The peach council asked for an explanation regarding FOB
prices in the background section item 13, and section 11.
Response: FCIC has amended the term ``FOB'' in section 1 under the
definition for ``Actual price per bushel.'' The shipping point price
reported by the Market News Service is used to determine the value of
production for the purpose of quality adjustment.
Comment: The crop insurance industry questioned why Freight on
Board (FOB) is also used in the definition of ``actual price per
bushel'' and recommended it be changed to read ``(FOB) (Freight on
Board)'' for reference.
Response: The term ``(FOB) (Freight on Board)'' has been removed
from the definitions. However, ``FOB'' will still be used in the term
of ``actual price per bushel.''
Comment: The peach councils requested that the Special Provisions
be open for comments and modification.
Response: FCIC agrees that the terms of the Special Provisions are
important to producers because they are part of the insurance contract.
However, the Special Provisions contain those terms and conditions that
are unique to an area. Great variations in production and marketing
practices make inclusion of all terms into the Crop Provisions
impractical. Any person with questions or comments regarding the
Special Provisions should direct such comments to the applicable
Regional Service Office.
Comment: The peach council recommended that the Secretary be given
discretionary authority in the policy to declare a Crop Failure
Mitigation Floor under which the decrease in the APH yield would be
limited to 10 percent when a commodity within a growing region meets
specified parameters for a total or near total crop failure.
Response: Section 508(g) in the Federal Crop Insurance Act, as
amended, provides for the calculation of APH. This section requires a
straight average of the annual yield in the data base and does not
authorize the use of yield ceilings or floors. Therefore, no change has
been made.
Comment: The peach council contends that standardization of crop
policies should not be to the detriment of the peach producers.
Response: FCIC does not believe that standardization of crop
policies adversely affects the producers. FCIC makes every possible
effort to assure that any unique characteristics of a crop are
recognized. This is the reason that the Crop Provisions are used in
conjunction with the Common Crop Insurance Policy.
Comment: In three comments received from the peach council, two
recommended that the definition ``Actual price per bushel'' be changed
by deleting the distinction between fresh and processing peach types.
The third commenter suggested deleting the entire paragraph.
Response: The definition ``Actual price per bushel'' is used for
quality adjustment purposes. Since marketing prices for fresh and
processing uses differ materially, distinction between peach types is
necessary. Therefore, no change has been made.
Comment: The peach growers and the crop insurance industry
expressed concern with the definition of ``Actual price per bushel''
referring to U.S. Extra No. 1 ``2 inch'' peach. There has not been a
market for a ``2 inch'' peach in Pennsylvania and Maryland for many
years. Most growers market ``2\1/2\ inch'' peaches.
Response: FCIC recognizes that the typical size of marketable
peaches varies among regions. For this reason, the definition states
that, if the average price is not available for ``2 inch,'' the next
larger size for which a price is available will be used. Therefore, no
change has been made.
Comment: The peach council recommended that ``adverse weather
conditions'' be defined in the context of damage to the insured crop
rather than specific weather events. They noted that problems
previously have been experienced with events such as ``flooding,''
which technically was not considered flooding because water did not
overflow the banks of a nearby river. There was no regard to the crop
damage or inability to harvest and market the crop, which was a direct
result of excessive moisture. Such technicalities should be avoided.
Response: FCIC agrees that technicalities should be avoided, and
believes that the Basic Provisions in conjunction with the Crop
Provisions clearly specify that any adverse weather conditions,
including excess moisture, that causes damage to the insured crop is
covered by the policy. The consequence of adverse weather, such as
inability to harvest or market the crop, would be covered as long as
cause can be adequately established. However, under the principals of
insurance, the actual cause of the loss, inability to harvest etc.,
must be identified, not just the result of that cause. Therefore, no
change has been made.
Comment: Two comments from the peach council recommended changes to
the definition of ``Bushel.'' One peach council member proposed
changing the definition of ``Bushel'' to better reflect actual
practices of peach producers, as well as to parallel other existing
industry definitions. The commenter noted that the peach industry is
moving from the \3/4\ bushel box as the unofficial industry standard
toward a \1/2\ bushel box to meet marketplace demands. The \1/2\ bushel
box is more expensive to pack and distribute. In that light, the
existing graded/ungraded relationship equivalent should be consistent,
with due consideration given to packaging changes. The commenter
proposed that the definition be amended to read, ``A \3/4\ bushel of
graded peaches is considered equivalent to a 50-pound bushel of
ungraded peaches.'' Another peach council member proposed deleting the
second sentence in the definition of a bushel which states ``A \3/4\
bushel of graded peaches is
[[Page 39920]]
considered equivalent to a forty-eight-pound bushel of ungraded
peaches.''
Response: FCIC agrees with the comments and has amended the
provision to read ``bushel--fifty pounds of ungraded peaches.''
Comment: The crop insurance industry recommended that in the
definition of ``Bushel'' identify who grades the peaches, i.e., a
licensed grader.
Response: A licensed grader is only used by the government or
processor when the peach production is being shipped to market. For
direct marketing producers, i.e., roadside stand, farmers market, u-
pick etc., the bushel is a bulk 50 pounds measure and not graded by a
licensed grader. Therefore, no change has been made.
Comment: Two comments from the peach council, addressed the
definition of ``crop year.'' The peach council opposed the length of
the proposed crop year because it further shortened the period
producers have to make critical decisions for the upcoming crop by 10
days. The peach council proposed definition is, ``The period beginning
December 1 and extending through September 30 of the following year,
which is designated by the calendar year in which the insurance period
ends.''
Response: The definition of ``crop year'' has been removed from the
proposed rule because it is contained in the Common Crop Insurance
Policy Basic Provisions. FCIC believes that an insurance attachment
date of November 21 rather than December 1 does not pose an undue
hardship and simplifies the program because the November 21 date is
consistent with other perennial crop insurance policies.
Comment: The peach councils recommended modifying the definition of
``harvest'' by deleting the words ``or removal.'' The comment was based
on the potential of usual and customary commercial peach production
practices to cause peaches to be unintentionally knocked from the tree.
The proposed definition could be misconstrued and misapplied. The
council proposed the following definition: ``The picking of mature
peaches from the trees either by hand or machine with the intent to
sell.''
Response: FCIC believes the words ``removal of peaches'' must
remain in the definition to prevent the intentional knocking of peaches
to the ground to reduce the production to count in a loss situation.
Loss adjustment procedures account for ordinary and customary losses.
Therefore, no change has been made.
Comment: The peach council proposed adding a definition for the
term ``in the field.''
Response: The term is not used in the policy. Therefore, no change
has been made.
Comment: The peach council recommended the definition of
``irrigated practice'' be changed because the proposed definition
contains redundancies and is ambiguous. The council recommended
changing the definition of ``irrigated practice'' to read ``A method of
producing a crop by which water is artificially applied during the
growing season by appropriate systems and at the proper times.''
Response: The definition was written in the current manner to
prevent insureds with inadequate irrigation facilities and those who do
not supply sufficient water during the crop year from qualifying for an
irrigated loss. Therefore, no change has been made.
Comment: A reinsured company recommended adding the words ``and
quality'' to the definition of ``irrigated practice.''
Response: FCIC agrees that water quality is an important issue.
However, there are no established criteria regarding the quality of
water necessary to produce a crop. Such criteria would be difficult to
develop and administer due to the complexity of the factors. Therefore,
no change has been made.
Comment: The peach council proposed adding a definition of ``loss
in quality.''
Response: A definition of ``loss in quality'' has been added which
specifies that the crop must be damaged to the extent that the producer
does not receive the price for U.S. Extra No. 1 Peaches.
Comment: The peach council recommended adding a definition ``peach
type'' to include all insurable peach types for clarification.
Response: Peach types are not contained in the Crop Provisions.
Insurable peach types for the county are listed on the Special
Provisions. It is the agent's responsibility to have the current county
actuarial documents. Therefore, no change has been made.
Comment: The peach council recommended clarifying the clause in
section 2(e)(1) that states ``you must have records, which can be
independently verified, of acreage and production for each optional
unit for at least the last crop year used to determine your production
guarantee'' by adding ``unless the unit is for trees that are in the
fourth year of leaf growth or the unit is for insurable trees added
since the previous crop year for which no records are available.''
Response: The (APH) Crop Insurance Handbook contains procedures for
determining coverage on newly acquired acreage provided the peach trees
are in the fourth leaf of growth or the acreage of insurable trees
added that have no prior year records. It is the agent's responsibility
to have the current procedure. For reason stated, and to be consistent
with other crop policies, no change has been made.
Comment: A reinsured company expressed concern that the opening
clause of section 2(e)(3)(ii) is not necessary since 2(e)(3) states
that optional units must meet one or more of the following criteria.
Response: FCIC agrees with the comment and has amended the
provisions accordingly.
Comment: A reinsured company asked what is considered a ``bearing''
tree as opposed to a ``non-bearing'' tree as these terms are used in
section 3(b)(2).
Response: FCIC has added a definition of ``bearing tree,'' which
based on industry standards, is a tree in at least its 4th growing
season after set out.
Comment: The peach council recommended inserting the words
``reasonable and pertinent'' between the words ``other information'' in
section 3(b)(4)(iv).
Response: Since the information requested must be necessary to
establish the approved yield, it is presumed reasonable and pertinent.
Comment: The peach council recommended deleting the sentence ``If
you fail to notify us of any circumstance that may affect your yields
from previous levels, we will adjust your production guarantee as
necessary at any time we become aware of the circumstances'' from
section 3(b)(4)(iv) because broad and ambiguous phrases like ``any
circumstance'' are inappropriate and unreasonable.
Response: This provision in its entirety requires information to
establish reasonable yields for orchards that are interplanted, for
which production practices have changed, etc. If the insurance provider
discovers, after an approved yield has been established, that the
condition of the orchard is not as reported, the insurance provider
must have the right to adjust the production guarantee to reflect the
actual condition of the orchard. Therefore, no change has been made.
Comment: A reinsured company questioned why the proposed language
in section 6 omitted the reference to peaches ``grown for the
production of
[[Page 39921]]
fresh and processing peaches (except processing peaches in
California'') that is contained in the current policy.
Response: FCIC agrees and has added section 6(c) in these
provisions.
Comment: The peach councils recommended the cancellation and
termination dates remain November 30.
Response: The cancellation and termination dates were changed from
November 30 to November 20 to be consistent with other perennial crop
insurance policies. This action was taken to comply with legal
directives that the program be simplified. Combining similar dates does
reduce complexity. Further, this change is consistent with the change
to the date insurance attaches. Therefore, no change has been made.
Comment: The peach councils recommended changing section 8(a)(1) to
state that insurance attaches on December 1 or ten (10) days after
application for those applications filed after November 21.
Response: FCIC has changed the date to November 21 to be consistent
with other perennial crops. Therefore, no change has been made.
Comment: The peach councils and peach growers requested that split
pits not be automatically excluded as insured damage. They requested
that section 9(b)(2) be revised to read ``Split pits regardless of
cause, unless damaged by an insured cause of loss.''
Response: FCIC realizes that the percentage of split pits may
increase under certain adverse weather situations. However, some
varieties are inherently subject to split pits. It is difficult to
identify whether a split pit is the result of natural tendencies or is
weather related. Split pits are not always obvious since the damage is
internal. Principals of sound insurance require that losses be definite
as to time, place, and cause. FCIC does not believe that split pits
meet these principles. Therefore, no change has been made.
Comment: The peach councils requested the notification date in
section 10(a) be changed from 3 days to 7 days prior to the date that
harvest of the damaged variety should have started if the crop is not
to be harvested.
Response: FCIC recognizes that 3 days is a short time frame.
However, FCIC wants to provide the insured with the maximum amount of
time to determine whether the crop can be harvested while still
providing time for the insurance provider to conduct an appraisal. This
requirement is consistent with other perennial crop insurance policies.
Therefore, no change has been made.
Comment: The peach councils recommended changes to section 10(c) by
deleting the phrases ``at least 15 days prior to the beginning of
harvest'' and ``you must not sell or dispose of the damaged crop until
after we have given written consent to do so.'' The inherent nature of
farming, weather, and marketing suggest that a notice one-half month
(15 days) prior to beginning of harvest is unreasonable. Numerous
examples can be raised to demonstrate the potential problems with this
provision. If notice of damage has been previously given as required,
then the insurance provider should accept at least a portion of the
responsibility in managing the potential claim. Nullification of
coverage for failure to meet this requirement is far too severe.
Response: Initial reports of damage often do not result in a loss
because the damage was not severe enough. The insured is best able to
assess the conditions of the crop as it matures because he or she
observes it. The insurance providers responsibility is to appraise the
loss once it has been determined that a loss is likely. Under the
insurance policy, the burden is on the insured to prove that a loss
occurred as a result of an insured cause of loss. FCIC will not shift
the burden to the insurance provider. Therefore, no change has been
made.
Comment: The peach council recommended a new section 10(d) that
states ``in addition to our responsibilities outlined in the Basic
Provisions, we will assume responsibilities for inspection requirements
outlined in this section, following the initial notification by you
that a crop may be damaged.''
Response: The insurance provider does not have the day to day
contact with the crop that the producer does to identify when losses
have manifested themselves. It would place an undue burden on the
insurance provider to take this responsibility. Therefore, no change
has been made.
Comment: The peach councils recommended the language in section
11(b) be modified to be consistent with the current policy. The current
policy specifies multiplying the total production to be counted by the
actual price per bushel or by the price election, whichever is larger.
Response: This change was made so that the same price is used to
establish liability and the amount of loss. FCIC is no longer offering
revenue insurance on peaches because it is currently not authorized
under the Federal Crop Insurance Act, as amended, except on a pilot
basis. Therefore, no change has been made.
Comment: The peach councils recommended deleting the reference
relating to direct marketing from section 11(c)(1)(i)(B).
Response: FCIC will insure direct marketed peaches, so the
requirement in section 10 must be addressed in determining the total
production to count. Therefore, no change has been made.
Comment: The peach council recommended deleting the last sentence
in section 11(a) which reads, ``In the event you are unable to provide
separate acceptable production records: * * *.''
Response: Maintaining separate records is a condition of receiving
optional units. If production records for optional units are not kept
separate, it would be impossible to accurately determine production to
count for each unit. Therefore, no change has been made.
Comment: The peach council recommended changing 11(a)(1) to read:
For any optional unit, we will combine all optional units for which
``timely notice was not reported or representative samples for
appraisals are not available.''
Response: Neither timely notices nor representative samples for
appraisals are a requirement for optional units. Units are combined
when a producer fails to maintain separate production records.
Therefore, no change has been made.
Comment: The peach council recommended that FCIC delete 11(a)(2)
which reads ``For any basic units, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for the units.''
Response: If production is commingled it is impossible to
accurately establish the amount of production attributed to each unit.
Allocation in proportion to our liability for the harvested acres in
units is a fair and equitable process. The alternative is to deny
liability due to failure to follow policy provisions. Therefore, no
change has been made.
Comment: The peach councils recommended that sections 11(b)(1),
(2), (3), (4), (5), (6), and (7) be replaced by: ``11(b) In the event
of loss or damage covered by this policy, we will settle your claim by:
(1) Multiply the insured acreage of peaches on the farm unit by the
applicable production guarantee per acre which product will be the
production guarantee for the farm unit;
(2) Subtract therefrom the total production of peaches to be
counted for the farm unit;
(3) Multiply the remainder by the applicable price election for
computing indemnities; and
[[Page 39922]]
(4) Multiply the result obtained in step (3) by the insured's
share.
Response: The abbreviated formula is not correct when both fresh
and processing peaches are insured within the same unit. When
applicable, separate prices must be used to establish the amount of
liability and the value of the production to count. Therefore, no
change has been made.
Comment: The peach councils recommended deleting in the proposed
provisions, references to appraised production in sections
11(c)(1)(i)(B) and (D), 11(c)(1)(ii), (iii), and (iv), and 11(c)(2) and
(3).
Response: The recommended changes would permit abuse of the
insurance program in many ways. A producer could simply elect not to
harvest the crop and if the references to appraised production were
deleted, the producer would receive a zero production to count. The
crop insurance program only insures against legitimate losses of
production. To permit such a change would significantly increase the
premium rates for all producers. Therefore, no change has been made.
Comment: The peach council proposed that two guidelines for
production to count be added: ``(A) Peaches damaged by an insured cause
of loss that fail to appraise ``2 inches'' and up in size will not be
recorded as production to count; and (B) Upon inspection, peaches
showing evidence of internal damage will not be recorded as production
to count.''
Response: In some regions of the country, certain varieties of
peaches which grade near ``2 inches'' in size are sold. Peaches that
are less than ``2 inches'' in size due to an insurable cause of loss
are eligible for quality adjustment that takes into consideration their
reduced value. If this damage is from an insurable cause and results in
unmarketability of the peaches, they are not included as production to
count. Therefore, no change has been made.
Comment: The peach council recommended modifying section 11(c)(1)
to read ``any appraisal we have made on insured acreage will be
considered production to count.'' This recommendation would result in
deleting the language ``unless such appraised production is exceeded by
the actual harvested production.''
Response: Harvested production is the most accurate determination
and will be used as production to count. Appraisals are, by necessity,
an estimate of production. Therefore, no change has been made.
Comment: The peach councils recommended changing section
11(c)(1)(iv) to read: (1) potential production on insured acreage that
you intended to abandon or no longer care for, if you and we agree on
the appraised amount of production. Upon such agreement, the insurance
period ``and all crop adjustments'' for the acreage will end; and (2)
add the statement ``In any regard, however, once you and we reach an
agreement on appraised production, further activity or inactivity with
the crop is immaterial.''
Response: When the insurance period ends the producer can do
whatever the producer wishes with the crop. Therefore, no change has
been made.
Comment: The peach council recommended revising section 11(c)(2) to
read ``all production from the insurable acreage, unless the insurance
period has ended due to a previous agreement between you and us.''
Response: Harvested production will be used as production to count.
For any acreage that is not harvested by the end of the insurance
period, the appraised production will be used as production to count.
Once the insurance period has ended and the claim finalized, the
producer can do whatever the producer wishes with the crop. Therefore,
no change has been made.
Comment: The peach council recommended deleting section 11(c)(3).
This provision permits mature marketable peach production to be reduced
due to loss in quality as a result of an insured cause of loss.
Response: This provision allows quality adjustment on damaged
production due to all insured causes of loss. The current policy only
permits quality adjustment for damage due to hail, wind, and misshapen
fruit. Therefore, no change has been made.
Comment: The peach councils recommended deleting section
11(c)(3)(i)(A) which allows for (FOB) peach prices in the absence of
the Market News Service.
Response: The current policy does not specify the price to use when
the Market News Service does not establish a price for peaches. The
change to the definition of actual price per bushel rectifies this
omission. Therefore, no change has been made.
Comment: The peach councils recommended deleting that part of
section 11(c)(3)(i) which reads: ``peaches grown for fresh use by:''
and deleting subparagraph 11(c)(3)(ii) in its entirety.
Response: The county actuarial table provides for different price
elections for fresh and processing peaches. For example: The price
election for fresh peaches is $5.25 per bushel and processing peaches
is $4.00 per bushel. While it is true that some fresh market varieties
may be marketed as either fresh or processing, the true processing
peaches do not make good fresh market peaches. Also the Market News
Service only quotes prices for fresh peaches that are packed and
shipped. Therefore, no change has been made.
Comment: The peach council suggested adding a section 11(c)(5)
``Economic Zero or Threshold Yield.'' This section would contain
language to allow an appropriate level in which production is not
economically feasible to maintain and therefore should be zero in
production to count.
Response: The crop insurance program only protects against loss of
yield or crop damage due to insured causes. It does not ensure a
profit. Therefore, no change has been made.
Comment: The peach councils suggested adding language to section
11(c)(6) to state ``Peaches damaged by an insured cause of loss that
failed to appraise ``2 inch'' and up in size will not be recorded as
production to count.''
Response: Peaches less than ``2 inch'' in size due to an insurable
cause of loss may still have value if they are sold. Such production
will be eligible for quality adjustment which is more equitable for the
insurance provider and insured. Therefore, no change has been made.
Comment: One comment received from the peach council requested
clarification of the written agreement in the summary. Specifically, an
explanation of the phrase ``certain modifications allowed'' and the
policies for which modifications are allowed was requested.
Response: Written agreements are designed to modify certain terms
and conditions of the crop insurance policy. Each crop insurance policy
specifies the provisions that may be modified by written agreement. For
example, section 6(c) states that: ``We may agree in writing to insure
peaches on acreage that has not reached the fourth growing season after
being set out if it has produced at least 100 bushels of peaches per
acre.
Comment: A reinsured company recommended that the requirement for a
written agreement to be renewed each year should be removed in section
12. Terms of the agreement should be stated in the agreement to fit the
particular situation for the policy, or if no substantive changes occur
from one year to the next, allow the written agreement to be
continuous.
Response: Written agreements are temporary and intended to address
unusual situations. If the condition for written agreement remains from
year to year, that condition should be
[[Page 39923]]
incorporated into the policy, the Special Provisions or the Actuarial
Table. Therefore, no change has been made.
In addition to the changes described above, FCIC has made the
following changes to the Peach Crop Provisions.
1. Section 1--Clarified the definition of ``actual price per
bushel.''
2. Section 1--Added the definition of ``packing shed'' and ``set
out'' for clarification.
3. Section 2(e)(1)--Clarified that the insured must provide records
not later than the production reporting date of acreage and production
for each optional unit for at least the last crop year used to
determine the production guarantee.
4. Section 3(a)--Clarified that the insured may select one price
election for each peach type ``fresh or processing.''
5. Section 3(b)(4)(i)--Clarified that for the first year of
insurance, the insured must report the age of any perennial crop
interplanted with peaches.
6. Section 9--Added wildlife as an insurable cause of loss to be
consistent with other perennial crop insurance policies. Clarified that
peaches are insured for the same causes of loss as other crops. Disease
and insect infestation are insured causes of loss, if due to natural
causes beyond the control of the producer. The former limitation that
``adverse weather'' be the sole cause factor no longer is necessary.
7. Section 11(c)(3)(ii)(A)--Clarified that the production to count
for damaged peaches grown for processing is calculated by dividing the
value of the damaged peaches by the actual price of undamaged peaches
for processing.
List of Subjects in 7 CFR Parts 403 and 457
Crop Insurance, Peach crop.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation, hereby amends 7 CFR parts 403 and 457, as
follows:
PART 403--GENERAL CROP INSURANCE REGULATION
1. The authority citation for 7 CFR part 403 is revised to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
2. The part heading is revised to read as set forth above.
3. The subpart heading ``Subpart-Regulations for the 1986 and
Succeeding Crop Years'' is removed.
4. Section 403.7 is amended by revising the introductory text of
paragraph (d) to read as follows:
Sec. 403.7 The application and policy.
* * * * *
(d) The application for the 1986 and succeeding crop years is found
at subpart D of part 400, General Administrative Regulations (7 CFR
400.34, 400.38). The provisions of the Peach Insurance Policy for the
1986 through 1997 crop years are as follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
5. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
6. Section 457.153 is added to read as follows:
Sec. 457.153 Peach crop insurance provisions.
The Peach Crop Insurance Provisions for the 1998 and succeeding
crop years are as follows:
FCIC policies:
Department of Agriculture
Federal Crop Insurance Corporation
Reinsured policies:
(Appropriate title for insurance provider)
Both FCIC and reinsured policies:
Peach Crop Provisions
If a conflict exists among the Basic Provisions (Sec. 457.8),
the Crop Provisions, the Special Provisions, and the Catastrophic
Risk Protection Endorsement, if applicable, the Special Provisions
will control the Crop Provisions and these Basic Provisions; the
Crop Provisions will control the Basic Provisions; and the
Catastrophic Risk Protection Endorsement, if applicable, will
control all provisions.
1. Definitions
Actual price per bushel for:
(a) Fresh peaches means the average price per bushel of U.S.
Extra No. 1 ``2-inch'' peaches (if not available, the next larger
size for which a price is available) determined from applicable
prices reported by the Market News Service of the United States
Department of Agriculture for seven consecutive marketing days,
commencing with the day harvest of the variety begins. In the
absence of FOB shipping point price from the Market News Service,
the price per bushel of U.S. Extra No. 1 ``2-inch'' peaches will be
the total of the price election and allowable costs for the
undamaged peaches; and
(b) Processing peaches means the average price per bushel
received from the processor for that applicable variety determined
for seven consecutive marketing days, commencing with the day
harvest of the variety begins.
Bearing tree. A tree in at least the 4th growing season after
set out.
Bushel. Fifty pounds of ungraded peaches.
Days. Calendar days.
Direct marketing. Sale of the insured crop directly to consumers
without the intervention of an intermediary such as a wholesaler,
retailer, packer, processor, shipper or buyer. Examples of direct
marketing include selling through an on-farm or roadside stand,
farmer's market, or permitting the general public to enter the field
for the purpose of picking all or a portion of the crop.
FSA. The Farm Service Agency, an agency of the United States
Department of Agriculture, or a successor agency.
Good farming practices. The cultural practices generally in use
in the county for the crop to make normal progress toward maturity
and produce at least the yield used to determine the production
guarantee, and are those recognized by the Cooperative State
Research, Education, and Extension Service as compatible with
agronomic and weather conditions in the county.
Harvest. The picking or removal of mature peaches from the trees
either by hand or machine.
Interplanted. Acreage on which two or more crops are planted in
any form of alternating or mixed pattern.
Irrigated practice. A method of producing a crop by which water
is artificially applied during the growing season by appropriate
systems and at the proper times, with the intention of providing the
quantity of water needed to produce at least the yield used to
establish the irrigated production guarantee on the irrigated
acreage planted to the insured crop.
Loss in quality. When the crop is damaged to the extent that the
producer does not receive the average price for U.S. Extra No. 1
peach.
Packing shed. A facility at which peaches are graded, packed and
cooled in preparation for shipment to a wholesale market.
Production guarantee (per acre). The number of peaches (bushels)
determined by multiplying the approved actual production history
(APH) yield per acre by the coverage level percentage you elect.
Set out. Transplanting the tree into the orchard.
Written agreement. A written document that alters designated
terms of this policy in accordance with section 12.
2. Unit Division
(a) Unless limited by the Special Provisions, a basic unit as
defined in section 1 (Definitions) of the Basic Provisions
(Sec. 457.8) may be divided into optional units if, for each
optional unit, you meet all the conditions of this section.
(b) Basic units may not be divided into optional units on any
basis other than as described in this section.
(c) If you do not comply fully with these provisions, we will
combine all optional units that are not in compliance with these
provisions into the basic unit from which they were formed. We will
combine the optional units at any time we discover that you have
failed to comply with these provisions. If failure to comply with
these provisions is determined to be inadvertent, and the optional
units are combined into a basic unit, that portion of the additional
premium paid for the optional units that have been combined will be
refunded to you for the units combined.
[[Page 39924]]
(d) All optional units you selected for the crop year must be
identified on the acreage report for that crop year.
(e) The following requirements must be met for each optional
unit:
(1) You must have provided records not later than the production
reporting date, which can be independently verified, of acreage and
production for each optional unit for at least the last crop year
used to determine your production guarantee;
(2) For each crop year, records of marketed production from each
optional unit must be maintained in such a manner that permits us to
verify the production from each optional unit, or the production
from each unit must be kept separate until loss adjustment is
completed by us; and
(3) Each optional unit must meet one or more of the following
criteria, as applicable, unless otherwise specified by written
agreement:
(i) Optional Units by Section, Section Equivalent, or FSA Farm
Serial Number: Optional units may be established if each optional
unit is located in a separate legally identified section. In the
absence of sections, we may consider parcels of land legally
identified by other methods of measure including, but not limited to
Spanish grants, railroad surveys, leagues, labors, or Virginia
Military Lands, as the equivalent of sections for unit purposes. In
areas that have not been surveyed using the systems identified
above, or another system approved by us, or in areas where such
systems exist but boundaries are not readily discernable, each
optional unit must be located in a separate farm identified by a
single FSA Farm Serial Number.
(ii) Optional Units on Acreage Including Both Irrigated and Non-
irrigated Practices: Optional units may be based on irrigated
acreage and non-irrigated acreage (in those counties where ``non-
irrigated'' practice is allowed in the actuarial table) if both are
located in the same section, section equivalent, or FSA Farm Serial
Number. The irrigated acreage may not extend beyond the point at
which your irrigation system can deliver the quantity of water
needed to produce the yield on which the guarantee is based and you
may not continue into non-irrigated acreage in the same rows or
planting pattern.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
In addition to the requirements of section 3 (Insurance
Guarantees, Coverage Levels, and Prices for Determining Indemnities)
of the Basic Provisions (Sec. 457.8):
(a) You may select only one price election for all the peaches
in the county insured under this policy unless the Special
Provisions provide different price elections by type, in which case
you may select one price election for each peach type (fresh or
processing) designated in the Special Provisions. The price
elections you choose for each type must have the same percentage
relationship to the maximum price offered by us for each type. For
example, if you choose 100 percent of the maximum price election for
one type, you must choose 100 percent of the maximum price election
for all other types.
(b) You must report, not later than the production reporting
date designated in section 3 (Insurance Guarantees, Coverage Levels,
and Prices for Determining Indemnities) of the Basic Provisions
(Sec. 457.8), by type if applicable:
(1) Any damage, removal of or addition of trees, or change in
practices, or any other circumstance that may reduce the expected
yield below the yield upon which the insurance guarantee is based,
and the number of affected acres;
(2) The number of bearing and non-bearing trees on insurable and
uninsurable acreage;
(3) The age of the trees, variety, type, and the planting
pattern; and
(4) For the first year of insurance, acreage interplanted with
another perennial crop, and anytime the planting pattern of such
acreage is changed:
(i) The age of the crop that is interplanted with the peaches;
(ii) The variety, and type if applicable;
(iii) The planting pattern; and
(iv) Any other reasonable and pertinent information that we
request in order to establish your approved yield.
We will adjust the yield used to establish your production
guarantee as necessary, based on our estimate of the effect of
interplanting a perennial crop; removal or addition of trees or
varieties of trees; physical or structural tree damage; a change in
practices or changes in tree population and density, and any other
circumstance affecting the yield potential of the insured crop. If
you fail to notify us of any circumstance that may affect your
yields from previous levels, we will adjust your production
guarantee as necessary at any time we become aware of the
circumstance.
4. Contract Changes
In accordance with section 4 (Contract Changes) of the Basic
Provisions (Sec. 457.8), the contract change date is August 31
preceding the cancellation date.
5. Cancellation and Termination Dates
In accordance with section 2 (Life of Policy, Cancellation, and
Termination) of the Basic Provisions (Sec. 457.8), the cancellation
and termination dates are November 20.
6. Insured Crop
In accordance with section 8 (Insured Crop) of the Basic
Provisions (Sec. 457.8), the crop insured will be all the peaches in
the county for which a premium rate is provided by the actuarial
table:
(a) In which you have a share;
(b) That are grown on tree varieties that:
(1) Were commercially available when the trees were set out;
(2) Are a variety having a chilling hour requirement that is
appropriate for the area;
(3) Are grown on a root stock that is adapted to the area.
(c) That the crop insured will be any of the types or varieties
of peaches that are grown for the production of Fresh or Processing
Peaches (except Processing Peaches excluded in California) on
insured acreage and for which a guarantee and premium rate are
provided by the Actuarial Table.
(d) That are grown in an orchard that, if inspected, is
considered acceptable by us; and
(e) That has reached at least the fourth growing season after
set out. However, we may agree in writing to insure acreage that has
not reached this age if it has produced at least 100 bushels of
peaches per acre.
7. Insurable Acreage
In lieu of the provisions in section 9 (Insurable Acreage) of
the Basic Provisions (Sec. 457.8), that prohibit insurance attaching
to a crop planted with another crop, peaches interplanted with
another perennial crop are insurable unless we inspect the acreage
and determine that it does not meet the requirements contained in
your policy.
8. Insurance Period
(a) In accordance with the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8):
(1) Coverage begins on November 21 of each crop year, except
that for the year of application, if your application is received
after November 11 but prior to November 21, insurance will attach on
the 10th day after your properly completed application is received
in our local office, unless we inspect the acreage during the 10-day
period and determine that it does not meet insurability
requirements. You must provide any information that we require for
the crop to determine the condition of the orchard.
(2) The calendar date for the end of the insurance period for
each crop year is September 30.
(b) In addition to the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8):
(1) If you acquire an insurable share in any insurable acreage
after coverage begins but on or before the acreage reporting date
for the crop year, and after an inspection we consider the acreage
acceptable, insurance will be considered to have attached to such
acreage on the calendar date for the beginning of the insurance
period.
(2) If you relinquish your insurable interest on any acreage of
peaches on or before the acreage reporting date for the crop year
and if the acreage was insured by you the previous crop year,
insurance will not be considered to have attached, and no premium or
indemnity will be due for such acreage for that crop year unless:
(i) A transfer of coverage and right to an indemnity, or a
similar form approved by us, is completed by all affected parties;
(ii) We are notified by you or the transferee in writing of such
transfer on or before the acreage reporting date; and
(iii) The transferee is eligible for crop insurance.
9. Causes of Loss
(a) In accordance with the provisions of section 12 (Causes of
Loss) of the Basic Provisions (Sec. 457.8), insurance is provided
only against the following causes of loss that occur within the
insurance period:
(1) Adverse weather conditions;
(2) Fire, unless weeds and other forms of undergrowth have not been
controlled or pruning debris has not been removed from the orchard;
(3) Earthquake;
[[Page 39925]]
(4) Insects, but not damage due to insufficient or improper
application of pest control measures;
(5) Plant disease, but not damage due to insufficient or improper
application of disease control measures;
(6) Volcanic eruption;
(7) Wildlife, unless control measures have not been taken;
(8) An insufficient number of chilling hours to effectively break
dormancy; or
(9) Failure of irrigation water supply, if caused by an insured
peril that occurs during the insurance period.
(b) In addition to the causes of loss excluded in section 12
(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not
insure against damage or loss of production due to:
(1) Split pits, regardless of cause; or
(2) Inability to market the peaches for any reason other than
actual physical damage from an insurable cause specified in this
section. For example, we will not pay you an indemnity if you are
unable to market due to quarantine, boycott, or refusal of any person
to accept production.
10. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 (Duties in the Event
of Damage or Loss) of the Basic Provisions (Sec. 457.8), and unless the
insurance period has ended prior to each of the following events, the
following will apply:
(a) You must notify us within three days of the date that harvest
of the damaged variety should have started if the crop will not be
harvested.
(b) You must notify us at least 15 days before any production from
any unit will be sold by direct marketing unless you have records
verifying that the direct market peaches were ``weighed and graded''
through a packing shed. Failure to give timely notice that production
will be sold by direct marketing will result in an appraised amount of
production to count not less than the production guarantee per acre if
such failure results in our inability to make the required appraisal.
(c) If you previously gave notice in accordance with section 14 of
the Basic Provisions (Sec. 457.8), and if you intend to claim an
indemnity on any unit, you must notify us at least 15 days prior to the
beginning of harvest of the damaged variety, so that we may inspect the
damaged production. You must not sell or dispose of the damaged crop
until after we have given you written consent to do so.
(d) If you fail to meet the requirements of this section and such
failure results in our inability to inspect the damaged production, all
such production will be considered undamaged and included as production
to count.
11. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event you
are unable to provide separate acceptable production records:
(1) For any optional units, we will combine all optional units for
which such production records were not provided; or
(2) For any basic units, we will allocate any commingled production
to such units in proportion to our liability on the harvested acreage
for the units.
(b) In the event of loss or damage covered by this policy, we will
settle your claim by:
(1) Multiplying the insured acreage for each type, if applicable,
by its respective production guarantee;
(2) Multiplying each result in section 11(b)(1) by the respective
price election;
(3) Totaling the results in section 11(b)(2);
(4) Multiplying the total production to be counted by type, if
applicable, (see subsection 11(c)) by the respective price election;
(5) Totaling the results in section 11(b)(4);
(6) Subtracting the total in section 11(b)(5) from the total in
section 11(b)(3); and
(7) Multiplying the result in section 11(b)(6) by your share.
(c) The total production to count (in bushels) from all insurable
acreage on the unit will include:
(1) All appraised production will be determined as follows:
(i) Not less than the production guarantee per acre for acreage:
(A) That is abandoned;
(B) From which production is sold by direct marketing if you fail
to meet the requirements contained in section 10;
(C) That is damaged solely by uninsured causes; or
(D) For which you fail to provide production records that are
acceptable to us;
(ii) Production lost due to uninsured causes;
(iii) Unharvested production;
(iv) Potential production on insured acreage that you intend to
abandon or no longer care for, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end. If you do not agree with our appraisal, we may
defer the claim only if you agree to continue to care for the crop. We
will then make another appraisal when you notify us of further damage
or that harvest is general in the area unless you harvested the crop,
in which case we will use the harvested production. If you do not
continue to adequately care for the crop, our appraisal made prior to
deferring the claim will be used to determine the production to count;
and
(v) Any appraised production on insured acreage will be considered
production to count unless such production is exceeded by the actual
harvested production.
(2) All harvested production from the insurable acreage.
(3) Mature marketable peach production may be reduced as a result
of a loss in quality due to an insured cause of loss. The amount of
production to count for such peaches will be determined as follows:
(i) Peaches grown for fresh use by:
(A) Dividing the value of the damaged peaches by the actual price
for undamaged peaches; and
(B) Multiplying the result of section 11(c)(3)(i)(A) by the number
of bushels of the eligible damaged peaches.
(ii) Peaches grown for processing by:
(A) Dividing the value of the damaged peaches by the actual price
of undamaged peaches for processing; and
(B) Multiplying the result of section 11(c)(3)(ii)(A) by the number
of bushels of the eligible damaged peaches.
(4) Peaches that cannot be marketed due to insurable causes will
not be considered production to count.
12. Written Agreements
Terms of this policy which are specifically designated for the use
of written agreement may be altered by written agreement in accordance
with the following:
(a) You must apply in writing for each written agreement no later
than the sales closing date, except as provided in section 12(e);
(b) The application for a written agreement must contain all
variable terms of the contract between you and us that will be in
effect if the written agreement is not approved;
(c) If approved, the written agreement will include all variable
terms of the contract, including, but not limited to, crop type or
variety, the guarantee, premium rate, and price election;
(d) Each written agreement will only be valid for one year (If the
written agreement is not specifically renewed the following year,
insurance coverage for subsequent crop years will be in accordance with
the printed policy); and
(e) An application for a written agreement submitted after the
sales closing date may be approved if, after a physical inspection of
the acreage, it is
[[Page 39926]]
determined that no loss has occurred and the crop is insurable in
accordance with the policy and written agreement provisions.
Signed in Washington, D.C., on July 21, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-19631 Filed 7-24-97; 8:45 am]
BILLING CODE 3410-08-P