[Federal Register Volume 63, Number 119 (Monday, June 22, 1998)]
[Rules and Regulations]
[Pages 33835-33841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16147]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 / Rules
and Regulations
[[Page 33835]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 447 and 457
RIN 0563-AB48
Popcorn Crop Insurance Regulations; and Common Crop Insurance
Regulations, Popcorn 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 popcorn. 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
popcorn crop insurance regulations with the Common Crop Insurance
Policy for ease of use and consistency of terms, and to restrict the
effect of the current popcorn crop insurance regulations to the 1998
and prior crop years.
EFFECTIVE DATE: July 22, 1998.
FOR FURTHER INFORMATION CONTACT: Linda Williams, 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 12866
This rule has been determined to be exempt for the purposes of
Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget (OMB).
Paperwork Reduction Act of 1995
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter
35), the collections of information have been approved by the Office of
Management and Budget (OMB) under control number 0563-0053 through
October 31, 2000.
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. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
the UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 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. The amount of work required of
the insurance companies will not increase because the information used
to determine eligibility is already maintained at their office and the
other information now required is already being gathered as a result of
the present policy. No additional actions are required as a result of
this action on the part of either the insured or the insurance
companies. Additionally, this regulation does not require any greater
action on the part of small entities than is required on the part of
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 12372
This program is not subject to the provisions of Executive Order
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 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will not
have a retroactive effect. The provisions of this 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 of any determination made by FCIC 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 Wednesday, April 9, 1997, FCIC published a notice of proposed
rulemaking in the Federal Register at 62 FR 17103 to add to the Common
Crop Insurance Regulations (7 CFR part 457), a new section, 7 CFR
457.126, Popcorn Crop Insurance Provisions. The new provisions will be
effective for the 1999 and succeeding crop years. These provisions will
replace and supersede the current provisions for insuring popcorn found
at 7 CFR part 447 (Popcorn Crop Insurance Regulations). FCIC also
amends 7 CFR part 447 to limit its effect to the 1998 and prior crop
years.
Following publication of the proposed rule, the public was afforded
30 days to
[[Page 33836]]
submit written comments and opinions. A total of 31 comments were
received from an insurance service organization and reinsured
companies. The comments received and FCIC's responses are as follows:
Comment: An insurance service organization and two reinsured
companies asked whether, under the definition of ``good farming
practices,'' there may exist acceptable cultural practices that are not
necessarily recognized (or possibly not known) by the Cooperative State
Research, Education, and Extension Service. The commenters recommended
changing the term ``county'' in the definition of ``good farming
practices'' to ``area.'' The insurance service organization also
recommended adding the word ``generally'' before ``recognized by the
Cooperative State Research, Education, and Extension Service * * *''
Response: The Cooperative State Research, Education, and Extension
Service (CSREES) recognizes farming practices that are considered
acceptable for producing popcorn. If a producer is following practices
currently not recognized as acceptable by the CSREES, such recognition
can be sought by interested parties. Use of the term ``generally'' will
only make the definition ambiguous and more difficult to administer.
Although the cultural practices recognized by the CSREES may only
pertain to specific areas within a county, the actuarial documents are
on a county basis. However, the definition of ``good farming
practices'' has been moved to the Basic Provisions.
Comment: A reinsured company expressed concern about the definition
of ``final planting date'' because it infers that coverage is provided
after the final planting date; however, there are no provisions for
``late planting.''
Response: The definition of ``late planting'' as well as provisions
for late and prevented planting coverages common to most crops have
been moved to the Basic Provisions. FCIC has added late planting
provisions, section 14, and prevented planting provisions, section 15,
to these popcorn crop provisions.
Comment: A reinsured company recommended adding the words ``and
quality'' after the word ``quantity'' in the definition of ``irrigated
practice.''
Response: There are no clear criteria regarding the quality of
water necessary to produce a crop. The highly variable factors involved
would make such criteria difficult to develop and administer. The
provisions regarding good farming practices can be applied in
situations in which the insured person failed to exercise due care and
diligence. The definition of ``irrigated practice'' has been moved to
the Basic Provisions.
Comment: An insurance service organization and a reinsured company
stated the definition of ``replanting'' is confusing and awkward. One
of the commenters recommended revising the definition to specify ``* *
* growing a successful popcorn crop.''
Response: The definition of ``replanting'' clearly describes the
steps required to replant the crop. The producer must first perform the
cultural practices needed to replant the seed before replanting the
seed. FCIC has revised the definition to specify that the crop be
replanted with the expectation of producing at least the guarantee. The
definition of ``replanting'' has been moved to the Basic Provisions.
Comment: A reinsured company recommended that the reference
contained in the definition of ``written agreement'' should be section
14 rather than section 15.
Response: The provisions for written agreements have been moved to
the Basic Provisions with reference to the correct section.
Comment: An insurance service organization and a reinsured company
recommended amending section 2 of the proposed rule to clarify whether
optional units may be established if the processor contract stipulates
the number of contracted acres, or only if the contract does not
specify an amount of production.
Response: FCIC has amended section 2 to specify that processor
contracts that stipulate a specific amount of production to be
delivered, the basic unit will consist of all the acreage planted to
the insured crop in the county that will be used to fulfill contracts
with each processor, and optional units will not be established for
such production-based processor contracts. The language in section 2
has also been revised and reformatted to clearly state the requirements
for both the acreage-based and production-based processor contracts. In
addition, language in this section that is common with other Crop
Provisions has been moved to the Basic Provisions.
Comment: An insurance service organization recommended removal of
the opening phrase in section 2(b)(5)(iv)(B) that states ``In addition
to, or instead of establishing optional units by section, section
equivalent, or FSA Farm Serial Number, * * * ``since section
2(b)(5)(iv) specifies that ``Each optional unit must meet one or more
of the following criteria* * *.''
Response: FCIC has revised the language accordingly. However, the
optional unit provisions common to most crops have been moved to the
Basic Provisions.
Comment: An insurance service organization stated that the language
in section 3(a) which provides guidelines for selection of price
elections should be moved to the Basic Provisions.
Response: The requirement that the price election (for each type,
varietal group, etc.) have the same percentage relationship to the
maximum prices does not apply to all crop policies. However, this
clause applies to a sufficient number of policies so as to make it an
item for consideration whenever 7 CFR part 457 is amended. This
recommendation will be considered at that time, and no change has been
made to these popcorn provisions.
Comment: An insurance service organization expressed concern that
the November 30 contract change date is not early enough for counties
with a January 15 sales closing date.
Response: The January 15 cancellation and termination dates are
applicable only to counties in the most southern part of Texas. The
commenter did not provide specific details as to why the November 30
contract change date is not sufficient. FCIC believes that the 45 days
between the contract change date and the cancellation date allows an
ample period of time for the insured to make a decision regarding
subsequent crop year coverages considering the small number of policies
and areas involved. Therefore, no change has been made.
Comment: An insurance service organization stated that section 6
which requires the producer to provide a copy of the processor contract
no later than the acreage reporting date, could provide a loophole by
allowing producers to wait until acreage reporting time to decide if
they want coverage.
Response: There is no evidence that allowing the producer to
provide a copy of the processor contract as late as the acreage
reporting date has resulted in producers waiting to decide until the
acreage reporting date if they want coverage. Popcorn producers will
have processor contracts much sooner to ensure that they have a market
before expending the costs to plant the crop. The requirement to
provide a copy of the processor contract with the acreage report is
also most convenient for the producer. Language in section 6 has been
revised to clarify that a copy of all processor contracts must be
provided on or before the acreage reporting date.
[[Page 33837]]
Comment: An insurance service organization recommended changing the
word ``before'' in section 7(a)(3) to ``by'' or ``on or before'' the
acreage reporting date. This would allow for the processor contract to
be established that day.
Response: FCIC has amended the provision accordingly.
Comment: An insurance service organization questioned whether any
processor contract would allow interplanted popcorn or popcorn planted
into an established grass or legume. The commenter further indicted
that consideration should be given to inserting the language in section
7(a)(4) into the Basic Provisions.
Response: Popcorn has seldom, if ever, been interplanted with
another crop or planted into an established grass or legume. However,
production practices are constantly evolving. FCIC chooses to retain
the provisions of section 7(a)(4) to accommodate such developments if
they should occur. In addition, interplanting provisions are not the
same among the crop policies and, therefore, will be retained in the
Crop Provisions.
Comment: An insurance service organization indicated that the
provisions contained in section 7(b) are confusing and seem to indicate
that only a landlord would have a share in the insured crop and that a
tenant cannot have a share since that person does not retain possession
of the acreage. The commenter questioned whether the provision in
section 7(b) is already covered in sections 7(a) (1) and (3).
Response: The language in section 7(b) was intended to cover
producers who have a crop share agreement, rent, or owns acreage. The
word ``possession'' has been changed to ``control'' for clarification
and FCIC has added that the insured must have a risk of loss. Section
7(a) specifies requirements for insurance coverage on the crop, while
section 7(b) specifies requirements for an insurable share in the crop.
Therefore, both provisions are necessary.
Comment: Two comments from an insurance service organization and
one from a reinsured company questioned whether the provisions in
section 9(b), which state that the insurance period ceases on the date
sufficient production is harvested to fulfill the producer's processor
contract, conflicts with the provisions in section 13(a), that states
``We will determine your loss on a unit basis.'' The commenters
questioned how the insured will know enough production has been
harvested before acceptance by the processor. One commenter stated that
the insured may not be aware of discounts and production modifications
(e.g., shrinkage, foreign material, etc.) that may be imposed by the
processor. The insured may believe the contracted amount of production
has been harvested and later learn that the amount harvested is short
of the production guarantee. The insurance service organization asked
if any production in excess of the contracted amount will be considered
as production to count for APH purposes, or is the production only
counted when there is a processor settlement sheet? The insurance
service organization recommended the language in section 9(b) be made
similar to the language contained in the sugar beet policy, such as,
``* * * the insurance period ends when the production delivered to the
processor equals the amount of production stated in the popcorn
processor contract.'' The insurance service organization also
questioned whether ``delivered to'' is the same as ``accepted by'' the
processor and suggested adding wording to include ``whether delivered
or not.''
Response: Section 9(b) does not conflict with section 13(a). For
processor contracts based on a stated amount of production, FCIC is
only insuring the contracted amount, and the producer can only
establish one basic unit per processor contract. Therefore, once the
contracted amount is fulfilled, insurance ceases on the unit and there
is no payable loss. If the contract is not fulfilled and there still is
unharvested production, any insurable cause of loss is covered up to
the contracted amount, assuming it has not been abandoned. With respect
to the issue of when the producer would know when the processor
contract was fulfilled, records are kept as production is delivered to
the processor. As a result, both the producer and processor are aware
of the amount of production that has been delivered. All production
from the unit, including any in excess of the amount stated in the
contract, will be considered as production to count when determining
the producer's approved yield. The claim settlement provisions have
been clarified to state that, for the purposes of loss adjustment, the
amount shown on the settlement sheet, plus any appraised or harvested
production lost due to uninsured causes that rendered the production
unacceptable to the processor, will be included as production to count.
FCIC has also revised section 9(b) to clarify that the insurance period
ceases when the production accepted by the processor equals the
contracted amount of production if the processor contract stipulates a
specific amount of production to be delivered. However, rejected
production will be considered as production to count unless it was
damaged by an insurable cause of loss occurring during the insurance
period.
Comment: An insurance service organization questioned a discrepancy
between section 9(b), which states that insurance ceases on ``The date
you harvested sufficient production to fulfill your processor
contract,'' and section 10(b)(3) of the proposed rule, which states
that loss of production will not be insured due to ``damage that occurs
to unharvested production after you deliver the production required by
the processor contract.'' The commenter indicated that this provision
is not necessary since any damage occurring after delivery would be
outside the insurance period as indicated in section 9(b).
Response: FCIC has deleted the provision contained in section
10(b)(3) accordingly.
Comment: An insurance service organization stated that some crop
policies allow the entire replanting payment to be paid to the person
incurring the entire expense (usually the tenant) when landlord and
tenant are insured by the same company. However, the commenter
questioned why this language is not contained in section 11 of the
proposed Popcorn Crop Provisions.
Response: It is true that a few crop provisions allow the entire
replanting payment to be paid to the person incurring the entire
expense (usually the tenant) when the landlord and tenant are insured
with the same company. However, due to comments received on other
regulations, FCIC reevaluated this provision and has concluded it is
not equitable to all insureds. Specifically, if a landlord and tenant
are insured with one company, the provisions apply, but if the landlord
and tenant are insured with different companies, the provisions do not
apply. Any Crop Provisions containing these terms will be amended to
eliminate them. Therefore, no change has been made.
Comment: An insurance service organization suggested that language
contained in section 11(b) should include 20 acres as a minimum
qualifier in addition to the others.
Response: The commenter misunderstood the provisions contained in
section 11(b). Section 13 of the Basic Provisions contains the 20 acre
or 20 percent rule referenced by the commenter which is applicable to
this policy. Section 11(b) of the Popcorn Crop Provisions establishes
the
[[Page 33838]]
maximum amount of the replanting payment (20 percent of the production
guarantee or 150 pounds, multiplied by the price election, multiplied
by the share). Therefore, no change has been made.
Comment: An insurance service organization stated the indemnity
calculation contained in section 13(b) was wordy, difficult to follow,
and should be simplified for crops without separate prices by type.
Response: Since some of the calculations involved are not performed
in sequential order, it is necessary to refer to specific section
numbers. Removal of the section reference would make the provisions
less clear. However, an example has been added to clarify section 13.
Comment: An insurance service organization stated that section
13(c)(1)(iv) should not allow the insured to defer settlement and wait
for a later, generally lower appraisal, especially on crops that have a
short ``shelf life.''
Response: This provision allows deferment of a claim only if the
insurance provider agrees that representative samples should be left or
if the insured elects to continue to care for the entire crop in order
to obtain a more accurate determination of the production to count for
the unit. In either case, if the insured does not provide sufficient
care for the crop or crop samples, the original appraisal will be used.
Therefore, no change has been made.
Comment: An insurance service organization and two reinsured
companies recommended removal of the requirement contained in section
15 that a written agreement be renewed each year if there are no
significant changes to the farming operation. Two of the commenters
stated a written agreement should be continuous and the effective
period should be specified in the written agreement.
Response: Written agreements are intended to supplement policy
terms or permit insurance in unusual situations that require
modification of the otherwise standard insurance provisions. If such
practices continue year to year, they should be incorporated into the
policy or Special Provisions. It is important to minimize written
agreement exceptions to ensure that the insured is well aware of the
specific terms of the policy. The written agreement provisions have
been moved to the Basic Provisions since they apply to most crops.
Comment: An insurance service organization and two reinsured
companies stated the proposed rule did not contain provisions for late
planting and prevented planting coverages. The commenters questioned
whether popcorn was intended to have late and prevented planting
coverages?
Response: Provisions for late and prevented planting coverages are
now contained in the Basic Provisions which are applicable to popcorn.
FCIC has added to the Popcorn Crop Provisions, a new section 14, which
specifies that late planting provisions are applicable to popcorn if
written approval is obtained from the processor by the acreage
reporting date. FCIC has also added a new section 15, providing the
available prevented planting coverage.
In addition to the changes described above, FCIC has made minor
editorial changes and has amended the following Popcorn Crop
Provisions:
1. Amended and clarified the paragraph preceding section 1 to
include the Catastrophic Risk Protection Endorsement.
2. Section 1--Amended the definition of ``planted acreage'' to add
a requirement that popcorn must be planted in rows far enough apart to
permit mechanical cultivation, unless otherwise excepted. Amended the
definition of ``practical to replant'' to clarify that it will not be
considered practical to replant unless production from the replanted
acreage can be delivered under the terms of the processor contract, or
the processor agrees in writing that it will accept the production from
the replanted acreage. Clarified the definition of ``processor
contract'' to specify that multiple contracts with the same processor,
each of which stipulates a specific amount of production to be
delivered under the terms of the specified contract, will be considered
as a single processor contract. Removed the definitions of ``approved
yield,'' ``days,'' ``FSA,'' ``interplanted,'' ``production guarantee
(per acre),'' and ``timely planted'' because these definitions now
appear in the Basic Provisions.
3. Section 2--Moved all the provisions common to most crops to the
Basic Provisions.
4. Section 7(a)--Revised ``actuarial table'' to ``actuarial
documents'' to be consistent with language in other crop provisions.
5. Section 7(c)(2)--Amended and clarified that the Board of
Directors or officers of the processor must, prior to the sales closing
date, execute and adopt a resolution that contains the same terms as an
acceptable processor contract.
6. Section 14--Revised provisions to address only late planted
acreage.
7. Section 15--Deleted provisions for written agreements and added
provisions for prevented planting coverage.
List of Subjects in 7 CFR Parts 447 and 457
Crop insurance, Popcorn.
Final Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation hereby amends the Popcorn Crop Insurance
Regulations (7 CFR part 447) and the Common Crop Insurance Regulations
(7 CFR part 457) as follows:
PART 447--POPCORN CROP INSURANCE REGULATIONS FOR THE 1987 THROUGH
THE 1998 CROP YEARS
1. The authority citation for 7 CFR part 447 is revised to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
Part Heading [Revised]
2. The part heading is revised as set forth above.
Subpart Heading [Removed]
3. The part heading ``Subpart--Regulations for the 1987 and
Succeeding Crop Years is removed.
4. Section 447.7 is amended by revising the introductory text of
paragraph (d) to read as follows:
Sec. 447.7 The application and policy.
* * * * *
(d) The application is found at subpart D of part 400, General
Administrative Regulations (7 CFR 400.37, 400.38). The provisions of
the Popcorn Insurance Policy for the 1987 through 1998 crop years are
as follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CROP 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 457.126 is added to read as follows:
Sec. 457.126 Popcorn Crop Insurance Provisions.
The Popcorn Crop Insurance Provisions for the 1999 and succeeding
crop years are as follows:
FCIC policies:
United States Department of Agriculture
Federal Crop Insurance Corporation
Reinsured policies:
[[Page 33839]]
(Appropriate title for insurance provider)
Both FCIC and reinsured policies:
Popcorn Crop Insurance Provisions
If a conflict exists among the policy provisions, the order of
priority is as follows: (1) The Catastrophic Risk Protection
Endorsement, if applicable; (2) the Special Provisions; (3) these
Crop Provisions; and (4) the Basic Provisions with (1) controlling
(2), etc.
1. Definitions
Base contract price. The price stipulated on the contract
executed between you and the processor before any adjustments for
quality.
Harvest. Removing the grain or ear from the stalk either by hand
or by machine.
Merchantable popcorn. Popcorn that meets the provisions of the
processor contract.
Planted acreage. In addition to the definition contained in the
Basic Provisions, popcorn must initially be planted in rows far
enough apart to permit mechanical cultivation, unless otherwise
provided by the Special Provisions, actuarial documents, or by
written agreement.
Pound. Sixteen (16) ounces avoirdupois.
Practical to replant. In addition to the definition contained in
the Basic Provisions, it will not be considered practical to replant
unless production from the replanted acreage can be delivered under
the terms of the popcorn processor contract, or the processor agrees
in writing that it will accept the production from the replanted
acreage.
Processor. Any business enterprise regularly engaged in
processing popcorn that possesses all licenses, permits or approved
inspections for processing popcorn required by the state in which it
operates, and that possesses facilities, or has contractual access
to such facilities, with enough equipment to accept and process the
contracted popcorn within a reasonable amount of time after harvest.
Processor contract. A written agreement between the producer and
a processor, containing at a minimum:
(a) The producer's commitment to plant and grow popcorn, and to
deliver the popcorn production to the processor;
(b) The processor's commitment to purchase all the production
stated in the processor contract;
(c) A date, if specified on the processor's contract, by which
the crop must be harvested to be accepted; and
(d) A base contract price.
Multiple contracts with the same processor, each of which stipulates
a specific amount of production to be delivered under the terms of
the processor contact, will be considered as a single processor
contract.
2. Unit Division
(a) For processor contracts that stipulate the amount of
production to be delivered:
(1) In lieu of the definition contained in the Basic Provisions,
a basic unit will consist of all the acreage planted to the insured
crop in the county that will be used to fulfill contracts with each
processor;
(i) There will be no more than one basic unit for all production
contracted with each processor contract;
(ii) In accordance with section 13 of these Crop Provisions, all
production from any basic unit in excess of the amount under
contract will be included as production to count if such production
is applied to any other basic unit for which the contracted amount
has not been fulfilled; and
(2) Provisions in the Basic Provisions that allow optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated practices are not applicable.
(b) For any processor contract that stipulates only the number
of acres to be planted, the provisions contained in section 34 of
the Basic Provisions will apply.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
In addition to the requirements of section 3 of the Basic
Provisions, you may select only one price election for all the
popcorn 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 popcorn type 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 also choose 100
percent of the maximum price election for all other types.
4. Contract Changes
In accordance with section 4 of the Basic Provisions, the
contract change date is November 30 preceding the cancellation date.
5. Cancellation and Termination Dates
In accordance with section 2 of the Basic Provisions, the
cancellation and termination dates are:
------------------------------------------------------------------------
Cancellation and termination
State and county dates
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Val Verde, Edwards, Kerr, Kendall, Bexar, January 15.
Wilson, Karnes, Goliad, Victoria, and
Jackson counties Texas, and all Texas
counties lying south thereof.
All other Texas counties and all other March 15.
states.
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6. Report of Acreage
In addition to the provisions of section 6 of the Basic
Provisions, you must provide a copy of all processor contracts to us
on or before the acreage reporting date.
7. Insured Crop
(a) In accordance with section 8 of the Basic Provisions, the
crop insured will be all the popcorn in the county for which a
premium rate is provided by the actuarial documents:
(1) In which you have a share;
(2) That is planted for harvest as popcorn;
(3) That is grown under, and in accordance with the requirements
of, a processor contract executed on or before the acreage reporting
date and is not excluded from the processor contract at any time
during the crop year; and
(4) That is not (unless allowed by the Special Provisions or by
written agreement):
(i) Interplanted with another crop; or
(ii) Planted into an established grass or legume.
(b) You will be considered to have a share in the insured crop
if, under the processor contract, you retain control of the acreage
on which the popcorn is grown, you have a risk of loss, and the
processor contract provides for delivery of popcorn under specified
conditions and at a stipulated base contract price.
(c) A popcorn producer who is also a processor may be able to
establish an insurable interest if the following requirements are
met:
(1) The producer must comply with these Crop Provisions;
(2) The Board of Directors or officers of the processor must,
prior to the sales closing date, execute and adopt a resolution that
contains the same terms as an acceptable processor contract. Such
resolution will be considered a processor contract under this
policy; and
(3) Our inspection reveals that the processing facilities comply
with the definition of a processor contained in these Crop
Provisions.
8. Insurable Acreage
In addition to the provisions of section 9 of the Basic
Provisions, any acreage of the insured crop damaged before the final
planting date, to the extent that the majority of producers in the
area would normally not further care for the crop, must be replanted
unless we agree that it is not practical to replant.
9. Insurance Period
In lieu of the provisions contained in section 11 of the Basic
Provisions, regarding the end of the insurance period, insurance
ceases on each unit or part of a unit at the earliest of:
(a) The date the popcorn:
(1) Was destroyed;
(2) Should have been harvested but was not harvested;
(3) Was abandoned; or
(4) Was harvested;
(b) When the processor contract stipulates a specific amount of
production to be delivered, the date the production accepted by the
processor equals the contracted amount of production;
(c) Final adjustment of a loss; or
(d) December 10 immediately following planting.
10. Causes of Loss
(a) In accordance with the provisions of section 12 of the Basic
Provisions, insurance is provided only against the following causes
of loss that occur during the insurance period:
(1) Adverse weather conditions;
(2) Fire;
(3) Insects, but not damage due to insufficient or improper
application of pest control measures;
(4) Plant disease, but not damage due to insufficient or
improper application of disease control measures;
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(5) Wildlife;
(6) Earthquake;
(7) Volcanic eruption; or
(8) Failure of the irrigation water supply, if caused by a cause
of loss specified in sections 10(a)(1) through (7) that occurs
during the insurance period.
(b) In addition to the causes of loss excluded by section 12 of
the Basic Provisions, we do not insure against any loss of
production due to:
(1) Damage resulting from frost or freeze after the date
designated in the Special Provisions; or
(2) Failure to follow the requirements contained in the
processor contract.
11. Replanting Payment
(a) In accordance with section 13 of the Basic Provisions, a
replanting payment is allowed if the crop is damaged by an insurable
cause of loss to the extent that the remaining stand will not
produce at least 90 percent of the production guarantee for the
acreage and it is practical to replant.
(b) The maximum amount of the replanting payment per acre will
be the lesser of 20 percent of the production guarantee or 150
pounds, multiplied by your price election, multiplied by your
insured share.
(c) When popcorn is replanted using a practice that is
uninsurable as an original planting, our liability for the unit will
be reduced by the amount of the replanting payment. The premium
amount will not be reduced.
12. Duties in the Event of Damage or Loss
In accordance with the requirements of section 14 of the Basic
Provisions, the representative samples of the unharvested crop must
be at least 10 feet wide and extend the entire length of each field
in the unit. The samples must not be destroyed until the earlier of
our inspection or 15 days after harvest of the balance of the unit
is completed.
13. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event
you are unable to provide acceptable production records:
(1) For any optional unit, we will combine all optional units
for which such production records were not provided; or
(2) For any basic unit, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for each unit.
(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 the result of section 13(b)(1) by the respective
price election for each type, if applicable;
(3) Totaling the results of section 13(b)(2) if there is more
than one type;
(4) Multiplying the total production to count (see section
13(c)), of each type if applicable, by its respective price
election;
(5) Totaling the results of section 13(b)(4) if there is more
than one type;
(6) Subtracting the result of section 13(b)(4) from the result
in section 13(b)(2) if there is only one type or subtracting the
result of section 13(b)(5) from the result of section 13(b)(3) if
there is more than one type; and
(7) Multiplying the result of section 13(b)(6) by your share.
For example:
You have a 100 percent share in 100 acres of Type A popcorn in the unit,
with a guarantee of 2,500 pounds per acre and a price election of $.12
per pound. You are only able to harvest 150,000 pounds. Your indemnity
would be calculated as follows:
1.................... 100 acres x 2,500 pounds = 250,000 pound
guarantee;
2.................... 250,00 pounds x $.12 price election = $30,000
value of guarantee;
4.................... 150,000 pounds production to count x $.12 price
election = $18,000 value of production to count;
6.................... $30,000-$18,000 = $12,000 loss; and
7.................... $12,000 x 100 percent share = $12,000 indemnity
payment.
You also have a 100 percent share in 150 acres of type B popcorn in the
same unit, with a guarantee of 2,250 pounds per acre and a price
election of $.10 per pound. You are only able to harvest 70,000 pounds.
Your total indemnity for both popcorn types A and B would be calculated
as follows:
1.................... 100 acres x 2,500 pounds = 250,000 guarantee
for type A and 150 acres x 2,250 pounds =
337,500 pound guarantee for type B;
2.................... 250,000 pound guarantee x $.12 price election =
$30,000 value of guarantee for type A and
337,500 pound guarantee x $.10 price election
= $33,750 value guarantee for type B;
3.................... $30,000 + $33,750 = $63,750 total value
guarantee;
4.................... 150,000 pounds x $.12 price election = $18,000
value of production to count for type A and
70,000 pounds x $.10 price election = $7,000
value of production to count for type B;
5.................... $18,000 + $7,000 = $25,000 total value of
production to count;
6.................... $63,750-$25,000 = $38,750 loss; and
7.................... $38,750 x 100 percent = $38,750 indemnity
payment.
(c) The total production to count (in pounds) from all insurable
acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee for acreage:
(A) That is abandoned;
(B) Put to another use without our consent;
(C) Damaged solely by uninsured causes; or
(D) For which you fail to provide production records;
(ii) Unharvested production (mature unharvested production may
be adjusted for quality deficiencies and excess moisture in
accordance with section 13(d));
(iii) Potential production on insured acreage that you intend to
put to another use or abandon, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end when you put the acreage to another use or
abandon the crop. If agreement on the appraised amount of production
is not reached:
(A) If you do not elect to continue to care for the crop, we may
give you consent to put the acreage to another use if you agree to
leave intact, and provide sufficient care for, representative
samples of the crop in locations acceptable to us (The amount of
production to count for such acreage will be based on the harvested
production or appraisals from the samples at the time harvest should
have occurred. If you do not leave the required samples intact, or
fail to provide sufficient care for the samples, our appraisal made
prior to giving you consent to put the acreage to another use will
be used to determine the amount of production to count); or
(B) If you elect to continue to care for the crop, the amount of
production to count for the acreage will be the harvested
production, or our reappraisal if additional damage occurs and the
crop is not harvested;
(2) All harvested production from the insurable acreage in the
unit;
(3) All harvested and appraised production lost or damaged by
uninsured causes; and
(4) For processor contracts that stipulate the amount of
production to be delivered, all harvested popcorn production from
any other insurable unit that has been used to fulfill your
processor contract applicable to this unit.
(5) Any production from yellow or white dent corn will be
counted as popcorn on a weight basis and any production harvested
from plants growing in the insured crop may be counted as popcorn
production on a weight basis.
(6) Any ear production for which we cannot determine a shelling
factor will be considered to have an 80 percent shelling factor.
(d) Mature popcorn may be adjusted for excess moisture and
quality deficiencies. If moisture adjustment is applicable, it will
be made prior to any adjustment for quality.
(1) Production will be reduced by 0.12 percent for each 0.1
percentage point for moisture in excess of 15 percent. We may obtain
samples of the production to determine the moisture content.
(2) Popcorn production will be eligible for quality adjustment
if, due to an insurable cause of loss that occurs within the
insurance period, it is not merchantable popcorn and is rejected by
the processor. The production will be adjusted by:
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(i) Dividing the value per pound of the damaged popcorn by the
base contract price per pound for undamaged popcorn; and
(ii) Multiplying the result by the number of pounds of such
popcorn.
14. Late Planting
Late planting provisions in the Basic Provisions are applicable
for popcorn if you provide written approval from the processor by
the acreage reporting date that it will accept the production from
the late planted acres when it is expected to be ready for harvest.
15. Prevented Planting
Your prevented planting coverage will be 60 percent of your
production guarantee for timely planted acreage. If you have limited
or additional levels of coverage, as specified in 7 CFR part 400,
subpart T, and pay an additional premium, you may increase your
prevented planting coverage to a level specified in the actuarial
documents.
Signed in Washington, D.C., on June 11, 1998.
Robert Prchal,
Acting Manager, Federal Crop Insurance Corporation.
[FR Doc. 98-16147 Filed 6-19-98; 8:45 am]
BILLING CODE 3410-08-P