[Federal Register Volume 62, Number 241 (Tuesday, December 16, 1997)]
[Rules and Regulations]
[Pages 65741-65747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32619]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 62, No. 241 / Tuesday, December 16, 1997 /
Rules and Regulations
[[Page 65741]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
Pea Crop Insurance Regulations; and Common Crop Insurance
Regulations, Dry Pea 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 dry peas. 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, separate dry peas and
green peas into separate crop insurance provisions, include the current
pea 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 pea crop insurance regulations to the 1997 and prior crop
years.
EFFECTIVE DATE: December 16, 1997.
FOR FURTHER INFORMATION CONTACT: Arden Routh, 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, has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507),
those collections of information have been approved by the Office of
Management and Budget (OMB) under control number 0563-0053.
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 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 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 on large
entities. Under the current regulations, a producer is required to
complete an application and acreage report. If the crop is damaged or
destroyed, the insured is required to give notice of loss and provide
the necessary information to complete a claim for indemnity.
The insured must also annually certify to the previous years
production if adequate records are available to support the
certification. The producer must maintain the production records to
support the certified information for at least three years. This
regulation does not alter those requirements.
The amount of work required of the insurance companies delivering
and servicing these policies will not increase significantly from the
amount of work currently required. 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. 12998
This final rule has been reviewed in accordance with Executive
Order No. 12998 on civil justice reform. The provisions of this rule
will not have a retroactive effect prior to the effective date. 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 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 Thursday, May 15, 1997, FCIC published a proposed rule in the
Federal Register at 62 FR 26750 to add to the Common Crop Insurance
Regulations (7 CFR part 457) a new section, 7 CFR 457.140, Dry Pea Crop
Insurance Provisions. The new provisions will be effective for the 1998
and succeeding crop years. These provisions will replace and supersede
[[Page 65742]]
the current provisions for insuring dry peas found at 7 CFR part 416
(Pea Crop Insurance Regulations).
Following publication of the proposed rule, the public was afforded
30 days to submit written comments, data, and opinions. A total of 42
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 recommended that FCIC
consider combining contract seed peas and contract seed beans into one
crop provision.
Response: FCIC will consider combining insurance provisions for
these two crop types in the future.
Comment: An insurance service organization was concerned about late
and prevented planting coverage for dry peas if revisions to the Basic
Provisions are not finalized in time to be effective for the 1998 crop
year.
Response: The late and prevented planting provisions in the Basic
Provisions, will be applicable to this policy.
Comment: An insurance service organization questioned if the plant
population is determined per unit or per acre within the unit in the
definition of ``adequate stand.''
Response: FCIC has clarified the definition of ``adequate stand''
to specify that the plant population is determined on a per acre basis.
Comment: An insurance service organization questioned if the term
``contract seed peas'' had replaced ``wrinkled varieties of dry peas''
in the 1986-CHIAA 713 policy.
Response: The term ``contract seed peas'' has replaced ``wrinkled
varieties of dry peas'' in those crop provisions.
Comment: An insurance service organization questioned if item (1)
in the definition of ``dry peas'' includes peas grown for seed that do
not qualify as contract seed for the purpose of the policy, and if this
allows such peas to be included in the same unit as the dry edible
types.
Response: Peas grown for seed that do not qualify as contract seed
peas under the policy terms are treated the same as dry edible peas for
purposes of the policy. Therefore, the peas grown for seed could be
included in the same unit.
Comment: A reinsured company and an insurance service organization
indicated that cultural practices may exist that are not recognized (or
possibly known) by the Cooperative State Research, Education and
Extension Service (CSREES). The comments indicated that the definition
of ``Good farming practices'' is too restrictive since it limits
acceptable farming practices to those recognized by the CSREES. The
comments also suggested changing the last word of the definition from
``county'' to ``area.''
Response: CSREES recognizes farming practices that are considered
acceptable for producing dry peas. If a producer is following practices
currently not recognized as acceptable by CSREES, such recognition can
be sought by interested parties. The actuarial documents are on a
county basis. No changes have been made.
Comment: A reinsured company recommended adding the words ``and
quality'' after the word ``quantity'' in the definition of ``Irrigated
practice.''
Response: Water quality is an important issue. However, since no
standards or procedures have been developed to measure water quality
for insurance purposes, quality cannot be included in the definition.
No change has been made.
Comment: An insurance service organization questioned the
definition of ``local market price'' which refers to grades and prices
for ``dry peas or lentils.'' The definition of ``dry peas'' includes
lentils as one dry pea type. It seems unnecessary to specify ``or
lentils'' if the language in the definition of ``local market price''
is intended to exclude contract seed peas. The commenter recommended
changing the words ``dry peas or lentils'' to ``dry edible peas or
lentils,'' but if there is no change, ``lentils'' should be defined
separately from the ``dry peas.''
Response: Under the definition of ``dry peas,'' peas grown for seed
may be insured as dry edible peas. FCIC has amended the definition of
local market price by deleting the words ``and lentils.''
Comment: A reinsured company questioned whether the reference to
``late planting period'' in the definition of ``practical to replant''
is still appropriate since there is not a section in these provisions
for late and prevented planting. The commenter also asked if late
planting period will be defined in the late and prevented planting
provisions of the proposed Basic Provisions.
Response: Since the late planting period is no longer defined in
these Crop Provisions, the words ``late planting period'' have been
changed to ``25 days.'' The Basic Provisions contain a definition for
``late planting period'' as well as sections with provisions for late
and prevented planting.
Comment: An insurance service organization stated that a nurse crop
is not always intended to be harvested separately, but may be removed
with a herbicide or other means. The commenter recommended deleting the
phrase ``that is intended to be harvested separately,'' in the
definition of ``nurse crop.''
Response: The primary reason that a nurse crop is planted is to
improve the growing conditions of the crop with which it is grown. The
definition has been revised to specify that the nurse crop is not
intended to be harvested with the insured crop.
Comment: An insurance service organization questioned if the phrase
``marketing window'' in the definition of ``practical to replant''
applies to dry peas.
Response: The Federal Agriculture Improvement and Reform Act of
1996 requires FCIC to consider marketing window when determining
whether it is practical to replant. No change has been made.
Comment: A reinsured company and an insurance service organization
are concerned with the definition of ``replanting.'' The reinsured
company indicated that the phrase replace the pea seed and then
replacing the pea seed is awkward and cumbersome. The insurance service
organization recommended clarifying the definition of ``replanting'' by
specifying the crop name as follows: ``with the expectation of growing
a successful pea 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 or expectation of producing at least the guarantee. No
change has been made.
Comment: An insurance service organization stated that the
definition of ``salvage value'' appears to be unnecessary as the term
is not used elsewhere in these provisions.
Response: FCIC has deleted the phrase ``salvage value'' from these
Crop Provisions.
Comment: An insurance service organization questioned whether the
defined dry pea types are the same as the varietal groups of dry peas
that qualify for basic units in the current 1986-CHIAA 713 provisions.
Response: The dry pea types defined in these Crop Provisions are
the same as the varietal groups of dry peas that qualify for basic
units in the current 1986-CHIAA 713 provisions, except that Austrian
Winter Peas are added under these Crop Provisions. A basic unit may be
divided into optional units by type.
[[Page 65743]]
Comment: An insurance service organization stated that section 2
allows basic units to be divided into optional units by type (varietal
group). The proposed change would require an insured to keep separate
production records to qualify for optional units by type and the
insured would no longer qualify for the basic unit discount. The
commenter asked whether there would be any corresponding rate
adjustment?
Response: Insureds have the option of selecting optional units by
type. It is not required. To qualify for optional units, the insured
must maintain separate production records by type. The premium rate
charged will depend on the unit structure selected by the insured.
Comment: An insurance service organization recommended removal of
the opening phrase in section 2(e)(4)(iii) of the proposed rule that
states ``In addition to, or instead of, establishing optional units by
section, section equivalent or FSA Farm Serial Number since section
2(e)(4) of the proposed rule specifies that ``Each optional unit must
meet one or more of the following criteria.
Response: FCIC has revised this provision in the Basic Provisions.
Comment: An insurance service organization questioned if the
various types of peas listed in the ``dry pea'' definition have similar
growing seasons and harvest dates.
Response: With the exception of Austrian Winter Peas, the various
types of peas listed in the ``dry pea'' definition have similar growing
seasons and harvest dates. Austrian Winter Peas have a different
growing season since they are normally planted in the fall. This
difference should be no more complex than is the case for winter and
spring wheats that also are grown in the Pacific Northwest.
Comment: A reinsured company and an insurance service organization
questioned why the provisions in section 3 allow different price
election percentages by dry pea type. This is not consistent with most
other Crop Provisions unless each type is treated as a separate crop.
They stated that this inconsistency may lead to confusion on the part
of the insureds and agents.
Response: Producer groups have requested the flexibility to select
a different percentage of the maximum price election for each type. The
economic significance of different types of dry peas can vary
considerably to a producer. Insurance providers have already programmed
computer systems to allow variation in price election percentages for
dry beans. There should be no significant costs if the same system is
used for dry peas. No changes have been made.
Comment: An insurance service organization questioned why peas
would be excluded from the seed contract ``during'' the crop year.
Response: The processor may modify the terms of the contract to
exclude acreage or production because of over-production. If, for any
reason, peas are excluded, they may not be covered under these Crop
Provisions.
Comment: An insurance service organization questioned whether,
under section 7(a)(3), interplanting would be limited to certain acres
and whether this practice would require a growing season inspection.
Response: If the Special Provisions allow for interplanted dry
peas, insurance coverage for this practice would apply to all acreage
in a county. If a written agreement provides coverage for interplanted
dry peas, the agreement itself would specify any limitations. In
neither case, would a growing season inspection be required.
Comment: An insurance service organization stated that the term
``lease'' in section 7(b) is confusing. It questioned if this section
should be moved to the definition of ``seed company.''
Response: FCIC agrees that the provisions are confusing and has
revised section 7(b) to specify that the insured must retain control of
the leased acreage.
Comment: An insurance service organization questioned the
provisions in section 7(c) that reference an adequate stand as one
capable of producing ``at least the production guarantee'' which
conflicts with the definition of ``adequate stand.''
Response: Section 7(c) has been revised to refer to adequate stand.
Comment: An insurance service organization questioned the
provisions of section 7(c), which permit insurance for Austrian Winter
Peas, if provided for on the Special Provisions, the insured requests
insurance on or before the sales closing date, and if the insurance
provider agrees in writing that there is an adequate stand in the
spring to produce the yield used to establish the production guarantee.
The commenter asked if a growing season inspection would be required.
Response: A preliminary inspection will be required to determine if
there is an adequate stand for insurance coverage. Once it is
determined that there is an adequate stand, and insurance has attached,
it will be up to the insurance provider to determine if a growing
season inspection should be performed.
Comment: An insurance service organization recommended clarifying
the provisions of section 7(d) to specify that coverage for replanted
acreage will be based on the originally planted type, and to move this
provision to section 8(b).
Response: To be consistent with other Crop Provisions, FCIC has
added a provision to specify that the guarantee and premium for acreage
replanted to a different insurable type will be based on the replanted
type. Since this provision describes the insured crop, it will remain
in section 7.
Comment: A reinsured company and an insurance service organization
recommended deleting the phrase in section 8(b) to the extent that the
majority of producers in the area would normally not further care for
the crop as this phrase is subjective and meaningless, and causes
problems if acreage of the crop is damaged after the final planting
date, but other producers in the area are still replanting.
Response: FCIC has revised this provision to require replanting
when most producers of the crop on acreage with similar characteristics
are replanting.
Comment: A reinsured company questioned whether the phrase at the
beginning of section 9 should be ``In addition to'' instead of ``In
accordance with.''
Response: FCIC has amended the beginning of section 9 accordingly.
Comment: A reinsured company and an insurance service organization
questioned if the provisions of section 9(b) applied only to Austrian
Winter Peas or to all dry pea types.
Response: Section 9(b) has been clarified to indicate that the
provisions apply to all dry pea types unless otherwise specified in the
Special Provisions.
Comment: An insurance service organization indicated that the
calculation sequence in section 12(b)(1)-(13) is difficult to follow
because it is so wordy. They stated that it seems unnecessary to refer
to the previous item by number as if it were on another page.
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 references would make the provisions less
clear. FCIC will add an example for clarity.
Comment: An insurance service organization questioned if the
reference to ``each contract seed pea type,'' in section 12(b)(4),
meant the same as each type that qualifies for a separate optional unit
according to section
[[Page 65744]]
2(e)(4)(i), or if the optional unit division is applicable to only the
``types'' listed in the definition or ``dry peas.'' If this is the
case, the commenter recommended that another term should be used in
this section as well as section 12(c).
Response: The provisions in sections 12(b)(4) and 12(c) should have
referred to contract seed pea varieties. This section has been
clarified accordingly.
Comment: A reinsured company questioned if the terms ``value'' and
``actual value'' in section 12(c) should be defined. The commenter also
wanted to know how cull value is incorporated into the calculations to
determine the value of production to count.
Response: FCIC has revised section 12(c) to refer to the ``highest
local market price'' instead of ``actual value'' in order to set an
objective standard for determining the value of damaged production. The
provisions clearly indicate that the value of production to count is
based on the new term local market price. The local market price of any
``cull'' production will be included when determining the amount of any
indemnity.
Comment: An insurance service organization questioned how the
``actual value'' is determined for mature production that does not meet
the minimum quality requirements contained in the seed pea contract.
The commenter asked if the value of production that does not meet the
minimum quality requirements contained in the seed pea contract would
be considered to be the ``salvage value.''
Response: The ``local market price'' for contract seed pea
production not meeting the minimum quality requirements contained in
the seed pea contract will be the highest price obtainable for the
production regardless of its ultimate disposition. If a salvage use
proves to provide the highest value obtainable, then that ``salvage
value'' will be used to determine the value of the production to count.
Comment: An insurance service organization received one comment
stating that the policy should not allow the insured to defer
settlement and wait for a later, generally lower appraisal.
Response: A later appraisal will only be necessary if the insurance
provider and the insured do not agree on the appraisal or if the
insurance provider believes that the crop needs to be carried farther
to make a more accurate appraisal. If the insured does not provide
sufficient care for the remaining crop, the insurance provider may use
the original appraisal or assess an appraisal for an uninsured cause of
loss. Therefore, no change has been made.
Comment: A reinsured company questioned if the term ``condition''
should be defined as this term is used in section 12(e)(3)(i)(C).
Response: FCIC has defined ``conditioning'' in section 1 of these
Crop Provisions.
Comment: The crop insurance industry recommended that the
requirement for a written agreement to be renewed each year be removed.
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 intended to change policy terms or
permit insurance in unusual situations where such changes will not
increase risk. If such practices continue year to year, they should be
incorporated into the policy or Special Provisions. It is important to
minimize exceptions to assure that the insured is well aware of the
specific terms of the policy. The written agreement provisions are
deleted and moved to the Basic Provisions.
In addition to the changes described above, FCIC has made the
following editorial changes to the Dry Pea Crop Insurance Provisions:
1. Amended the paragraph preceding section 1 (Definitions) to
include the Catastrophic Risk Protection Endorsement.
2. Section 1--Amended the definition of ``combining,'' ``contract
seed peas,'' ``local market price,'' ``practical to replant,'' and
``seed company contract'' for clarification. Deleted the definition of
``contract price'' since this term is not used in these provisions.
Deleted the definition of ``days,'' ``FSA,'' ``final planting date,''
``good farming practices,'' ``interplanted,'' ``irrigated practice,''
``production guarantee (per acre),'' ``replanting,'' ``USDA,'' ``timely
planting,'' and ``written agreement'' because these definitions were
moved to the Basic Provisions. Revised the definition of ``planted
acreage'' and ``practical to replant'' to delete those provisions moved
to the Basic Provisions.
3. Section 2--Deleted those provisions moved to the Basic
Provisions.
4. Section 3--Removed the provision in section 3 regarding
administrative fees because it is duplicative of provisions contained
in 7 CFR part 400, subpart T.
5. Section 6--Deleted the requirements of ``spring-planted'' and
``grown under contract with a seed company'' since they are included in
the definition of ``contract seed peas.''
6. Section 7(c)--Clarified that Austrian Winter Peas will be
insured if authorized by the Special Provisions, if the insured
requests insurance in writing for such dry peas, and if the insurance
provider agrees in writing to provide coverage.
7. Section 12(d)(1)(iv)(B)--Clarified language to indicate that if
the producer continues to care for the crop, the amount of production
to count will be the harvested production or the reappraised amount if
the crop is not harvested.
In general, FCIC has clarified some language to make these
provisions easier to read.
Good cause is shown to make this rule effective upon publication in
the Federal Register. This rule improves the dry pea insurance coverage
and brings it under the Common Crop Insurance Policy Basic Provisions
for consistency among policies. The earliest contract change date that
can be met for the 1998 crop year is December 31, 1997. It is therefore
imperative that these provisions be made final before that date so that
the reinsured companies and insureds may have sufficient time to
implement these changes. Therefore, public interest requires the agency
to act immediately to make these provisions available for the 1998 crop
year.
List of Subjects in 7 CFR Part 457
Crop insurance, Dry pea, Pea crop insurance regulations.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation, hereby amends 7 CFR part 457, as follows:
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
2. Section 457.140 is added to read as follows:
Sec. 457.140 Dry pea crop insurance provisions.
The Dry Pea Crop Insurance Provisions for the 1998 and succeeding
crop years are as follows:
FCIC policies:
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
Reinsured policies:
[[Page 65745]]
(Appropriate title for insurance provider)
Both FCIC and reinsured policies:
Dry Pea Crop 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.
Adequate stand. A population of live plants per acre that will
produce at least the yield used to establish your production
guarantee.
Base price. The price per pound stipulated in the processor
contract without regard to discounts or incentives that may apply,
and that will be paid to the producer for at least 50 percent of the
total production under contract with the seed company.
Combining. A mechanical process that separates the peas from the
pods and other vegetative matter and place the peas into a temporary
storage receptacle.
Conditioning. A process that improves the quality of production
by screening or any other operation commonly used in the dry pea
industry to remove dry peas that are deficient in quality.
Contract seed peas. Dry peas produced for seed to be planted at
a future date and that:
(a) Are grown on acreage enrolled in the seed certification
program administered by the state in which the peas are produced;
(b) Are grown on acreage planted in the spring; and
(c) Are under a seed company contract.
Dry peas. Peas of the following types:
(a) All spring-planted smooth green and yellow varieties of
commercial dry edible peas, and peas grown to produce seed to be
planted at a future date that do not meet the requirements contained
in the seed company contract;
(b) All fall-planted varieties of Austrian Winter Peas only if
provided for in the Special Provisions;
(c) All spring-planted varieties of lentils; and
(d) All varieties of contract seed peas.
Harvest. Combining of dry peas.
Local market price. The cash price per pound for the U.S. No. 2
grade of dry peas as determined by us. Such price will be the
prevailing dollar amount these buyers are willing to pay for dry
peas containing the maximum limits of quality deficiencies allowable
for the U.S. No. 2 grade. Factors not associated with grading under
the United States Standards for Whole Dry Peas, Split Peas and
Lentils will not be considered.
Nurse crop (companion crop). A crop planted into the same
acreage as another crop, that is intended to improve the growing
conditions for the crop with which it is grown and that is not
intended to be harvested with the insured crop.
Planted acreage. In addition to the definition contained in the
Basic Provisions, dry peas must initially be planted in rows to be
considered planted. Acreage planted in any other manner will not be
insurable unless otherwise provided by the Special Provisions or by
written agreement.
Practical to replant. In addition to the definition contained in
the Basic Provisions, it will not be considered practical to replant
dry peas, except for seed peas, more than 25 days after the final
planting date unless replanting is generally occurring in the area.
For seed peas, it will not be considered practical to replant unless
production from the replanted acreage can be delivered under the
terms of the seed pea processor contract or the seed company agrees
in writing to accept such production.
Price election. In addition to the provisions of the definition
contained in the Basic Provisions, the price election for contract
seed peas will be a percentage (not to exceed 100 percent) of the
base price that you elect.
Seed company. Any business enterprise regularly engaged in the
processing of contract seed peas, that possesses all licenses and
permits for marketing contract seed peas required by the state in
which it operates, and that owns, or has contracted, sufficient
drying, screening, and bagging or packaging equipment to accept and
process the contract seed peas within a reasonable amount of time
after harvest.
Seed company contract. A written agreement between the producer
and the seed company, executed by the acreage reporting date,
containing at a minimum:
(a) The producer's promise to plant and grow one or more
specific varieties of contract seed peas, and deliver the production
from those varieties to the seed company;
(b) The seed company's promise to purchase all the production
stated in the contract; and
(c) A fixed price, or a method to determine such price based on
published information compiled by a third party, that will be paid
to the producer for at least 50 percent of the production stated in
the contract.
2. Unit Division.
(a) In addition to, or instead of, establishing optional units
by section, section equivalent, or FSA farm serial number and by
irrigated and non-irrigated acreage as provided in the unit division
provisions contained in the Basic Provisions, a separate optional
unit may be established for each pea type listed in section 1 of
these Crop Provisions.
(b) Contract seed peas may qualify for optional units only if
the seed company contract specifies the number of acres under
contract. Contract seed peas produced under a seed company contract
that specifies only an amount of production or a combination of
acreage and production, are not eligible for optional units.
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 dry
peas, including contract seed peas, 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 dry pea type so designated in the Special Provisions. The
price elections you choose for each type are not required to 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 may choose 80 percent of the
maximum price election for another type. However, if you elect the
Catastrophic Risk Protection level of insurance for any dry pea
type, the same level of coverage will be applicable to all insured
acreage in the county.
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 March 15.
6. Report of Acreage.
In addition to the provisions of section 6 of the Basic
Provisions, you must submit a copy of the seed company contract to
us on or before the acreage reporting date if you are insuring
contract seed peas.
7. Insured Crop.
(a) In accordance with section 8 of the Basic Provisions, the
crop insured will be all the dry pea types in the county (including
Austrian Winter Peas if you request insurance for such peas in
accordance with section 7(c)) for which a premium rate is provided
by the actuarial documents:
(1) In which you have a share;
(2) That are planted for harvest as dry peas and which, if grown
under a seed company contract, are not excluded from such contract
during the crop year;
(3) That are grown in accordance with the requirements of the
seed company contract, if applicable;
(4) That are not (unless allowed by the Special Provisions or by
written agreement):
(i) Interplanted with another crop;
(ii) Planted into an established grass or legume; or
(iii) Planted as a nurse crop.
(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 contract seed peas are grown, you are at risk of loss,
and the processor contract is in effect.
(c) Austrian Winter Peas are only insurable if you request
insurance in writing for such dry peas, and we agree in writing to
provide coverage. Your request to insure Austrian Winter Peas must
be submitted to us not later than the sales closing date. We will
not agree to insure Austrian Winter Peas unless an adequate stand
exists in the spring.
(d) Any acreage of dry peas that is destroyed and replanted to a
different insurable type of dry peas will be considered insured
acreage. The guarantee and premium for acreage replanted to a
different insurable type will be based on the replanted type and
will be calculated in accordance with sections 3 and 7 of the Basic
Provisions and section 3 of these Crop Provisions.
8. Insurable Acreage.
In addition to the provisions of section 9 of the Basic
Provisions:
(a) We will not insure any acreage that does not meet the
rotation requirements, if applicable, contained in the Special
Provisions; or
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(b) Any acreage of the insured crop damaged before the final
planting date, to the extent that most producers of the crop or
acreage with similar characteristics in the area would normally not
further care for the crop, must be replanted unless we agree that it
is not practical to replant. We will not require you to replant if
it is not practical to replant the type of dry peas originally
planted.
9. Insurance Period.
In addition to the provisions of section 11 of the Basic
Provisions:
(a) Coverage for Austrian Winter Peas, will begin on the earlier
of March 16 or the date we agree to accept the acreage for
insurance, but not before March 1; and
(b) The calendar date for the end of the insurance period for
all insurable types of dry peas in the county is September 30 of the
crop year in which the crop normally is harvested unless otherwise
specified in the Special Provisions.
10. Causes of Loss.
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:
(a) Adverse weather conditions;
(b) Fire;
(c) Insects, but not damage due to insufficient or improper
application of pest control measures;
(d) Plant disease, but not damage due to insufficient or
improper application of disease control measures;
(e) Wildlife;
(f) Earthquake;
(g) Volcanic eruption; or
(h) Failure of the irrigation water supply, if due to a cause of
loss contained in section 10(a) through (g) that occurs during the
insurance period.
11. 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. If you intend to destroy the crop prior to harvest, the
samples must not be destroyed until after our inspection.
12. 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 to your pea crop covered by
this policy, we will settle your claim by:
(1) Multiplying the insured acreage of each dry pea type, if
applicable, excluding contract seed peas, by its respective
production guarantee;
(2) Multiplying each result of section 12(b)(1) by the
respective price election;
(3) Totaling the results of section 12(b)(2);
(4) Multiplying the insured acreage of each contract seed pea
variety by its respective production guarantee;
(5) Multiplying each result of section 12(b)(4) by the
applicable base price;
(6) Multiplying each result of section 12(b)(5) by your selected
price election percentage;
(7) Totaling the results of section 12(b)(6);
(8) Totaling the results of section 12(b)(3) and section
12(b)(7);
(9) Multiplying the total production to be counted of each dry
pea type, excluding contract seed peas, if applicable (see section
12(d)), by the respective price elections;
(10) Totaling the value of all contract seed pea production (see
section 12(c));
(11) Totaling the results of section 12(b)(9) and section
12(b)(10);
(12) Subtracting the result of section 12(b)(11) from the result
in section 12(b)(8); and
(13) Multiplying the result of section 12(b)12 by your share.
For example:
You have a 100 percent share in 100 acres of spring-planted
smooth green dry edible peas in the unit, with a guarantee of 4,000
pounds per acre and a price election of $0.09 per pound. You are
only able to harvest 200,000 pounds. Your indemnity would be
calculated as follows:
(1) 100 acres x 4,000 pounds = 400,000 pounds guarantee;
(2) 400,000 pounds x $0.09 price election = $36,000.00 value
of guarantee;
(9) 200,000 pounds x $0.09 price election = $18,000.00 value
of production to count; $36,000.00 value of guarantee -$18,000.00
value of production to count = $18,000.00 loss; and
(13) $18,000.00 x 100 percent = $18,000.00 indemnity payment.
You also have a 100 percent share in 100 acres of contract seed
peas in the same unit, with a guarantee of 5,000 pounds per acre and
a base price of $0.40 per pound. Your selected price election
percentage is 75 percent. You are only able to harvest 450,000
pounds. Your total indemnity for both spring-planted smooth green
dry edible peas and contract seed peas would be calculated as
follows:
(1) 100 acres x 4,000 pounds = 400,000 pounds guarantee for
the spring-planted smooth green dry edible pea type, and
(4) 100 acres x 5,000 pounds = 500,000 pounds guarantee for
the contract seed pea type;
(2) 400,000 pounds guarantee x $0.09 price election =
$36,000.00 value of guarantee for the spring-planted smooth green
dry edible pea type, and
(5) 500,000 pounds guarantee x $0.40 base price = $200,000.00
gross value of guarantee for the contract seed pea type;
(6) $200,000 x .75 price election percentage = $150,000 net
value of guarantee for the contract seed pea type;
(8) $36,000.00+$150,000.00 = $186,000.00 total value of
guarantee;
(9) 200,000 pounds x $0.09 price election = $18,000.00 value
of production to count for the spring-planted smooth green dry
edible pea type, and
(10) 450,000 pounds x $0.30 = $135,000.00 value of production
to count for the contract seed pea type;
(11) $18,000.00+$135,000.00 = $153,000.00 total value of
production to count;
(12) $186,000.00-$153,000.00 = $33,000.00 loss; and
(13) $33,000.00 loss x 100 percent = $33,000.00 indemnity
payment.
(c) The value of contract seed pea production to count for each
variety in the unit will be determined as follows:
(1) For production meeting the minimum quality requirements
contained in the seed company contract, and for production that does
not meet such requirements due to uninsured causes:
(i) Multiplying the local market price or base price per pound,
whichever is greater, by the price election percentage you selected;
and
(ii) Multiplying the result by the number of pounds of such
production.
(2) For mature production not meeting the minimum quality
requirements contained in the seed pea processor contract due to
insurable causes, and immature production that is appraised:
(i) Multiplying the highest local market price available for
such dry peas by the price election percentage you selected; and
(ii) Multiplying the result by the number of pounds of such
production.
(d) The total pea 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 per acre for acreage:
(A) That is abandoned;
(B) That is put to another use without our consent;
(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 (mature unharvested production of
dry peas, excluding Austrian Winter Peas, may be adjusted for
quality deficiencies in accordance with section 12 (c) or (e), if
applicable); and
(iv) 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
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the acreage will be the harvested production, or our reappraisal if
the crop is not harvested; and
(2) All harvested production from the insurable acreage.
(e) Mature production of smooth green and yellow peas, lentils,
and seed peas that do not qualify as contract seed peas under the
policy terms, and that are not deliverable under the contract or are
sold under the contract for less than the contract price, may be
adjusted for quality deficiencies. No adjustment for quality
deficiencies will be allowed for Austrian Winter Peas.
(1) Production will be eligible for quality adjustment if:
(i) Deficiencies in quality, in accordance with the United
States Standards for Whole Dry Peas, Split Peas, and Lentils, result
in production grading U.S. No. 2 or worse because of defects, color,
skinned production (lentils only), odor, material weathering, or
distinctly low quality; or
(ii) Substances or conditions are present that are identified by
the Food and Drug Administration or other public health
organizations of the United States as being injurious to human or
animal health.
(2) Quality will be a factor in determining your loss only if:
(i) The deficiencies, substances, or conditions resulted from a
cause of loss against which insurance is provided under these Crop
Provisions and which occurs within the insurance period;
(ii) The deficiencies, substances, or conditions result in a net
price for the damaged production that is less than the local market
price;
(iii) All determinations of these deficiencies, substances, or
conditions are made using samples of the production obtained by us
or by a disinterested third party approved by us; and
(iv) The samples are analyzed by a grader licensed to grade dry
peas under the authority of the United States Agricultural Marketing
Act or the United States Warehouse Act with regard to deficiencies
in quality, or by a laboratory approved by us with regard to
substances or conditions injurious to human or animal health. Test
weight for quality adjustment purposes may be determined by our loss
adjuster.
(3) Dry Pea production that is eligible for quality adjustment,
as specified in sections 12(e) (1) and (2), will be reduced as
follows:
(i) The highest local market price for the qualifying damaged
production will be determined on the earlier of the date such
damaged production is sold or the date of final inspection for the
unit. The highest local market price for the qualifying damaged
production will be determined in the local area to the extent
feasible. We may obtain prices from any buyer of our choice. If we
obtain prices from one or more buyers located outside your local
market area, we will reduce such prices by the additional costs
required to deliver the dry peas to those buyers. Discounts used to
establish the net value of the damaged production will be limited to
those that are usual, customary, and reasonable.
The value will not be reduced for:
(A) Moisture content;
(B) Damage due to uninsured causes; or
(C) Drying, handling, processing, or any other costs associated
with normal harvesting, handling, and marketing of the dry peas;
except, if the value of the damaged production can be increased by
conditioning, we may reduce the value of the production after it has
been conditioned by the cost of conditioning but not lower than the
value of the production before conditioning;
(ii) The value per pound of the damaged or conditioned
production will be divided by the local market price to determine
the quality adjustment factor;
(iii) The number of pounds of the damaged or conditioned
production will then be multiplied by the quality adjustment factor
to determine the production count to be included in section 12(d);
and
(iv) Any production harvested from plants growing in the insured
crop may be counted as production of the insured crop on a weight
basis.
13. 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 December 9, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-32619 Filed 12-15-97; 8:45 am]
BILLING CODE 3410-08-P
