[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4230]
[Federal Register: February 28, 1994]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
General Crop Insurance Regulations; Small Grains Crop Insurance
Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) hereby adopts
regulations for specific crop provisions to insure Small Grains (wheat,
barley, flax, oats, and rye), and options for increased coverage on
Winter Wheat and Malting Barley. This rule consolidates the provisions
for insuring small grains into one policy and provides for late
planting, prevented planting, and wheat winter coverage.
EFFECTIVE DATE: March 30, 1994.
FOR FURTHER INFORMATION CONTACT:
Mari L. Dunleavy, Regulatory and Procedural Development, Federal Crop
Insurance Corporation, U.S. Department of Agriculture, Washington, DC
20250, telephone (202) 254-8314.
SUPPLEMENTARY INFORMATION: This action has been reviewed under USDA
procedures established by Departmental Regulation 1512-1. This action
constitutes a review as to the need, currency, clarity, and
effectiveness of these regulations under those procedures. The sunset
review date established for these regulations is July 1, 1998.
Kenneth D. Ackerman, Manager, FCIC, has determined that this action
is in conformance with Executive Order 12866 and is not a ``significant
regulatory action.'' Based on information compiled by the Department,
it has been determined that this final rule: (1) Would not adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local, or tribal governments or communities; (2)
would not create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency; (3) would not alter the
budgetary impact of entitlement, grants, user fees or loan programs or
rights and obligations of recipients thereof; and (4) would not raise
novel legal or policy issues arising out of legal mandates, the
President's priorities, or principles set forth in Executive Order
12866.
In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.
3501 et seq.), the information collection or record-keeping
requirements included in this final rule have been submitted for
approval to the Office of Management and Budget.
This action will not have a significant impact on a substantial
number of small businesses. The insurance companies delivering these
policies will not increase the amount of work required over the
previous policy delivery. In fact, the combination of a number of
previously independent policies into one policy should reduce confusion
and increase efficiency. Therefore, this action is determined to be
exempt from the provisions of the Regulatory Flexibility Act and no
Regulatory Flexibility Analysis was prepared.
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
This program is not subject to the provisions of Executive Order
12372 which requires 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.
This action is not expected to have any significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
The small grains crop provisions were developed to provide one
policy form for insuring wheat, barley, flax, oats, and rye. Using one
policy for these five crops will: (1) Substantially reduce paperwork by
issuing one policy form rather than the five separate policies
previously used; (2) substantially reduce the number of crop handbooks
and administrative procedures because separate handbooks and procedures
will no longer be required for each of the small grain crops; (3)
reduce the time involved to amend or revise the Provisions by
eliminating repetitious review processes; and (4) continue to allow
insureds the flexibility to elect any of the five small grain crops
they wish to insure.
By separate rule, FCIC will remove and reserve the present sections
for these crop endorsements.
On Thursday, June 10, 1993, FCIC published a notice of proposed
rulemaking in the Federal Register at 58 FR 32458 proposing to revise
the Common Crop Insurance Regulations by adding new provisions for
oats, wheat, winter wheat, flax, barley, malting barley, and rye crop
insurance.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments, data, and opinions. Comments were
received from various representatives of farm and commodity groups, the
crop insurance industry, and FCIC. The comments received and FCIC
responses are as follows:
Comment: Six comments suggested that the Crop Provisions should be
delayed until after the 1994 crop year because:
(1) Timeliness--Implementation of this program for the 1994 crop
would cause confusion and disruption because companies had insufficient
time for training and marketing of the program to agents and insureds;
(2) Program Integrity--The effect upon the overall public
acceptance and program integrity will be negative as a result of the
inevitable service problems associated with ``rushing'' a program of
such national scale; and
(3) Changes--To a large degree, most of the proposed provisions are
positive and will improve the program; however, by delaying
implementation until the 1985 crop year specific provisions can be
studied.
Response: FCIC delayed implementation until the 1995 crop year.
Comment: Two comments suggested the proposed Small Grains Crop
Provisions undergo a pilot test in two to three county groupings
located in (1) a predominantly spring wheat only area, (2) a winter
wheat only area, and (3) an area having significant acreage of both
winter and spring wheat. The comments stated that this approach would
avoid undue risk of adverse effects to a wheat program currently
working well for thousands of policyholders. An additional comment
recommended that the proposal be tabled for further study and
discussion to give all parties sufficient time to adequately assess the
effects of the proposed changes.
Response: The Small Grains Crop Provisions permit farmers to choose
the same or nearly the same coverage as currently offered. FCIC does
not anticipate significant problems with the proposed provisions, and
sees no need to create a pilot program to test effectiveness.
Comment: Two comments recommended that the term ``initially
planted'' be defined for the purposes of unit division. Current farming
practices are such that more than one use/interpretation of this term
is possible. Another comment recommended that ``initially planted'' be
defined as ``the first occurrence of planting the crop to the acreage
for the crop year''.
Response: FCIC agrees that the term ``initially planted'' should be
defined and has done so.
Comment: One comment stated that the definition of ``practical to
replant'' contained in the Common Crop Insurance Policy conflicts with
the Small Grains Crop Provisions. The Common Crop Insurance Policy
indicates it is practical to replant until 20 days after the final
planting date. The Small Grains Crop Provisions indicate that any
acreage of the insured crop damaged before the final planting date must
be replanted unless FCIC agrees that replanting is not practical. It
was recommended that a definition of ``practical to replant'' be added
to the Small Grains Crop Provisions that will override the definition
contained in the Common Crop Insurance Policy.
Response: The comment misapplies the definition of ``practical to
replant'' in the Common Policy. That policy does not indicate that it
is practical to replant until 20 days after the final planting date
but, to the contrary, states that it is not practical to replant after
that date. The provisions do not conflict. A new definition has not
been added due to this comment. However, a new definition has been
added that is compatible with the new 25 day late planting period.
Comment: One comment noted that the definition of ``swathed''
indicates that a wheat crop that has been cut but not placed in
windrows is considered ``swathed.'' The comment suggested rewording the
definition to require that the crop be placed in a windrow.
Response: FCIC agrees with the comment and has appropriately
modified the definition.
Comment: One comment stated that the wording in the unit division
section has significantly changed as has the unit division wording in
the ``draft'' 1994 Crop Insurance Handbook (CIH). The comment
recommended corresponding policy language with that in the CIH.
Response: Language contained in the Crop Insurance Handbook is
interpretive and procedural in nature. The Crop Insurance Handbook
details unit division for various crops, and is intended for use by
insurers and their agents to interpret the crop provisions. In the
event of conflict the provisions control. The Small Grains Crop
Provisions outline the unit structure for small grains in a concise
manner and are controlling.
Comment: One comment disagreed with requiring insureds to furnish
records for each optional unit for at least the last crop year the unit
was planted. According to current procedure, ``in order for optional
units to apply, the insured must have provided production reports for
the most recent year in the base period which support the optional
units proposed by the insured.'' The comment asserts that unless all
optional units are planted every year, the new policy could require an
insured to furnish records for several years to qualify for optional
units. This places an increased burden on all producers, particularly
on those practicing crop rotation. The comment recommended revising the
provision to ``You must have verifiable records of production for at
least the last crop year used to determine your production guarantee.''
Response: FCIC agrees with the comment and has modified the
provision with language similar to that recommended.
Comment: A comment inquired if the process of raising the planter
for a few feet and then resuming planting, or leaving a space unplanted
is sufficient for a ``clear and discernible break in the planting
pattern''. The comment suggested further clarification of the term,
``clear and discernible break in the planting pattern''.
Response: Requirements for separate units have been met if the
break in the planting pattern is adequate to allow measurement of
individual insurance units, and allow separate harvest of the units.
The terms are self explanatory. Whether a break exists depends on
whether these functions can occur. No changes in policy language are
needed to clarify boundary requirements.
Comment: Four comments supported initially planted spring wheat
being treated as a separate unit. Each comment also indicated that
there should not be a mandatory replant provision for damaged winter
wheat. One of the four comments indicated that any premium increase
caused by the separate optional units for spring and winter wheat
should be minimal.
Response: Separate optional units for initially planted winter and
spring wheat are allowed by this regulation, although farmers who elect
this choice will forgo the premium discount for maintaining a single
unit. These terms are consistent with those terms given to a producer
who elects to plant spring and winter wheat into separate sections.
The Wheat Winter Coverage Endorsement provides optional coverage
for those growers who may not wish to replant damaged winter wheat.
However, the Basic Policy requires that crops damaged prior to the
final planting date be replanted when practical. This requirement helps
FCIC maintain lower premium rates.
Comment: Some comments were in disagreement with the provision
allowing insureds to select optional units for initially planted winter
wheat and initially planted spring wheat for the following reasons:
a. Currently, production from winter wheat acreage often off-sets
losses on spring wheat acreage. Allowing optional units by type can
only increase the loss ratio in those areas where both winter and
spring types wheat are planted and insured. To increase risk exposure
by allowing winter and spring wheat units when other changes are
concurrently being implemented in the program to decrease the loss
ratio seems to create a conflict.
b. There is no appreciable difference in harvesting and marketing
the soft white winter wheat and the soft white spring wheat grown in
the northwest. Although a yield difference does exist between the two
types of wheat, yield differences also exist for many other crop
practices and types not allowed separate optional units.
c. If optional units are allowed by type, a significant increase in
losses could result. According to information from some member
companies who have analyzed prior year losses by type, loss ratios for
wheat would have been substantially higher if winter and spring wheat
could have been insured as a separate optional units.
d. One organization had not received any requests for optional
units by type from companies, agents, or insureds, and therefore did
not see the need for the provision.
Other comments provided the following observations and inquiries:
a. Will the cost of the options in provisions governing Unit
Division be prohibitive?
b. Production of spring wheat and winter wheat is commingled more
often than not.
c. Allowing winter and spring optional units may significantly
increase risk. FCIC should analyze winter and spring statistics to
determine if an additional rate should be charged.
d. The provision allowing optional units for initially planted
Winter Wheat and initially planted Spring Wheat will permit growers who
have insufficient acreage to plant in separate sections and declare
separate optional units. Large producers will also be able to declare
separate optional units, and the net effect will increase the number of
wheat units. This may have a negative effect on FCIC's loss ratio. The
provision will also increase the paperwork burden of the already
overburdened claims adjuster.
e. Changes or adjustments to the program should be sensitive to
rating adequacy and reduction of excess of loss ratios. Some of the
provisions of the program contradict these goals. For instance,
analyses by companies and industry trade associations do not support
the notion that no additional rate is required for optional units by
type. As proposed, optional units by type can only be justified as a
marketing tool in some areas of the country.
Response: Separate units for winter and spring wheat have been
requested by grower groups in Washington, Idaho, and Oregon. FCIC
agrees that farmers should have the opportunity to designate initially
planted spring and winter wheat as separate optional units because they
are planted several months apart and are normally harvested separately.
FCIC also agrees that soft white wheat types may be marketed together.
However, there are substantial price penalties for commingling
production of spring and winter wheat of other types.
FCIC has analyzed types of wheat reported by unit for the states in
which both winter and spring types are insured. An average of only 7
percent of all units in these states reported both winter and spring
types within the same unit. The majority, or 93 percent of all units,
reported only a single type within the unit. These results suggest that
most farmers already manage their land in a manner that permits them to
put the winter and spring types into separate optional units. This is
accomplished by planting the types within different legally defined
sections of land. Thus, FCIC believes that the potential for increases
in the number of optional units is not substantial. Most farmers who
have enough land and who wish to designate separate optional units
already do so.
Farmers who designate separate optional units by type within the
same section will forgo the premium discount that is currently allowed
if a basic unit is not separated into optional units. Thus, farmers who
elect to designate units by type of wheat within the section will pay
more premium than a farmer who elects to retain all acreage within a
basic unit.
The comments concerning additional paperwork are overstated.
Farmers already are required to report separately any acreage planted
to the spring and winter types within section because different premium
rates, insurance guarantees, or both, apply to such acreage. The only
difference in the acreage report under the new provision is that two
distinct unit numbers will be used by the insurer rather than one as at
present. Farmers will be required to report the production of the two
types separately, which they already may do in many cases. FCIC cannot
estimate the number of cases in which a new report may be required. The
former wheat endorsement required only that insured persons report the
total production of all the insurable crop produced on the unit. If a
farmer elects to report only total production under the present
arrangements, the accuracy of the guarantees for the types is reduced
because the insurer must allocate the production in some manner to
establish a guarantee by type. If farmers who now report the combined
production of the two types within section do designate separate
optional units, the change may enhance the precision of guarantees for
the separate types, thereby benefiting the insurer. If the farmer
already reports production of the two types separately, there will be
no change in the paperwork required.
Insured persons who wish to take advantage of the opportunity to
designate separate optional units within a section must comply with all
other requirements for unit division. Thus, if a producer commingles
production of the winter and spring types, separate optional units may
not be elected. If a producer plants spring wheat into a failed winter
stand, separate optional units may not be elected. If planting patterns
do not permit separate identification of the acreage, optional units
may not be elected. If a producer wishes to reduce the premium paid for
the insurance, he or she can elect to retain all the acreage in a basic
unit. The new provisions do not mandate separate optional units.
Finally, much of the research about units referenced in the
comments relates to size of acreage, not specifically to unit division.
Results of such research suggests that small farmers should pay higher
premiums than large farmers because small acreage may have higher
losses on average. Although the issues is related, FCIC believes that
the issues should be treated separately. If it is ultimately
demonstrated that small acreage should be subject to a surcharge due to
actuarial considerations, the surcharge should be assessed against
small acreage regardless of whether these result from small farming
operations or from unit division.
In summary, FCIC does not find these comments persuasive.
Comment: One comment took issue with winter wheat vs. spring wheat
Transitional Yields (T-yields) and factors in many Pacific Northwest
counties. The comment suggested that the uncoupling of winter wheat and
spring wheat into separate units be preceded by a major rework of T-
yield factors to prevent potential over-payments on spring wheat units.
Response: FCIC agrees that T-yields should reflect any significant
differences in yields. Evaluations will be performed and any necessary
changes will be made as soon as practicable. However, those changes
will not require a change in this rule.
Comment: The last paragraph under section 2. (Unit Division)
indicates that optional units not in compliance with the provisions of
the section will be combined into the basic unit from which they were
formed. A comment suggested that this language be clarified to separate
this combination from that which occurs at loss time if production is
commingled between optional units. The comment recommended the
following language: ``If you do not comply fully with these conditions,
we will combine all optional units which are not established in
compliance with this section into the basic unit from which they were
formed.''
Response: FCIC agrees with the comment and has modified the
provision as recommended.
Comment: One comment suggested that Harding and Perkins counties,
South Dakota, be added to the list of wheat counties that have an April
15 cancellation and termination date. Statistics indicate that over 80
percent of the wheat in these counties is initially planted spring
wheat. In order to maintain the line of counties which separates the
April 15 counties from counties with earlier dates, Harding and Perkins
counties should be listed with the other South Dakota counties with the
April 15 date.
Response: FCIC agrees with the comment and has modified the
provision as recommended.
Comment: Four comments agreed with changing the wheat sales closing
and cancellation dates for Idaho, Oregon, and Washington from October
31, to September 30. However, they recommended the dates not be changed
until the 1995 crop year due to the late publication of the proposed
rule. One of the four comments indicated the change would cause the
production reporting date to occur at an earlier date. In some areas of
the Northwest, harvest may not be completed by that new production
reporting date.
Response: The effective date of these regulations has been
postponed until the 1995 crop year, therefore, the wheat sales closing
and cancellation dates for Idaho, Oregon, and Washington from October
31 to September 30 has been postponed to 1995. FCIC will take action to
change the production reporting date if problems occur.
Comment: One comment stated that the change of the wheat sales
closing and cancellation dates from October 31 to September 30 for
Idaho, Oregon, and Washington is favorable and inquired as to the
reason that Nevada and Utah remain at the 10/31 date.
Response: FCIC changed the sales closing and cancellation in Idaho,
Oregon, and Washington due to an allegation that the previous dates
posed a potential for adverse selection. FCIC has not received any
comments or recommendations regarding the dates in Nevada or Utah. It
is FCIC's intent to allow the maximum sales period possible as long as
program integrity is not compromised. FCIC will not change the proposed
rule.
Comment: A comment recommended that the cancellation and
termination dates be changed from April 15 to February 28 for barley
and oats in all Pacific Northwest states.
Response: FCIC plans an overall assessment of program dates for all
crops. The recommendation will be considered in that review.
Comment: A comment recommended moving the cancellation and
termination dates from the Crop Provisions to the Special Provisions.
The comment suggested that any information specific to a state, county
or group of counties be located in the Special Provisions where the
appropriate parties have access to it.
Response: These dates must remain in the Common Crop Insurance
Policy due to the requirements of Sec. 457.8. However, FCIC will
consider also placing them in the Special Provisions.
Comment: One comment stated that as proposed, policy language in
subsection 6.(a) could lead the reader to believe that the insured has
the option of insuring only a portion of their insurable acreage.
Response: FCIC agrees that this language should be clarified. The
provision has been modified to indicate the crop insured is each small
grain the producer elects to insure, that is grown in the county on
insurable acreage, and for which premium rates are provided by the
actuarial table.
Comment: One comment recommended requiring that requests for
written agreements be received by FCIC within 15 days of the acreage
reporting date and that the requirement be added to section 6. Insured
Crop.
Response: The Crop Insurance Handbook now indicates that these
types of written agreements must be sent to FCIC, and be postmarked no
later than 15 days after the acreage reporting date. Since reinsured
insurance contracts are between the reinsured company and the insured,
the contract should not contain obligations that exist between FCIC and
the reinsured company. Therefore, language indicating that requests
must be received by FCIC within 15 days of the acreage reporting date
will not be included in the crop provisions.
Comment: Three comments were received regarding the provision that
allows the insured to designate wheat acreage that will be destroyed
before harvest as uninsurable acreage, or acreage eligible for a
reduced premium rate. The comments suggested that applicability of the
provisions not be limited to wheat, and that the reduced premium rate
should only be provided in counties where early destruction of crops
has been a problem.
Response: FCIC agrees that applicability of the provisions should
not be limited to wheat. Only acreage intended to be harvested for
grain qualifies as an insurable crop. Therefore, if it is known at the
acreage reporting date that the acreage will be destroyed, it is not
insurable. The provision that allows an insured to designate only wheat
acreage as uninsurable acreage has been changed to apply to all covered
crops. The provision that provides for a reduced premium rate if
acreage is destroyed by a certain date, has been changed so that it
applies only in those counties for which such a reduced rate is
included on the actuarial table. This change will allow FCIC to provide
a ``short rate'' only in areas where small grain crops are most
commonly used for multiple purposes, e.g., grazing and harvest for
grain.
Comment: One comment questioned the benefit of using the under-
reported premium factor as opposed to current procedure whereby
production from unreported acreage is counted against the guarantee for
reported acreage, or the acreage report is revised if acreage is over-
reported.
Response: Current procedure is not altered if under-reported
acreage is the only problem. The under-reported premium factor reduces
the guarantee when share, practice, type, or other material information
is under-reported.
Comment: One comment noted that it is extremely important that
shifting liability procedure be reinstated. Acreage is reported by unit
and the insurance company requires the insured to indicate on the
acreage report the acreage he plans to destroy, however, insureds often
do not know at acreage report time exactly which acres will be
destroyed. Therefore, the company is asking for information that is
often unknown at the time the acreage report is filed. Shifting
liability procedure is an equitable method of addressing the situation.
Response: If an insured indicates that acreage will be destroyed
and then does not destroy the acreage, the unit will be subject to the
under-reporting provisions of subsection 6.(f) of the Common Crop
Insurance Policy (Sec. 457.8).
Comment: Two comments indicated that the wheat provision will allow
any insured producer whose wheat sustains early damage to destroy any
remaining wheat, pay a reduced premium rate, and receive a full
indemnity. The comments suggested that the provision should be changed
to prohibit this practice, and to require the insured to notify the
insurer prior to destroying any insured wheat.
Response: FCIC agrees that the reduced premium should apply only
when there is no insurable damage. FCIC also agrees that the insured
should notify the insurer prior to and after destruction of any acreage
of the insured crop. This notification will allow the insurer to make
any necessary inspections and adjustments to the Acreage Report. The
provision has been revised accordingly.
Comment: Two comments indicated that the provisions for destroyed
acreage are difficult to assess without seeing the proposed prorata
premium charges, or the deadlines which will be designated in the
Special Provisions. The comments asked if the expense reimbursement to
reinsured companies for acreage destroyed by the deadline in the
Special Provisions would be calculated using the total premium or the
reduced premium.
Response: Premium rates for destroyed acreage will vary in
accordance with the probability of loss in individual geographic areas.
If insurable damage occurs prior to the crop being destroyed by the
grower, the loss will be processed in the normal manner and 100 percent
of the premium will be due. Expense reimbursement will also be
calculated on this basis. If the insured destroys the acreage by the
date designated in the Special Provisions and does not claim insurable
damage on such acreage, the reduced rate will be used to determine the
premium and the reduced premium will be used to determine the expense
reimbursement.
Comment: One comment recommended that if the terms of the Late
Planting Agreement Option are added to the Small Grains Policy, an
option should be allowed for insureds to decline this coverage. The
comment supported giving insureds the opportunity to make a management
decision on whether their late planted acreage has coverage.
Response: Provisions for late planting coverage have been added to
these provisions in order to provide more complete coverage for
insureds. If insureds are allowed to opt out of the coverage it may
result in adverse selection against the insurer. When agronomic
conditions are good many insureds would tend to opt out of the
coverage, but if growing conditions are poor, insureds would tend to
keep the coverage.
Comment: One comment inquired about the lack of availability of the
late planting option for late planted winter wheat. The comment pointed
out that the option is available for both fall and spring planted
barley, and suggested that it be available for winter wheat.
Response: FCIC has received comments indicating that the wheat
final planting dates are now set as late as it is normally practical to
plant. The additional planting period allowed by the Late Planting
Agreement Option (LPAO) permits planting too late in the year to expect
production equal to or in excess of the insurance guarantee provided by
the Option. Although coverage similar to that provided by the current
LPAO will no longer be available, coverage for winter wheat planted
after the final planting date will be available under the prevented
planting provisions (section 12). FCIC received no comments opposed to
removing the LPAO for winter wheat.
Comment: One comment recommended changing the wording in subsection
6.(d) to: ``If you do not select one of the options for alternate
coverage, you agree that in counties for which the special provisions
designate both a fall final planting date and a spring final planting
date, any damage to fall planted wheat which occurs between the fall
final planting date and the spring final planting date due to any cause
is not insured.''
Response: Subsection 6.(d) (renumbered as 6.(c) in this final rule)
is intended solely to inform the insured of the availability of the
Wheat Winter Coverage Endorsement. Section 7 (Insurance Period) clearly
indicates the coverage limitations for fall planted wheat in counties
with both fall and spring final planting dates. Additional language in
subsection 6.(d) is not necessary.
Comment: A comment suggested that FCIC provide a deadline for
selecting Option A or B under the Winter Coverage Option.
Response: The sales closing date will be the last date an insured
can select either Option A or B under the Winter Coverage Option. FCIC
agrees that the Option should indicate this date and has revised it
accordingly.
Comment: One comment stated that if wheat insurance attaches at
different times depending on which style of insurance a grower has
purchased, it will lead to administrative problems. The comment
suggested that insurance on wheat attach on the day the acreage is
planted or the date the application is accepted--whichever is later.
Response: The insurance provisions attach on the later of the date
the application is accepted or the date the crop is planted. This does
not vary based on the insurance options chosen by the insured.
Comment: One comment indicated concern that the replant provision
could be interpreted to mean that a crop that had sustained 1% damage
before the final planting date must be replanted. The comment
recommended ``damage'' be defined to mean damaged to the extent that
the crop will not be further cared for, will not be harvested, or will
be abandoned.
Response: FCIC agrees that the amount of damage should be
clarified. Language has been added clarifying that any acreage damaged
to the extent that growers in the area would not further care for the
crop must be replanted unless replanting is not practical. The same
change has been made to similar provisions for barley and wheat acreage
(subparagraphs 7.(a)(2)(ii), 7.(a)(2)(iii), and 7.(a)(2)(iv)).
Comment: One comment stated that clarification is needed regarding
the definition of ``practical to replant.''
Response: FCIC agrees with the comment and has clarified the
definition. The new definition clarifies that it is practical to
replant if it is ``our determination, after loss or damage to the
insured crop, based on factors, including but not limited to moisture
availability, condition of the field, time to crop maturity, etc., that
a replanting of the insured crop will attain maturity in the remainder
of the crop year.''
Comment: A comment inquired as to the practicality of replanting
wheat before the fall planting date.
Response: Replanting wheat before the fall final planting date is
considered practical if certain conditions are met.
Comment: Three comments suggested that coverage limitations
applicable to winter wheat also apply to winter barley. One of the
comments also inquired if the requirement that a written request be
made to insure fall planted wheat in counties with only a spring final
planting date would result in extra paperwork.
Response: FCIC agrees that the limitations that apply to wheat
should also apply to barley. The provisions have been modified
accordingly. A written request to insure the fall planted acreage will
serve to notify the insurer that a crop inspection is necessary in the
spring to determine whether or not an adequate stand exists in the
spring.
Comment: One comment noted that the provisions of section 7
specifically state that spring wheat damaged prior to the spring final
planting date must be reseeded. The comment recommended that specific
wording be added to state that damaged fall wheat must be reseeded
prior to the fall final planting date and that no replanting payment
applies.
Response: FCIC agrees that this clarification should be made. The
provisions have been modified to state that any acreage damaged prior
to the fall final planting date must be replanted to winter wheat
unless FCIC agrees it is not practical. Paragraph 9.(a)(4) clearly
indicates that a replanting payment for damage occurring prior to the
fall final planting date is not allowed. Therefore, language regarding
replanting payments was not added.
Comment: The following questions regarding winter wheat were
submitted:
a. When winter wheat is planted in a county that has only a spring
final planting date, will the winter wheat be insured using the spring
wheat yield or will the RSO set a winter wheat yield on the written
agreement?
b. Will the winter wheat production be considered spring wheat for
APH purposes or must winter wheat APH yield be established?
c. What production guarantee is used to determine if the winter
wheat has an adequate stand?
Response: The provision that applies to these questions is
unchanged from the present wheat endorsement. Actuarial tables for the
counties in question do not designate a wheat type. When a type is not
designated, the guarantee is based on wheat production without regard
to the type. This guarantee is used for APH purposes and is also used
to determine whether or not an adequate stand exists.
Comment: For winter wheat in counties that only have a spring final
planting date, the policy states that insurance will attach on the
earlier of the spring final planting date or the date the insurer
agrees to accept the acreage. The policy also requires insureds
planting winter wheat in these counties to request insurance for winter
planted wheat. One comment suggested that because the insurer must
inspect the crop to determine if an adequate stand exists, insurance
should attach when the insurer agrees to accept liability (not on the
spring final planting date). The comment suggested that the applicable
sentence in subparagraph 7.(a)(2)(v) should be revised to read as
follows: ``* * * Insurance will attach to acreage having an adequate
stand on the date we agree to accept the acreage for insurance.''
Response: The policy language was written to set a specific date by
which the insurer must accept liability. The language requires insurers
to inspect acreage in a timely manner so that the insured can be
advised about the coverage level prior to the spring final planting
date. No changes have been made in the provisions.
Comment: Under the winter coverage endorsement, FCIC is giving
producers two additional coverage options for losses on winter wheat
that is damaged prior to the spring final planting date. A Montana
producer expressed concern that the new provisions may change the
current basic winter wheat coverage and premium levels.
Response: The basic coverage under the wheat provisions is similar
to the existing wheat endorsement. The changes (primarily replanting
payments in certain instances) may have a small impact on the rate
charged for the base coverage. The new basic policy (without the Wheat
Winter Coverage Endorsement) clearly states that winter wheat damaged
prior to the spring final planting date must be replanted in counties
with both winter and spring final planting dates.
Comment: One comment recommended that the calendar dates for the
end of the insurance period be moved to the Special Provisions. The
comment also indicated that it is incorrect to state that the end of
the insurance period is ``October 31 following planting in all other
states'' because, in many states, the crop is planted prior to October
31.
Response: FCIC agrees that language regarding the end of the
insurance period is incorrect and has made appropriate corrections. The
Common Crop Insurance Policy (Sec. 457.8), to which the Small Grains
Crop Provisions attaches, requires that the calendar date for the end
of the insurance period be indicated in the crop provisions. FCIC will
consider placing this date in the Special Provisions at a later date.
Comment: One comment expressed concern that the provisions
pertaining to sufficient or improper application of insect or disease
control measures could lead FCIC towards micro-management. The comment
also indicated that an over-zealous appraiser could unjustly claim that
a producer did not use the right timing, kind of pesticide, or the
equipment for application.
Response: Language indicates that crop damage caused by insects or
disease is covered unless the damage is due to insufficient or improper
application of control measures. It has always been the loss adjustor's
responsibility to determine if good farming practices are carried out
by the producer. This responsibility includes determining if cultural
practices necessary to control insects and disease are followed. The
new language does not change current loss adjustment procedures, or
give loss adjustors the latitude to require unreasonable control
measures. The language is intended to clearly advise insureds that they
are expected to take control measures that typically would be used in
the area.
Comment: One comment recommended adding the following language
under failure of water supply as an insured cause of loss: ``(water
source and means for supplying irrigation water, without regard to
equipment or facilities). This includes the water source, dams, canals,
ditches, pipelines, etc., necessary to supply water for movement from
the source to the acreage but does not include any irrigation equipment
or facilities.''
Response: Failure of the irrigation water supply during the
insurance period is a covered cause of loss. The ``supply'' includes
several items not included in the recommendation, e.g., aquifers,
precipitation, etc. Also covered are off-farm irrigation facilities and
equipment used by water regulators and suppliers. The recommended
language would not provide coverage when such facilities failed.
Language in the proposed rule will remain unchanged.
Comment: One comment inquired if the provision concerning wheat
replant payments includes replant payments for winter wheat as well as
spring wheat.
Response: The provisions provide a replant payment for winter wheat
in counties with both a fall and spring final planting date, only if
the winter wheat is damaged after the fall final planting date. A
replant payment is also provided to replant spring wheat in counties
with a spring final planting date.
Comment: Five comments were received opposing paying replant
payments for wheat. The comments stated that: (a) Insureds have not
requested replant payments for spring wheat; (b) insureds are currently
replanting or ``sweetening'' stands at their own minimal expense; (c)
replant payments for spring wheat will not reduce indemnity payments
because insureds already replant at their own expense; (d) the cost of
replanting wheat is much less than other spring crops; (e) unnecessary
increased loss adjustment expense will result; (f) if FCIC persists
with implementation of this proposal, provisions addressing these
increased expenses should be made; (g) without a commensurate increase
in rates, adding a replant payment has the net effect of increasing the
loss ratio; (h) this provision will tremendously impact the loss
adjustment expense; (i) the replant provisions are extremely hard to
react to on a timely basis and very expensive to administer; and (j)
replants on row crops are normally confined to smaller areas with fewer
miles to travel. The same is not applicable to other small grains.
Response: The intended effects of replanting payments are to: (1)
Provide coverage requested by wheat growers; (2) provide reimbursement
to insureds for replanting expenses; (3) reduce indemnities by
encouraging replacement of damaged or destroyed crops; and (4) provide
equity among the various crops. FCIC understands that administrative
costs will be associated with this coverage, however, replant payments
are a loss control mechanism and may outweigh any additional
administrative costs. Comments received did not establish findings that
all damaged acreage is presently replanted in the absence of a payment.
Comment: One comment recommended revising language concerning wheat
replant payments to specify that damage must be due to an insurable
cause of loss in order for a replay payment to be made.
Response: FCIC agrees with the comment and has revised the language
accordingly.
Comment: The provisions require that wheat be damaged to the extent
that the remaining stand will not produce at least 90 percent of the
production guarantee for the unit to qualify for a replant payment. One
comment stated that these provisions conflict with the winter coverage
options because the options indicate a replant payment can be made on a
portion of a unit. The comment recommended changing the language to
allow a replant payment if the remaining stand will not produce at
least 90 percent of the production guarantee for the acreage as opposed
to the unit.
Comment: FCIC agrees that changing the language as recommended
makes replanting payment provisions consistent between the Basic Policy
and Winter Wheat Coverage Endorsement. Changes have been made
accordingly.
Comment: The provisions do not include any limitation regarding the
date an insured can replant and be eligible for a replanting payment.
One comment recommended adding a provision requiring that acreage be
replanted within 25 days after the spring final planting date to remain
eligible for a replant payment. The comment also recommended clarifying
if ``sweetening'' is considered replanting.
Response: FCIC agrees that replanting should take place within 25
days after the spring final planting date and has added appropriate
language. The provision has been changed to indicate that planting new
seed into an existing damaged stand at a reduced seeding rate will not
be considered replanting.
Comment: One comment stated that the replant payment provisions do
not indicate the consequences when wheat is replanted using a practice
that is uninsurable for an original planting. The comment recommended
the following language be added to clearly indicate what happens in
such a situation: ``When wheat is replanted using a practice that is
uninsurable for an original planting, the liability for the unit will
be reduced by the amount of the replanting payment. The premium amount
will be based on the original liability.''
Response: FCIC agrees with the comment and has added the language
as recommended.
Comment: One comment recommended that replant payments apply onto
wheat. In addition, the comment recommended clarification that no
replant payment for barley, oats, rye or flax will be provided.
Response: The provisions already clearly state that a replant
payment is allowed only for wheat. Further clarification is not
necessary. After loss experience with wheat replanting payments is
analyzed, replanting payment coverage may be extended to barley, oats,
rye and flax.
Comment: One comment inquired why the number of days a
representative sample must be left unharvested has been changed from 15
to 30.
Response: The provisions have been revised to require that
representative samples be left until the earlier time the insurer gives
consent to destroy the samples or 15 days after harvest.
Comment: One comment stated that the proposed provisions do not
link the time notice is given with the requirement to leave
representative samples of the insured crop. In addition, the provisions
do not clearly indicate that a sample is required for each field in the
unit. The comment recommended that there be some indication that the
requirements in this provision are in addition to the insured's duties
contained in the Common Crop Insurance Policy. The comment also
recommended that the following language be used: ``In addition to your
duties contained under section 14 of the Common Crop Insurance Policy
(Sec. 457.8), if you initially discover damage to any insured crop
within 15 days of, or during harvest, you must leave representative
samples of the unharvested crop for our inspection. The samples must be
at least 10 feet wide and the entire length of each field in the unit,
and must not be harvested or destroyed until the earlier of our
inspection or 30 days after harvest is completed on the unit.''
Response: FCIC agrees with the comment and has changed the
provisions as recommended with the exception of the 30 day requirement.
Comment: One comment inquired about the intent of the provisions
under the heading, ``Duties in the Event of Damage or loss.''
Response: This provision requires that representative samples be
left when notice of damage is given within 15 days of, or during
harvest. It does not apply only when the producer is going to destroy
the acreage. The intent of this provision is to enable the loss
adjustor to have a reasonable amount of time to inspect a portion of
the undisturbed crop and determine the extent of insurable damage.
After the crop is harvested it can be extremely difficult to accurately
determine the extent of insurable damage.
Comment: One comment suggested clarifying the provisions under
section 11, ``Settlement of Claim'', by indicating that mixed grains
will be graded based on a sample of the insured (predominant) grain.
Response: According to current procedure, mixed grains may be
quality adjusted if the predominant grain is separable from other
grains in the mix. Additionally, the predominant grain must meet policy
requirements for quality adjustment. This is a procedural matter and
will remain in loss adjustment procedure handbooks.
Comment: Two comments recommended that the provisions be revised to
state that only those optional units on which production is commingled
will be combined. As proposed, the provisions require that all optional
units within a basic unit be combined when production is commingled
between any optional units.
Response: FCIC agrees with the comment and has revised the
provisions accordingly.
Comment: One comment stated that language under section 11,
``Settlement of Claim'', is misleading because it indicates that ``All
appraised production which is: Not less than the production guarantee
will be counted for acreage that is abandoned * * *'' This could lead
the reader to believe that only appraised production in excess of the
production guarantee will be counted. The comment recommended revising
the language as follows: ``All appraised production as follows: Not
less than the production guarantee for acreage which is abandoned * *
*.''
Response: FCIC agrees with the comment and has revised the language
as recommended.
Comment: One comment suggested that ``appraised production'' be
defined in the policy. The comment also inquired if FCIC intends to
include definitions of ``appraised production,'' ``harvested
production'' and ``uninsured causes'' in the small grains policy?
Response: The term ``appraised production'' is defined in the
provisions. ``Harvested production'' and ``uninsured causes'' are
definitive terms and do not require specific definitions.
Comment: One comment suggested clarifying the provisions under
section 11, ``Settlement of Claim'', by revising the language to read
as follows: ``(i) not less than the production guarantee for: (a)
acreage which is abandoned, (b) put to another use without our consent,
(c) damaged solely by uninsured causes, or (d) for which you fail to
provide records of production that are acceptable to us.''
Response: FCIC agrees that separating the items in the language
makes it easier to read and revisions have been made accordingly.
Comment: One comment recommended that the provisions under section
11, ``Settlement of Claim'', be revised to allow adjusting production
for both (1) moisture exceeding the requirements in the policy and (2)
quality deficiencies exceeding the grade requirements stated in the
policy for each small grain crop. The comment also recommended that an
adjustment for moisture should be addressed using moisture charts in
the handbook.
Response: FCIC agrees with the comment and has revised the
provisions so that adjustments for moisture and quality are determined
separately.
Comment: One comment inquired if individuals licensed under the
United States Warehouse Act are qualified to determine grade due to
damaged kernels, shrunken or broken kernels, defects, sound barley,
thin barley, sound oats, etc. The comment also inquired if tests for
vomitoxin by state university labs and commercial labs licensed by the
state will continue to be acceptable.
Response: Grain graders licensed under the United States Warehouse
Act are authorized to inspect, weigh, and grade grain for the purposes
of warehouse receipts. Ability to grade grain varies considerably. When
grade problems exist and elevator personnel are unable to adequately
establish the quality, samples are generally sent to Federal Grain
Inspection Service (FGIS) for a grade determination. FGIS has the
authority to make final grade determinations. Insurers who are
uncomfortable with grade determinations made by individuals licensed
under the United States Warehouse Act should send samples to FGIS for
final grade determination. Specialized tests, such as tests for
vomitoxin, must be performed by a qualified laboratory. Language
specifying that specialized tests must be performed by a laboratory
approved by the insurer has been added to the provisions.
Comment: One comment recommended clarifying the definition of
``local market price''.
Response: FCIC agrees that the definition should be clarified and
has done so.
Comment: Two comments recommended changing the term ``final
inspection'' under section 11, ``Statement of Claim'', to either:
``final settlement'' or ``the date the loss is adjusted.''
Response: The date of the final inspection is used to determine
values used in quality adjustment. This is the date the claim is
completed. Changing the term to either of the above suggestions does
not significantly clarify the provision.
Comment: One comment recommended revising the provisions concerning
quality adjustment under section 11, ``Statement of Claim'', to the
following: ``The value we use for the damaged production will reflect
only reduction in value to the requirements outlined in 11(d). It will
not reflect any reduction in value due to moisture content, uninsured
causes, charges for drying, handling or processing or any other
reduction.''
Response: FCIC agrees with the comment and has revised the language
accordingly.
Comment: One comment expressed concern over FCIC's option to
utilize prices of outside markets as opposed to local markets to
establish the value for local grain.
Response: This provision allows insurers to seek higher prices for
damaged grain which may result in the insured receiving compensation
from a buyer rather than from an insurance indemnity. This provision
should help reduce indemnities and keep premiums lower.
Comment: One comment suggested requiring damaged grain with zero
value be destroyed prior to paying any indemnity.
Response: Once a loss adjuster determines a crop has no value it
should remain the insured's choice how to handle its disposition. Loss
adjustors are trained to make accurate evaluations of crop potential
and any determinations made by them should be accepted by the insurer.
The suggested language has not been added.
Comment: One comment recommended that a provision be added to
clarify that any discount used to establish the net price of damaged
production be usual, customary, and reasonable.
Response: FCIC agrees with the comment and has revised the
provision accordingly.
Comment: One comment recommended revising paragraph 11.(d)(3)
regarding moisture reduction to read as follows: ``Production eligible
for moisture adjustment will be reduced by .12 percent for each .1
percentage point of moisture in excess of * * *.''
Response: FCIC agrees with the comment and has revised the
paragraph accordingly.
Comment: Four comments indicated that it is difficult to assess
provisions of the Winter Coverage Endorsement without knowing the
premium rates. One of the comments points out that dissatisfaction
would occur with the Endorsement when premium rates are published. The
author of another comment expressed concern that the proposed Options
may erode the affordable value of the insurance product in counties
currently covered by the Winter Coverage Option/Fall Seeded
Endorsement. If Option B is priced too high, it may cause a migration
of business to the less expensive Option A or the basic endorsement.
The result would be less significant protection, on an affordable
basis, and an overall devaluation of the effectiveness of the insurance
product in counties that currently have the Winter Coverage Option.
Response: Final rate determinations cannot be made until the
endorsement provisions are finalized. Any premium rate changes will
reflect the coverage provided by regulations published in this final
rule. Adequate time will be allowed to inform insureds of coverage and
rate changes, and for insureds to make choices regarding their
insurance protection.
Comment: Three comments stated that it will be necessary to provide
extra training to insurance agents before they sell the Winter Coverage
Endorsement.
Response: FCIC agrees that it is imperative to properly train
insurance agents regarding program changes. Adequate training will be
provided prior to implementing program changes contained in the new
Winter Coverage Endorsement.
Comment: One comment stated that ``conservation compliance
requirements are encouraging more intensive rotational systems.
Producers throughout South Dakota are opting to use both Spring wheat
and Winter wheat within their rotational systems. Unfortunately for
many producers, they are unable to buy winter wheat coverage in a large
portion of the state.'' The comment suggested that serious
consideration be given to allowing insurance coverage for both wheats
on a state wide basis.
Response: The Wheat Winter Coverage Endorsement will be available
in all South Dakota counties that currently have both fall and spring
final planting dates. Research is being done by FCIC to determine if
the Endorsement should be available in other counties. Expanded
availability will depend on the outcome of this research.
Comment: One comment submitted the following questions: If an
insured chooses to destroy damaged acreage covered by the Wheat Winter
Coverage Endorsement, can they destroy only damaged acres, or do they
have to destroy all the remaining acres in the unit? Is spring wheat
insurable on acres indemnified under Winter Wheat Option A? Will the
insured qualify for a replant payment on those acres?
Response: The insured may destroy only the damaged acres on the
unit and qualify for coverage as long as at least 20 acres or 20
percent of the acreage in the unit does not have an adequate stand to
produce at least 90 percent of the production guarantee for the
acreage. Under Option A, an insured may choose to have the acreage
appraised, destroy damaged winter wheat, or plant spring wheat on the
acreage and insure it separately. If the insured chooses to accept an
appraisal of the remaining potential, a replant payment is not allowed,
even if the acreage is replanted to spring wheat.
Comment: One comment recommended adding the following to the last
sentence in paragraph 3 of the Winter Coverage Endorsement: ``* * *
unless we agree in writing that it is practical to replant after the
spring final planting date.''
Response: The provisions of paragraph 3 do not prevent a replant
payment for acreage replanted after the spring final planting date. It
is not necessary to extend coverage after the period covered by the
Winter Coverage Endorsement.
Comment: One comment stated that the word ``damage,'' used in the
Winter Coverage Endorsement, can be interpreted to mean that a crop
which has suffered one percent damage can either be replanted, carried
to harvest or destroyed. The comment recommended that ``damage'' be
qualified to mean damaged to the extent that the crop does not have the
potential to produce the yield used to determine the production
guarantee, will not be further cared for, will not be harvested or will
be abandoned.
Response: Coverage under both Options A and B is limited to
situations in which at least 20 acres or 20 percent of the acreage in
the unit, whichever is less, is damaged to the extent that it does not
have an adequate stand to produce at least 90 percent of the production
guarantee for the acreage (see first paragraphs under Options A and B).
Comment: Two comments indicated that since one of the choices the
insured has under the Winter Coverage Option is to replant to spring
wheat, the notice of damage should be required by the spring final
planting date. The deadline for notice of loss under the current Fall-
Winter Coverage Option is the spring final planting date.
Response: FCIC agrees that notice of damage under the Endorsement
should be provided by the spring final planting date. The provisions
have been revised accordingly.
Comment: Eight comments were received regarding coverage
limitations under Option A of the Wheat Winter Coverage Endorsement.
The comments stated that limiting coverage for damaged wheat to 30
percent of the production guarantee, after the time period covered by
the Endorsement, is inappropriate. A crop carried on after the winter
coverage period would have a potential much greater than 30 percent of
the production guarantee. Two of the comments recommended allowing
coverage to remain at the full production guarantee when the insured
continues to care for the crop. One comment recommended allowing
coverage to remain in place at the actual crop potential.
Response: Option A limited coverage to 30 percent of the production
guarantee even if the insured elected to carry the damaged wheat to
harvest. FCIC has revised Option A to allow coverage to continue based
on the full guarantee if the production potential on the spring final
planting date is such that growers in the area continue to maintain the
crop.
Comment: The author of one comment submitted the following
questions: Under Option A of the Wheat Winter Coverage Endorsement, is
70 percent of the production guarantee levied against total production
on damaged acres only? What if there is winter damage and the insurer
was not informed until after harvest?
Response: Option A clearly indicates that the amount of production
to count will not be less than 70 percent of the production guarantee
for the damaged acreage. If notice of damage is not given in accordance
with policy provisions, and such lack of notice interferes with
determination of covered damage, a claim may not be payable for the
unit.
Comment: One comment outlined concerns that the coverage under
Option A will not be sufficient to cover production costs incurred
before the crop must be destroyed. The comment also inquired about the
actual premium costs.
Response: Option A of the Wheat Winter Coverage Endorsement is
designed as a lower cost alternative to the full coverage of Option B.
Although full production costs may not be covered, there is a
significant increase in coverage over the base policy which does not
provide protection unless the crop is replanted. Rate determinations
cannot be made until the Endorsement provisions are finalized. The
premium rates for Option A will reflect the coverage provided by
regulations published in this final rule.
Comment: One comment recommended adding language to the Wheat
Winter Coverage Endorsement that would state that when damaged winter
wheat is replanted to spring wheat, the spring wheat will have the
winter wheat guarantee.
Response: FCIC agrees that clarification is needed and has revised
the language accordingly.
Comment: Two comments were received regarding the provisions in the
Wheat Winter Coverage Endorsement that allow an insured to destroy
damaged wheat acreage, replant the acreage to spring wheat, and
consider such replanted acreage as a separate crop. One comment
indicated that the endorsement may cause program abuse by encouraging
an insured to gamble and seed winter wheat if he is normally a spring
wheat producer. If there is not a good stand in the spring, the insured
could destroy the crop, collect an indemnity, and plant spring wheat as
is normally done. The second comment indicated that the provision will
cause FCIC to insure two different crops of wheat on the same acreage
during one crop year, which could cause a myriad of administrative
problems.
Response: As written, both Option A and B allow an insured to
destroy damaged winter wheat, receive any applicable indemnity payment,
and then replant to spring wheat. The spring wheat can then be insured
separately for a separate premium. If the insured is forced to include
acreage replanted to spring wheat as part of the winter unit, a
significant coverage provided by the options is eliminated. FCIC does
not anticipate the administrative difficulties will be unmanageable.
Comment: The following question was submitted: ``Under Option A, if
damaged winter wheat is replanted to spring wheat, does the harvested
spring wheat production count against the winter wheat unit production
guarantee?''
Response: Yes.
Comment: The following question was submitted: ``Does the winter
wheat guarantee continue on the replanted spring wheat crop under
paragraph b of Option B.''
Response: Yes.
Comment: One comment stated that Option B provides better coverage
than Option A and will be more attractive to insureds. The comment
found no appreciable differences between the new Option B and former
Winter Coverage Option for wheat.
Response: Option B is not similar to the current Winter Coverage
Endorsement. Option B allows spring wheat (planted to replace damaged
winter wheat) to be treated as a separate crop. The current Endorsement
requires that spring wheat in this situation be a part of the winter
wheat unit. This new choice provides more comprehensive coverage than
the current Endorsement.
Comment: One comment inquired if FCIC is aware of the
recommendations from the meeting of the Montana Committee and the
Billings RSO regarding clarification of the Malting Barley Option.
Response: FCIC has considered and incorporated the recommendations
of the Billings Regional Service Office and the Montana Committee. The
recommendations were to: (1) Include a clearer definition of the entity
(i.e., a brewery or business that makes or sells malt or processed mash
to a brewery) contracting with the insured to produce malting barley;
and (2) clearly state that the insurer's liability under the Option is
limited to the lesser of the number of contracted bushels or the
production guarantee.
Comment: One comment inquired if malting barley basic units can be
divided into optional units by section/ASCS FSN and/or irrigated/non-
irrigated acreage. The comment stated that if this division is
possible, paragraph 4 of the Malting Barley Option needs to be revised
to refer to the Small Grains Crop Provisions, not the Basic Provisions.
Response: Paragraph 4 of the Malting Barley Option refers to the
``Basic Policy,'' not the ``Basic Provisions.'' The ``Basic Policy''
includes all provisions applicable to small grains (both the Common
Crop Insurance Policy, and the Small Grains Crop Provisions). Revision
is not necessary.
Comment: A comment recommended that the approved malting barley
varieties be specified in the Special Provisions.
Response: FCIC agrees with the comment and has specified the
varieties in the Special Provisions.
Comment: A comment suggested that the ``date of the final
inspection for the unit'' be clarified.
Response: The date of the final inspection is the date that the
loss adjustor completes the claim.
Comment: One comment recommended that the Malting Barley Option be
revised to allow adjusting production for both (1) moisture exceeding
the requirements in the policy and (2) exceeding the grade requirements
stated in the Option.
Response: FCIC agrees with the comment and has modified the
paragraphs so that adjustments for moisture and quality are determined
separately.
During the interim between publication of the Small Grains Crop
Provisions as a proposed rule and preparation of this final rule,
provisions providing coverage for Late and Prevented Planting were
added to the current Wheat Endorsement (Sec. 401.101), Barley
Endorsement (Sec. 401.103), and Oat Endorsement (Sec. 401.105). These
provisions for Late and Prevented Planting Coverage, which were
published in the Federal Register on December 22, 1993, have been
incorporated into this final rule to continue the coverage provided by
the current endorsements for barley, oats, and wheat, and to provide
the same coverage benefits to those insuring flax or rye. In addition,
FCIC has determined that revised language is needed in subparagraph
11.(c)(1)(iv) regarding acreage an insured wants to put to another use
prior to harvest. These provisions now allow an insured to destroy such
acreage when an appraisal amount is not agreed upon, if the insured
agrees to leave representative samples of the crop in place. The
samples will be used to later determine the amount of production to
count.
Accordingly, the rule, ``General Crop Insurance Regulations; Small
Grains Crop Insurance Provisions'' published at 58 FR 32458 as revised
as set out below is hereby adopted as final rule.
List of Subjects in 7 CFR Part 457
Crop insurance; Barley, Flax, Malting barley, Oats, Rye, Wheat,
Winter wheat.
Final Rule
Accordingly, pursuant to the authority contained in the Federal
Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), the Federal
Crop Insurance Corporation hereby amends the Common Crop Insurance
Regulations (7 CFR part 457), effective for the 1995 and succeeding
crop years, in the following instances:
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506, 1516.
2. 7 CFR Part 457 is amended by revising the heading; by adding and
reserving Secs. 457.9 through 457.100; and by adding Secs. 457.101
Small Grains Crop Provisions, 457.102 Wheat Crop Insurance Winter
Coverage Endorsement, and 457.103 Malting Barley Option to read as
follows:
PART 457--COMMON CROP INSURANCE; REGULATIONS FOR THE 1994 AND
SUBSEQUENT CONTRACT YEARS
* * * * *
Sec. 457.9-457.100 [Reserved]
Sec. 457.101 Small Grains Crop Insurance.
The Small Grains Crop Insurance provisions for the 1995 and
succeeding crop years are as follows:
United States Department of Agriculture
Federal Crop Insurance Corporation
Small Grains Crop Provisions
If a conflict exists between the Common Crop Insurance Policy
(Sec. 457.8) and the Special Provisions, the Special Provisions will
control. If a conflict exists between these Crop Provisions and the
Special Provisions, the Special Provisions will control.
1. Definitions
(a) Adequate stand--A population of live plants per unit of
acreage which will produce at least the yield used to establish your
production guarantee.
(b) Days--Calendar days.
(c) Final planting date--The date contained in the Special
Provisions by which the insured crop must initially be planted in
order to be insured for the full production guarantee.
(d) Good farming practices--The cultural practices necessary for
the insured crop to make usual and normal progress toward maturity
and which can be expected to produce at least the yield used to
determine the production guarantee. Good farming practices are
generally those in use in the county for production of the insured
crop and are recognized by the Cooperative Extension Service as
compatible with agronomic and weather conditions in the area.
(e) Harvest--Combining or threshing the insured crop for grain
or cutting for hay or silage on any acreage. A crop which is swathed
prior to combining is not considered harvested.
(f) Initially planted--The first occurrence of planting the
insured crop on insurable acreage for the crop year.
(g) Interplanted--Acreage on which two or more crops are planted
in a manner that does not permit separate agronomic maintenance or
harvest of the insured crop.
(h) Irrigated practice--A method of producing a crop by which
water is artificially applied during the growing season by
appropriate systems, and at the proper times, with the intention of
providing the quantity of water needed to produce at least the yield
used to establish the production guarantee on the irrigated acreage
planted to the insured crop.
(i) Late planted--Acreage planted during the late planting
period.
(j) Late planting period--(not applicable for fall-planted
wheat)--The period that begins the day after the final planting date
for the insured crop and ends twenty-five (25) days after the final
planting date.
(k) Latest final planting date--
(1) The final planting date for spring-planted acreage in all
counties for which the Special Provisions designate a final planting
date for spring-planted acreage only;
(2) The final planting date for fall-planted acreage in all
counties for which the Special Provisions designate a final planting
date for fall-planted acreage only; or
(3) The final planting date for spring-planted acreage in all
counties for which the Special Provisions designate final planting
dates for both spring-planted and fall-planted acreage.
(l) Local market price--The cash grain price per bushel for the
U.S. No. 2 grade of the insured crop offered by buyers in the area
in which you normally market the insured crop. The local market
price will reflect the maximum limits of quality deficiencies
allowable for the U.S. No. 2 grade of the insured crop. Factors not
associated with grading under the Official United States Standards
for Grain, including but not limited to protein, oil or moisture
content, or milling quality will not be considered.
(m) Nurse crop (companion crop)--A crop planted into the same
acreage as another crop, that is intended to be harvested
separately, and which is planted to improve growing conditions for
the crop with which it is grown.
(n) Planted acreage--Land in which seed has been placed by a
machine appropriate for the insured crop and planting method, at the
correct depth, into a seedbed which has been properly prepared for
the planting method and production practice. Except for flax, land
on which seed is initially spread onto the soil surface by any
method and subsequently is mechanically incorporated into the soil
in a timely manner and at the proper depth will be considered
planted. Flax seed must initially be placed in rows to be considered
planted.
(o) Practical to replant--(subsection 1.(ff) of the Common Crop
Insurance Policy (Sec. 457.8) does not apply to small grains.) Our
determination, after loss or damage to the insured crop, based on
factors, including but not limited to moisture availability,
condition of the field, time to crop maturity, etc., that a
replanting of the insured crop will attain maturity in the remainder
of the crop year. It will not be considered practical to replant
after the end of the late planting period or the final planting date
if a late planting period is not applicable (see section 7) except
that it may be determined practical to replant after the end of the
late planting period or the final plant date if such procedure is
generally occurring in the area.
(p) Prevented planting--Inabiltiy to plant the insured crop with
proper equipment by:
(1) The latest final planting date for the insured crop in the
county; or
(2) The end of the late planting period.
You must have been unable to plant the insured crop due to an
insured cause of loss that is general in the area (i.e., most
producers in the surrounding area are unable to plant due to similar
insurable causes) and that occurs between the sales closing date and
the latest final planting date for the insured crop in the county or
within the late planting period.
(q) Production guarantee--The number of bushels determined by
multiplying the approved yield per acre by the coverage level
percentage you elect.
(r) Replanting--Performing the cultural practices necessary to
replace seed for the insured crop, and replacing the seed in the
insured acreage with the expectation of growing a successful crop.
(s) Small grains--Wheat, barley, oats, rye, and flax.
(t) Swathed--Severance of the stem and grain head from the
ground without removal of the seed from the head and placing into a
windrow.
(u) Timely planted--Planted on or before the final planting date
designated in the Special Provisions.
2. Unit Division
Unless limited by the Special Provisions, a unit as defined in
subsection 1.(tt) of the Common Crop Insurance policy (Sec. 457.8)
may be divided into optional units if, for each optional unit you
claim, all the conditions of subsections 2.(a), (b), and (c), and
the conditions of paragraph 2.(d)(1), (d)(2, or (d)(3) are met, or
if we agree to such division in writing. Optional units must be
established at the time you file your report of acreage for each
crop year.
(a) You must have verifiable records of planted acreage and
production for each optional unit for at least the last crop year
used to determine your production guarantee.
(b) You must plant the crop in a manner which results in a clear
and discernable break in the planting pattern at the boundaries of
each optional unit.
(c) You must have measurements of stored production or market
production from each optional unit in a manner that permits us to
verify the production from the optional unit.
(d) Each optional unit must meet one or more of the following:
(1) Optional Units by Section, Section Equivalent, or ASCS Farm
Serial Number: Optional units may be established if each optional
unit is located in a separate section. In the absence of sections,
we may consider parcels of land legally identified by other methods
of measure including, but not limited to: Spanish grants, railroad
surveys, leagues, labors, or Virginia Military Lands. In areas which
have not been surveyed using the systems identified above or another
system approved by us, and in areas where boundaries are not readily
discernable, each optional unit must be located in separate ASCS
Farm Serial Number.
(2) Optional Units on Acreage Including Both Irrigated and Non-
Irrigated Practices: In addition to or instead of establishing
optional units by section, section equivalent, or ASCS Farm Serial
Number, optional units may be established if each optional unit
contains only irrigated acreage or only non-irrigated acreage. The
irrigated acreage may not extend beyond the point at which your
irrigation system can deliver the quantity of water needed to
produce the yield on which your guarantee is based. You must plant,
cultivate, fertilize, or otherwise care for the irrigated acreage
and the non-irrigated acreage in an appropriate manner.
(3) Optional Units by Initially Planted Winter Wheat or
Initially Planted Spring Wheat: For wheat only, in addition to or
instead of establishing optional units by section, section
equivalent, or ASCS Farm Serial Number as described in paragraph
2.(d)(1) or by irrigated and non-irrigated practices as described in
paragraph 2.(d)(2), optional units maybe established if each
optional unit contains only initially planted winter wheat or only
initially planted spring wheat. Optional units may be established in
this manner only in counties having both fall and spring final
planting dates as designated by the Special Provisions.
Basic units may not be divided into optional units on any basis
(production practice, type, variety, planting period, etc.) other
than as described under this section. If you do not comply fully
with these conditions, we will combine all optional units which are
not established in compliance with these provisions into the basic
unit from which they were formed. We may do this at any time we
discover that you have failed to comply with these conditions. If
failure to comply with these provisions is determined to be
inadvertent, and if the optional units are combined, the premium
paid for electing optional units will be refunded to you.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
In addition to the requirements under section 3 (Insurance
Guarantees, Coverage Levels, and Prices for determining Indemnities)
of the Common Crop Insurance Policy (Sec. 457.8) you may select only
one price election for each crop insured under this policy in the
county.
4. Contract Changes
The contract change date is December 31 preceding the
cancellation date for counties with an April 15 cancellation date
and June 30 preceding the cancellation date for all other counties
(see the provisions under section 4. (Contract changes) in the
Common Crop Insurance Policy Sec. 457.8).
5. Cancellation and Termination Dates
The cancellation and termination dates are:
------------------------------------------------------------------------
Crop, state and county Cancellation date Termination date
------------------------------------------------------------------------
Wheat:
All Colorado counties September 30 September 30.
except Alamosa,
Archuleta, Conejos,
Costilla, Custer,
Delta, Dolores, Eagle,
Garfield, Grand, La
Plata, Mesa, Moffat,
Montezuma, Montrose,
Ouray, Pitkin, Rio
Blanco, Rio Grande,
Routt, Saguache, and
San Miguel Counties;
all Iowa Counties
except Plymouth,
Cherokee, Buena Vista,
Pocahontas, Humbolt,
Wright, Franklin,
Butler, Black Hawk,
Buchanan, Delaware, and
Dubuque Counties and
all Iowa counties north
thereof; all Wisconsin
Counties except
Trempealeau, Jackson,
Wood, Portage, Waupaca,
Outagamie, Brown, and
Kewaunee Counties and
all Wisconsin counties
north and west thereof;
and all other states
except Alaska, Arizona,
California,
Connecticut, Idaho,
Maine, Massachusetts,
Minnesota, Montana,
Nevada, New Hampshire,
New York, North Dakota,
Oregon, Rhode Island,
South Dakota, Utah,
Vermont, Washington,
and Wyoming.
Archuleta, Custer, September 30 November 30.
Delta, Dolores, Eagle,
Garfield, Grand, La
Plata, Mesa, Moffat,
Montezuma, Montrose,
Ouray, Pitkin, Rio
Blanco, Routt, and San
Miguel Counties,
Colorado; Connecticut;
Idaho; Plymouth,
Cherokee, Buena Vista,
Pocahontas, Humboldt,
Wright, Franklin,
Butler, Black Hawk,
Buchanan, Delaware, and
Dubuque Counties, Iowa,
and all Iowa counties
north thereof;
Massachusetts; all
Montana counties except
Daniels, Roosevelt,
Sheridan, and Valley
Counties; New York;
Oregon; Rhode Island;
all South Dakota
counties except
Harding, Perkins,
Corson, Walworth,
Edmonds, Faulk, Spink,
Beadle, Jerauld,
Aurora, Douglas, and
Bon Homme Counties and
all South Dakota
counties north and east
thereof; Washington;
and all Wyoming
counties except Big
Horn, Fremont, Hot
Springs, Park, and
Washakie Counties.
Matanuska-Susitna October 31 November 30.
County, Alaska;
Arizona; California;
Nevada; and Utah.
All Alaska Counties April 15 April 15.
except Matanuska-
Susitna County;
Alamosa, Conejos,
Costilla, Rio Grande,
and Saguache Counties,
Colorado; Maine;
Minnesota; Daniels,
Roosevelt, Sheridan,
and Valley Counties,
Montana; New Hampshire;
North Dakota; Harding,
Perkins, Corson,
Walworth, Edmunds,
Faulk, Spink, Beadle,
Jerauld, Aurora,
Douglas, and Bon Homme
Counties, South Dakota,
and all South Dakota
counties north and east
thereof; Vermont;
Trempealeau, Jackson,
Wood, Portage, Waupaca,
Outagamie, Brown, and
Kewaunee Counties,
Wisconsin, and all
Wisconsin counties
north and west thereof;
Big Horn, Fremont, Hot
Springs, Park, and
Washakie Counties,
Wyoming.
Barley:
All New Mexico counties September 30 September 30.
except Taos County;
Oklahoma, Missouri,
Illinois, Indiana,
Ohio, Pennsylvania, New
Jersey, and all states
south and east thereof.
Kit Carson, Lincoln, September 30 November 30.
Elbert, El Paso,
Pueblo, Las Animas
Counties, Colorado and
all Colorado Counties
south and east thereof;
Connecticut; Kansas;
Massachusetts; and New
York.
Arizona; California; and October 31 November 30.
Clark and Nye Counties,
Nevada.
All Colorado counties April 15 April 15.
except Kit Carson,
Lincoln, Elbert, El
Paso, Pueblo, and Las
Animas Counties and all
Colorado counties south
and east thereof; all
Nevada counties except
Clark and Nye Counties;
Taos County, New
Mexico; and all other
states except: Arizona,
California,
Connecticut, Kansas,
Massachusetts, New
York; and (except)
Oklahoma, Missouri,
Illinois, Indiana,
Ohio, Pennsylvania, and
New Jersey and all
states south and east
thereof.
Oats:
Alabama; Arkansas; September 30 September 30.
Florida; Georgia;
Louisiana; Mississippi;
All New Mexico counties
except Taos County;
North Carolina;
Oklahoma; South
Carolina; Tennessee;
Texas; and Patrick,
Franklin, Pittsylvania,
Campbell, Appomattox,
Fluvanna, Buckingham,
Louisa, Spotsylvania,
Caroline, Essex, and
Westmoreland Counties,
Virginia, and all
Virginia counties east
thereof.
Arizona; All California October 31 October 31.
counties except Del
Norte, Humboldt,
Lassen, Modoc, Plumas,
Shasta, Siskiyou and
Trinity Counties.
Del Norte, Humbolt, April 15 April 15.
Lassen, Modoc, Plumas,
Shasta, Siskiyou, and
Trinity Counties,
California; Taos
County, New Mexico; all
Virginia counties
except Patrick,
Franklin, Pittsylvania,
Campbell, Attomattox,
Fluvanna, Buckingham,
Louisa, Spotsylvania,
Caroline, Essex, and
Westmoreland Counties
and all Virginia
counties east thereof;
and all other except
Alabama, Arizona,
Arkansas, Florida,
Georgia, Louisiana,
Mississippi, North
Carolina, Oklahoma,
South Carolina,
Tennessee, and Texas.
Rye:
All states.............. September 30 September 30.
Flax:
All states.............. April 15 April 15.
------------------------------------------------------------------------
6. Insured Crop
(a) The crop insured will be each small grain you elect to
insure, that is grown in the county on insurable acreage, and for
which premium rates are provided by the actuarial table:
(1) In which you have a share;
(2) That is planted for harvest as grain (a grain mixture in
which barley or oats is the predominate grain may also be insured if
allowed by the Barley or Oat Special Provisions, or if we agree in
writing to insure such mixture. The crop insured will be the grain
which is predominate in the mixture. The production from such
mixture will be considered as the predominate grain on a weight
basis);
(3) That is not:
(i) Interplanted with another crop except as allowed in
paragraph 6.(a)(2);
(ii) Planted into an established grass or legume; or
(iii) Planted as a nurse crop, unless planted as a nurse crop
for new forage seeding, but only if seeded at a normal rate and
intended for harvest as grain.
(4) We may agree, in writing, to insure a crop prohibited under
paragraph 6.(a)(3) if you so request. Your request to insure such
crop must be in writing, and submitted to your agent not later than
15 days after the acreage reporting date.
(b) If you anticipate destroying any acreage prior to harvest
you:
(1) May report all planted acreage when you report your acreage
for the crop year and specify any acreage to be destroyed as
uninsurable acreage. (By doing so, no coverage will be considered to
have attached on the specified acreage and no premium will be due
for such acreage. If you do not destroy such acreage, you will be
subject to the under-reporting provisions contained in subsection
6.(f) of the Common Crop Insurance Policy (Sec. 457.8)); or
(2) If the actuarial table provides a reduced premium rate for
acreage destroyed by a date designated in the Special Provisions,
you may report all planted acreage as insurable when you report your
acreage for the crop year. Premium will be due on all the acreage.
Your premium amount will be reduced by the amount shown on the
Actuarial Table for any acreage you destroy prior to a date
designated in the Special Provisions if you do not claim an
indemnity on such acreage. In accordance with subsection 14.(b) of
the Common Crop Insurance Policy (Sec. 457.8), you must obtain our
consent before and give us notice after you destroy any of the
insured crop so your acreage report can be revised to make you
eligible for this reduction in premium.
(c) In counties for which the Wheat Special Provisions designate
both fall and spring final planting dates, you may elect a winter
coverage endorsement for wheat. This endorsement provides two
options for alternative coverage for wheat that is damaged between
the fall final planting date and the spring final planting date.
Coverage under the endorsement will be effective only if you
designate the coverage option you elect by executing the endorsement
by the sales closing date for winter wheat in the county.
7. Insurance Period
In lieu of the requirements under section 11 (Insurance Period)
of the Common Crop Insurance Policy (Sec. 457.8), and subject to any
provisions provided by the Wheat crop insurance winter coverage
endorsement (Sec. 457.102) if you have elected such endorsement, the
insurance period is as follows:
(a) Insurance attaches on each unit or part thereof on the later
of the date we accept your application or the date the insured crop
is planted.
(1) For oats, rye and flax, the following limitations apply:
(i) The acreage must be planted on or before the final planting
date designated in the Special Provisions for the insured crop
except as allowed in subsection 12.(c).
(ii) Any acreage of the insured crop damaged before the final
planting date, to the extent that growers in the area would normally
not further care for the crop, must be replanted unless we agree
that replanting is not practical (see subsection 1.(o)).
(2) For barley and wheat, the following limitations apply:
(i) The acreage must be planted on or before the final planting
date designated in the Special Provisions for the type (winter or
spring) except as allowed in subsection 12.(c).
(ii) Whenever the Special Provisions designate only a fall final
planting date, any acreage of winter barley or wheat damaged before
such final planting date, to the extent that growers in the area
would normally not further care for the crop, must be replanted to a
winter type of the insured crop unless we agree that replanting is
not practical.
(iii) Whenever the Special Provisions designate both fall and
spring final planting dates, winter barley or wheat planted on or
before the final planting date which is damaged:
(A) Before the fall planting final planting date, to the extent
that growers in the area would normally not further care for the
crop, must be replanted to a winter type of the insured crop unless
we agree that replanting is not practical.
(B) On or after the fall final planting date, but before the
spring final planting date, to the extent that growers in the area
would normally not further care for the crop, must be replanted to
an appropriate variety of the insured crop unless we agree that
replanting is not practical.
If you have elected coverage under one of the available wheat
winter coverage options available in the county, the insurance
period for wheat will be in accordance with the selected options.
(iv) Whenever the Special Provisions designate a spring final
planting date, any acreage of spring barley or wheat damaged before
such final planting date, to the extent that growers in the area
would normally not further care for the crop, must be replanted to a
spring type of the insured crop unless we agree that replanting is
not practical.
(v) Whenever the Special Provisions designate only a spring
final planting date, any acreage of fall planted barley or wheat is
not insured unless you request such coverage and we agree in writing
that the acreage has an adequate stand in the spring to produce the
yield used to determine your production guarantee. Insurance will
then attach to acreage having an adequate stand on the earlier of
the spring final planting date or the date we agree to accept the
acreage for insurance. If such fall planted acreage is not to be
insured it must be recorded on the acreage report as an uninsured
fall planted crop.
(b) Insurance ends on each unit at the earliest of:
(1) Total destruction of the insured crop on the unit;
(2) Harvest of the unit;
(3) Final adjustment of a loss on the unit;
(4) September 25 following planting in Alaska, or October 31 of
the calendar year in which the crop is normally harvested in all
other states; or
(5) Abandonment of the crop on the unit.
8. Causes of Loss
In addition to the provisions under section 12 (Causes of Loss)
of the Common Crop Insurance Policy, any loss covered by this policy
must occur within the insurance period.
The specific causes of loss for small grains are:
(a) Adverse weather conditions;
(b) Fire;
(c) Insects, but not damage allowed because of insufficient or
improper application of pest control measures;
(d) Plant disease, but not damage allowed because of
insufficient or improper application of disease control measures;
(e) Wildlife;
(f) Earthquake;
(g) Volcanic eruption; or
(h) Failure of the irrigation water supply.
9. Replanting Payments
(a) A replant payment for wheat only is allowed as follows:
(1) You comply with all requirements regarding replanting
payments contained under section 13 (Replanting Payment) of the
Common Crop Insurance Policy and in any winter coverage endorsement
for which you are eligible and which you have elected;
(2) The wheat must be 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;
(3) The acreage must have been initially planted to spring wheat
in those counties with only a spring final planting date;
(4) The damage must occur after the fall final planting date in
those counties where both a fall and spring final planting date are
designated;
(5) Replanting must take place not later than 25 days after the
spring final planting date; and
(6) The replant wheat must be seeded at a rate that is normal
for initially planted wheat (if new seed is planted at a reduced
seeding rate into a partially damaged stand of wheat, the acreage
will not be eligible for a replanting payment).
(b) No replanting payment will be made for acreage initially
planted to winter wheat in any county for which the Special
Provisions contain only a fall final planting date.
(c) In accordance with subsection 13.(c) of the Common Crop
Insurance Policy (Sec. 457.8), the maximum amount of the replanting
payment per acre will be the lesser of 20 percent (20%) of the
production guarantee or 3 bushels, multiplied by your price election
multiplied by your share.
(d) When wheat is replanted using a practice that is uninsurable
for an original planting, the liability for the unit will be reduced
by the amount of the replanting payment. The premium amount will not
be reduced.
10. Duties in the Event of Damage or Loss
In addition to your duties under section 14 of the Common Crop
Insurance Policy (Sec. 457.8), if you initially discover damage to
any insured crop within 15 days of, or during harvest, you must
leave representative samples of the unharvested crop for our
inspection. The samples must be at least 10 feet wide and the entire
length of each field in the unit, and must not be harvested or
destroyed until the earlier of our inspection or 15 days after
harvest of the balance of the unit is completed.
11. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event
you are unable to provide records of production that are acceptable
to us for any:
(1) Optional unit, we will combine all optional units for which
acceptable records of production were not provided; or for any
(2) 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 by the production guarantee;
(2) Subtracting from this the total production to count;
(3) Multiplying the remainder by your price election; and
(4) Multiplying this result by your share.
(c) The total production (bushels) to count 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) Which is abandoned;
(B) Put to another use without our consent;
(C) Damaged solely by uninsured causes; or
(D) For which you fail to provide records of production that are
acceptable to us;
(ii) Production lost due to uninsured causes;
(iii) Unharvested production (mature unharvested production may
be adjusted for quality deficiencies and excess moisture in
accordance with subsection 11.(d));
(iv) Potential production on insured acreage you want to put to
another use or you wish to abandon and no longer care for, if you
and we agree on the appraised amount of production. Upon such
agreement, the insurance period for that acreage will end if you put
the acreage to another use or abandon the crop. If:
(A) Agreement on the appraised amount of production is not
reached, you may elect to continue to care for the crop, or we will
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
you 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.
(B) You elect to continue to care for the crop, we will
determine the amount of production to count for the acreage using
the harvested production, or our reappraisal if additional damage
occurs and the crop is not harvested.
(2) All harvested production from the insurable acreage.
(d) Mature wheat, barley, oat, and rye production may be
adjusted for excess moisture and quality deficiencies. Flax
production may be adjusted for quality deficiencies only.
(1) Production will be reduced by .12 percent for each .1
percentage point of moisture in excess of:
(i) 13.5 percent for wheat;
(ii) 14.5 percent for barley;
(iii) 14.0 percent for oats; and
(iv) 16.0 for rye.
We may obtain samples of the production to determine the
moisture content.
(2) Production will be eligible for quality adjustment if:
(i) Deficiencies in quality, in accordance with the Official
United States Standards for Grain, result in:
(A) Wheat not meeting the grade requirements for U.S. No. 4
(grades U.S. No. 5 or worse) because of test weight, total damaged
kernels (excluding heat damage), shrunken or broken kernels, or
defects (excluding foreign material and heat damage), or grading
garlicky, light smutty, smutty or ergoty;
(B) Barley not meeting the grade requirements for U.S. No. 4
(grades U.S. No. 5 or worse) because of test weight, percentage of
sound barley, damaged kernels, thin barley, or black barley, or
grading smutty, garlicky, or ergoty;
(C) Oats not meeting the grade requirements for U.S. No. 4
(grade U.S. sample grade) because of test weight or percentage of
sound oats, or grading smutty, garlicky, or ergoty;
(D) Rye not meeting the grade requirements for U.S. No. 3
(grades U.S. No. 4 or worse) because of test weight, percent damaged
kernels or thin rye, or grading smutty, garlicky, or ergoty;
(E) Flaxseed not meeting the grade requirements for U.S. No. 2
(grades U.S. sample grade) due to damaged kernels; or
(ii) Substances or conditions are present, including mycotoxins,
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.
(3) 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;
(ii) The deficiencies, substances, or conditions result in a net
price for the damaged grain that is less than the local market price
of U.S. No. 2 production;
(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 grain grader licensed under
the authority of the United States Grain Standards 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 one loss adjustor.
(4) Production of small grains that is eligible for quality
adjustment, as specified in paragraphs 11.(d) (2) and (3), will be
reduced as follows:
(i) The market price of the qualifying damaged production and
the local market price will be the prices on the earlier of the date
such quality adjusted production is sold or the date of final
inspection for the unit. The price for the qualifying damaged
production will be the market price for the local area to the extent
feasible. Discounts used to establish the net price of the damaged
production will be limited to those which are usual, customary, and
reasonable. Any reduction in price due to the following factors will
not be accepted:
(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 grain;
except, if the price of the damaged production can be increased by
conditioning, we may reduce the price of the production after it has
been conditioned by the cost of conditioning but not lower than the
value of the production before conditioning. 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 production to
those buyers.
(ii) The value of the damaged or conditioned production will be
divided by the local market price to determine the quality
adjustment factor.
(iii) The number of bushels remaining after any reduction due to
excessive moisture (the moisture-adjusted gross bushels (if
appropriate)) of the damaged or conditioned production will then be
multiplied by the quality adjustment factor to determine the net
production to count.
(e) Any production harvested from plants growing in the insured
crop may be counted as production of the insured crop on a weight
basis.
12. Late Planting and Prevented Planting
(a) In lieu of paragraph 8.(b)(2) and subsection 1.(aa) of the
Common Crop Insurance Policy (Sec. 457.8), insurance will be
provided for acreage planted to the insured crop during the late
planting period (see subsection (c)), and acreage you were prevented
from planting (see subsection (d)). These coverages provide reduced
production guarantees. The reduced guarantees will be combined with
the production guarantee for timely planted acreage for each unit.
The premium amount for late planted acreage and eligible prevented
planting acreage will be the same as that for timely planting
acreage. If the amount of premium you are required to pay (gross
premium less our subsidy) for late planting acreage or prevented
planting acreage exceeds the liability on such acreage, coverage for
those acres will not be provided (no premium will be due and no
indemnity will be paid for such acreage). For example, assume you
insure one unit in which you have a 100 percent share. The unit
consists of 150 acres, of which 50 acres were planted timely, 50
acres were planted 7 days after the final planting date (late
planted), and 50 acres are unplanted and eligible for prevented
planting coverage. To calculate the amount of any indemnity which
may be due to you, the production guarantee for the unit will be
computed as follows:
(1) For timely planted acreage, multiply the per acre production
guarantee for timely planted acreage by the 50 acres planted timely;
(2) For late planted acreage, multiply the per acre production
guarantee for timely planted acreage by 93 percent (0.93) and
multiply the result by the 50 acres planted late; and
(3) For prevented planting acreage, multiply the per acre
production guarantee for timely planted acreage by 50 percent (0.50)
and multiply the result by the 50 acres eligible for prevented
planting coverage.
The total of the three calculations will be the production
guarantee for the unit. Your premium will be based on the result of
multiplying the per acre production guarantee for timely planted
acreage by the 150 acres in the unit.
(b) You must provide written notice to us if you were prevented
from planting (see subsection 1.(p)). This notice must be given not
later than three (3) days after:
(1) The final planting date if you have unplanted acreage that
may be eligible for prevented planting coverage; and
(2) The date you stop planting within the late planting period
on any unit that may have acreage eligible for prevented planting
coverage.
(c) Late Planting:
(1) For spring-planted wheat acreage in counties for which the
Special Provisions designate a spring final planting date, and all
barley, flax, oat, and rye acreage which is planted after the final
planting date but on or before 25 days after the final planting
date, the production guarantee for each acre will be reduced for
each day planted after the final planting date by:
(i) One percent (.01) for the first through the tenth day; and
(ii) Two percent (.02) for the eleventh through the twenty-fifth
day.
(2) In addition to the requirements of section 6 (Report of
Acreage) of the Common Crop Insurance Policy (Sec. 457.8), you must
report the dates the acreage is planted within the late planting
period.
(3) If planting of the insured crop continues after the final
planting date, or you are prevented from planting during the late
planting period, the acreage reporting date will be the later of:
(i) The acreage reporting date contained in the Special
Provisions; or
(ii) Five (5) days after the end of the late planting period.
(d) Prevented Planting (Including Planting After the Late
Planting Period)
(1) If you were prevented from planting the insured crop (see
subsection 1.(p)), you may elect:
(i) To plant the insured crop during the late planting period
(The production guarantee for such acreage will be determined in
accordance with paragraph 12.(c)(1));
(ii) Not to plant this acreage to any crop that is intended for
harvest in the same crop year (The production guarantee for such
acreage which is eligible for prevented planting coverage will be 50
percent (50%) of the production guarantee for timely planted acres.
In counties for which the Special Provisions designates a spring
final planting date, the prevented planting guarantee will be based
on your approved yield for spring-planted acreage of the insured
crop. For example, if your production guarantee for timely planted
acreage is 30 bushels per acre, your prevented planting production
guarantee would be equivalent to 15 bushels per acre (30 bushels
multiplied by 0.50). This subparagraph does not prohibit the
preparation and care of the acreage for conservation practices, such
as planting a cover crop, as long as such crop is not intended for
harvest); or
(iii) To plant the insured crop after the late planting period
(The production guarantee for such acreage will be 50 percent (50%)
of the production guarantee for timely planted acres. For example,
if your production guarantee for timely planted acreage is 30
bushels per acre, your prevented planting production guarantee would
be equivalent to 15 bushels per acre (30 bushels times 0.50).
Production to count for such acreage will be determined in
accordance with subsections 11.(c) through (e)).
(2) In addition to the provisions under section 11 (Insurance
Period), of the Common Crop Insurance Policy (Sec. 457.8) the
beginning of the insurance period for prevented coverage is the
sales closing date designated in the Special Provisions for the
insured crop in the county.
(3) Unless we agree in writing, prior to the sales closing date,
the acreage to which prevented planting coverage applies will be
limited as follows:
(i) Eligible acreage will not exceed the greater of:
(A) The number of acres planted to the insured crop on each ASCS
Farm Serial Number during the previous crop year (adjusted for any
reconstitution which may have occurred prior to the sales closing
date);
(B) The ASCS base acreage for the insured crop reduced by any
acreage reduction applicable to the farm under any program
administered by the United States Department of Agriculture; or
(C) One hundred percent (100%) of the simple average of the
number of acres planted to the insured crop during the crop years
that were used to determine your yield;
Unless we agree in writing, prior to the sales closing date, to
approve acreage exceeding this limit.
(ii) Acreage intended to be planted under an irrigated practice
will be limited to the number of acres properly prepared to carry
out an irrigated practice.
(iii) A prevented planting production guarantee will not be
provided for:
(A) Any acreage that does not constitute at least 20 acres or 20
percent (20%) of the acres in the unit, whichever is less;
(B) Land for which the actuarial table does not designate a
premium rate unless you submit a written request for coverage for
such acreage prior to the sales closing date for the insured crop in
the county and we provide a written insurance offer for such
acreage;
(C) Land used for conservation purposes or intended to be or
considered to have been left unplanted under any program
administered by the United States Department of Agriculture;
(D) Land on which any crop, other than the insured crop, has
been planted and is intended for harvest, or has been harvested in
the same crop year; or
(E) Land which planting history or conservation plans indicate
would remain fallow for crop rotation purposes.
(iv) For the purpose of determining eligible acreage for
prevented planting coverage, acreage for all units will be combined
and reduced by the number of acres of the insured crop that are
timely planted and late planted. For example, assume you have 100
acres eligible for prevented planting coverage in which you have a
100 percent (100%) share. The acreage is located in a single ASCS
Farm Serial Number which you insure as two separate optional units
consisting of 50 acres each. If you planted 60 acres of the insured
crop on one optional unit and 40 acres of the insured crop on the
second optional unit, your prevented planting eligible acreage would
be reduced to zero (i.e., 100 acres eligible for prevented planting
coverage minus 100 acres planted equals zero). If you report more
acreage of the insured crop under this contract than is eligible for
prevented planting coverage, we will allocate the eligible acreage
to insured units based on the number of prevented planting acres and
share you report for each unit.
(4) When the ASCS Farm Serial Number covers more than one unit,
or a unit consists of more than one ASCS Farm Serial Number, the
covered acres will be pro-rated based on the number of acres in each
unit or ASCS Farm Serial Number that could have been planted to the
insured crop in the current crop year.
(5) In accordance with the provisions of section 6 (Report of
Acreage) of the Common Crop Insurance Policy (Sec. 457.8), you must
report any insurable acreage you were prevented from planting. This
report must be submitted on or before the acreage reporting date for
spring-planted acreage of the insured crop in counties for which the
Special Provisions designates a spring final planting date, or the
acreage reporting date for fall-planted acreage of the insured crop
in counties for which the Special Provisions designates a fall final
planting date only, even though you may elect to plant the acreage
after the late planting period. Any acreage you report as eligible
for prevented planting coverage which is not eligible will be
deleted from prevented planting coverage.
Sec. 457.102 Wheat crop insurance winter coverage endorsement.
United States Department of Agriculture
Federal Crop Insurance Corporation
Wheat Crop Insurance Winter Coverage Endorsement
(This is a Continuous Endorsement)
(a) In return for payment of the additional premium designated
in the Actuarial Table, this endorsement is attached to and made
part of your Small Grains Crop Provisions subject to the terms and
conditions described herein.
(b) This endorsement is available only in counties for which the
Special Provisions designate both a fall final planting date and a
spring final planting date.
(c) This endorsement modifies the provisions of sections 7 and
11 of the Small Grains Crop Insurance policy (Sec. 457.101).
(1) You must have a Small Grains Crop Insurance policy in force
and elect to insure wheat under that policy.
(2) You may select either Option A or Option B. Failure to
select either Option A or Option B means that you have rejected both
Options and this endorsement would be void.
(3) Insurance Period. Coverage under this endorsement begins on
the later of the date we accept your application for coverage or on
the fall final planting date designated in the Special Provisions.
Coverage ends on the spring final planting date designated in the
Special Provisions.
(4) The provisions under section 14 of the Common Crop Insurance
Policy (Sec. 457.8) are amended to require that all notices of
damage must be provided to us by the spring final planting date
designated in the Special Provisions.
Option A (30 Percent Coverage and Acreage Release)
Whenever any winter wheat is damaged during the insurance period
(see section 3, above), and at least 20 acres or 20 percent of the
acreage in the unit, whichever is less, does not have an adequate
stand to produce at least 90 percent of the production guarantee for
the acreage, you may take any one of the following actions:
(a) Destroy the remaining crop on such acreage. By doing so, you
agree to accept an amount of production to count against the unit
production guarantee equal to 70 percent of the production guarantee
for the damaged acreage, or an appraisal determined in accordance
with paragraph 11.(c)(1) of the Small Grains Crop Insurance
Provisions (Sec. 457.101) if such an appraisal results in a greater
amount of production. This amount will be considered production to
count in determining any final indemnity on the unit and will be
used to settle your claim as described in the provisions under
section 11. (Settlement of Claim) of the Small Grains Crop Insurance
Provisions (Sec. 457.101). You may use such acreage for any purpose,
including planting and separately insuring any other crop. If you
elect to utilize such acreage for the production of spring wheat,
you must:
(1) Plant the spring wheat in a manner which results in a clear
and discernible break in the planting pattern at the boundary
between it and any remaining winter wheat; and
(2) Store or market the production from such acreage in a manner
which permits us to verify the amount of spring wheat production
separately from any winter wheat production.
In the event you are unable to provide records of production
that are acceptable to us, the spring wheat acreage will be
considered to be a part of the original winter wheat unit. If you
elected to insure the spring wheat acreage as a separate optional
unit, any premium amount for such acreage will be considered earned
and payable to us.
(b) Continue to care for the damaged crop. By doing so, coverage
will continue under the terms of the Common Crop Insurance Policy
(Sec. 457.8), the Small Grains Crop Insurance Provisions
(Sec. 457.101), and this Option.
(c) Replant the acreage to an appropriate variety of wheat, if
it is practical, and receive a replanting payment in accordance with
the terms of section 9. (Replanting Payments) of the Small Grains
Crop Provisions (Sec. 457.101). By doing so, coverage will continue
under the terms of the Common Crop Insurance Policy (Sec. 457.8),
the Small Grains Crop Insurance Provisions (Sec. 457.101), and this
Option, and the production guarantee for winter wheat will remain in
effect.
Option B (With Full Winter Damage Coverage)
Whenever any winter wheat is damaged during the insurance period
and at least 20 acres or 20 percent of the acreage in the unit,
whichever is less, does not have an adequate stand to produce at
least 90 percent of the production guarantee for the acreage, you
may, at your option, take one of the following actions:
(a) Continue to care for the damaged crop. By doing so, coverage
will continue under the terms of the Common Crop Insurance Policy
(Sec. 457.8), the Small Grains Crop Insurance Provisions
(Sec. 457.101), and this Option.
(b) Replant the acreage to an appropriate variety of wheat, if
it is practical, and receive a replanting payment in accordance with
the terms of section 9. (Replanting Payments) of the Small Grains
Crop Provisions (Sec. 457.101). By doing so, coverage will continue
under the terms of the Common Crop Insurance Policy (Sec. 457.8),
the Small Grains Crop Insurance Provisions (Sec. 457.101), and this
Option, and the production guarantee for winter wheat will remain in
effect.
(c) Accept our appraisal of the crop on the damaged acreage as
production to count against the production guarantee for the damaged
acreage, destroy the remaining crop on such acreage, and be eligible
for any indemnity due under the terms of the Common Crop Insurance
Policy (Sec. 457.8) and the Small Grains Crop Provisions
(Sec. 457.101). The appraisal will be considered production to count
in determining any final indemnity on the unit and will be used to
settle your claim as described in the provisions of section 11.
(Settlement of Claim) of the Small Grains Crop Insurance Provisions
(Sec. 457.101). You may use such acreage for any purpose, including
planting and separately insuring any other crop. If you elect to
utilize such acreage for the production of spring wheat, you must:
(1) Plant the spring wheat in a manner which results in a clear
and discernable break in the planting pattern at the boundary
between it and any remaining winter wheat; and
(2) Store or market the production from such acreage in a manner
which permits us to verify the amount of spring wheat production
separately from any winter wheat production.
In the event you are unable to provide records of production
that are acceptable to us, the spring wheat acreage will be
considered to be a part of the original winter wheat unit. If you
elected to insure the spring wheat acreage as a separate optional
unit, any premium amount for such acreage will be considered earned
and payable to us.
Sec. 457.103 Malting barley option.
The Malting Barley Option Provisions for the 1995 and succeeding
crop years are as follows:
United States Department of Agriculture
Federal Crop Insurance Corporation
Small Grains Crop Insurance Malting Barley Endorsement
(This is a continuous Endorsement. Refer to section 2 of the Common
Crop Insurance Policy)
In return for payment of the additional premium designated in
the actuarial table, it is hereby agreed that the Common Crop
Insurance Policy (Sec. 457.8) and Small Grains Crop Provisions
(Sec. 457.101) are amended to incorporate the following terms and
conditions:
(a) This Endorsement must be submitted to us on or before the
final date for accepting applications for the initial crop year in
which you wish to insure your malting barley acreage under this
Option.
(b) You must have a Common Crop Insurance Policy (Sec. 457.8)
and a Small Grains Crop Insurance policy (Sec. 457.101) in force and
elect to insure barley under those policies.
(c) You must provide:
(1) Acceptable records of the sale of malting barley for malting
purposes for three of the previous five crop years by the production
reporting date; and
(2) Before the acreage reporting date, written contract with a
brewery or business that makes or sells malt or processed mash to a
brewery, which states the quantity contracted and purchase price or
method for determining such price by the acreage reporting date. Our
liability under this Option will be limited to the lesser of the
number of contracted bushels or your production guarantee.
(d) All barley acreage in the county planted to an approved
malting variety in which you have a share will be insured under this
Endorsement. All barley acreage of any non-malting variety will be
insured under the terms of the Small Grains Endorsement. Malting
barley and basic barley acreage will be separate basic units.
Further unit division may be allowed in accordance with the Common
Crop Insurance Policy.
(e) Your price election will be provided by the actuarial table.
(f) In lieu of subparagraphs 11.(d)(2)(i)(B) and 11.(d)(1)(ii)
of the Small Grains Crop Provisions:
(1) Mature malting barley production will be reduced .12 percent
for each one tenth (.1) percentage point of moisture in excess of
13.0 percent; and
(2) Mature malting barley production, which due to insurable
causes, is not accepted by a buyer of malting barley and will not
meet the applicable standards for two-rowed or six-rowed malting
barley will be adjusted by:
(i) Dividing the value per bushel for the insured malting barley
by the price election for malting barley; and
(ii) Multiplying the result not to exceed one (1.0) by the
number of bushels of such barley.
(3) All grade determination must be made by a grader licensed to
inspect barley under the United States Grain Standards Act using
samples obtained by a licensed sampler or our loss adjuster. Any
production which is not sampled and graded as provided by this
section will be considered as malting barley meeting the applicable
standards.
(g) As used in the Endorsement:
(1) Applicable standards--For two-rowed and six-rowed malting
barley are defined in the Official United States Standards for
barley.
(2) Approved malting variety--The varieties specified in the
Special Provisions.
(3) Brewery--A facility where malt liquors are commercially
produced for human consumption.
(4) Value per bushel means:
(i) The local market price of U.S. No. 2 barley (basic barley)
if the insure mature malting barley production, due to insurable
causes, grades U.S. No. 4 or better and does not grade smutty,
garlicky, or ergoty; or
(ii) The local market price of basic barley of the same quality
as the insured malting barley, if the malting barley does not grade
better than U.S. No. 5.
The prices used for this adjustment will be the prices on the
earlier of the date such quality-adjusted barley is sold or the date
of final inspection for the unit.
Done in Washington, DC, on February 16, 1994.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 94-4230 Filed 2-25-94; 8:45 am]
BILLING CODE 3410-08-M
