[Federal Register Volume 63, Number 105 (Tuesday, June 2, 1998)]
[Rules and Regulations]
[Pages 29933-29937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14545]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
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Federal Register / Vol. 63, No. 105 / Tuesday, June 2, 1998 / Rules
and Regulations
[[Page 29933]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 401 and 457
General Crop Insurance Regulations, Stonefruit Endorsement; and
Common Crop Insurance Regulations, Stonefruit Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes
specific crop provisions for the insurance of stonefruit. The
provisions will be used in conjunction with the Common Crop Insurance
Policy, Basic Provisions, which contain standard terms and conditions
common to most crops. The intended effect of this action is to provide
policy changes to better meet the needs of the insured, include the
current stonefruit endorsement with the Common Crop Insurance Policy
for ease of use and consistency of terms, and to restrict the effect of
the current stonefruit endorsement to the 1998 and prior crop years.
EFFECTIVE DATE: July 2, 1998.
FOR FURTHER INFORMATION CONTACT: Richard Brayton, Insurance Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, United States Department of
Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be exempt for the purposes of
Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget (OMB).
Paperwork Reduction Act of 1995
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter
35), the collections of information for this rule have been approved by
the Office of Management and Budget (OMB) under control number 0563-
0053 through October 31, 2000.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. This rule contains no Federal mandates (under the
regulatory provisions of title II of the UMRA) for State, local, and
tribal governments or the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions or on the distribution
of power and responsibilities among the various levels of government.
Regulatory Flexibility Act
This regulation will not have a significant economic impact on a
substantial number of small entities. The amount of work required of
the insurance companies will not increase because the information used
to determine eligibility is already maintained at their office and the
other information required is already being gathered as a result of the
present policy. No additional actions are required as a result of this
action on the part of either the insured or the insurance companies.
Additionally, the regulation does not require any action on the part of
the small entities than is required on the part of large entities.
Therefore, this action is determined to be exempt from the provisions
of the Regulatory Flexibility Act (5 U.S.C. 605), and no Regulatory
Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which require intergovernmental consultation with State and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988 on civil justice reform. The provisions of this rule will not
have a retroactive effect. The provisions of this rule will preempt
State and local laws to the extent such State and local laws are
inconsistent herewith. The administrative appeal provisions published
at 7 CFR part 11 must be exhausted before any action against FCIC for
judicial review may be brought.
Environmental Evaluation
This action is not expected to have a significant economic impact
on the quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review Initiative to eliminate unnecessary or duplicative
regulations and improve those that remain in force.
Background
On Tuesday, July 22, 1997, FCIC published a notice of proposed
rulemaking in the Federal Register at 62 FR 39189-39194 to add to the
Common Crop Insurance Regulations (7 CFR part 457), a new section, 7
CFR 457.159, Stonefruit Crop Insurance Provisions. The new provisions
will be effective for the 1999 and succeeding crop years. These
provisions will replace and supersede the current provisions for
insuring stonefruit found at 7 CFR 401 (Stonefruit Endorsement). FCIC
also amends Sec. 401.122 to limit its effect to the 1998 and prior crop
years.
Following publication of the proposed rule, the public was afforded
60 days to submit written comments and opinions.
[[Page 29934]]
A total of 16 comments were received from an insurance service
organization and reinsured companies. The comments received and FCIC's
responses are as follows:
Comment: A reinsured company expressed a concern that sales
closing, production reporting, and acreage reporting all have the same
date of January 31. The commenter stated it would be difficult to
service these policies when all reporting requirements must be
completed at the same time.
Response: FCIC disagrees with the comment. The sales closing and
acreage reporting dates have been January 31 in previous years. The
production reporting date is March 17, which would be 45 days after the
earlier of the cancellation date or the acreage reporting date. This is
consistent with other crop policies. Therefore, no change has been
made.
Comment: An insurance service organization suggested in the
definition of ``good farming practices'' the reference to ``county'' be
changed to ``area.''
Response: The term ``area'' is less clear than the term ``county''
and would cause determinations to be more subjective. The actuarial
documents are on a county basis. Therefore, no change has been made,
except the definition of ``good farming practices'' has been moved to
the Basic Provisions.
Comment: An insurance service organization questioned the
definition of ``interplanted'' in the proposed rule. The commenter
stated that the current stonefruit policy does not consider acreage
interplanted unless more than 10% of the insured acreage is planted to
another crop.
Response: Although the current stonefruit policies issued by most
reinsured companies contain the 10% requirement in the definition of
interplanted, the current stonefruit regulation contained in 7 CFR
401.122 does not. All reinsured MPCI policies will be brought to
conformance with this regulation. FCIC believes that introducing an
exact percentage of acres that must be exceeded before stonefruit is
considered interplanted is too restrictive. The definition is
consistent with other perennial crop policies. Therefore, no change has
been made.
Comment: An insurance service organization questioned the
definition of ``lug'' in the proposed rule. The commenter stated the
current policy refers to ``average'' net pounds of packed fruit and
questioned if the word ``average'' should not be included in the
proposed rule.
Response: FCIC agrees and has amended the definition to refer to
``average net pounds of packed fruit.''
Comment: An insurance service organization recommended rewording
section 2(a) of the proposed provisions to read: ``In addition to the
basic units as defined in section 1 of the Basic Provisions, each
stonefruit crop designated in the Special Provisions will be a basic
unit.''
Response: FCIC has removed section 2(a) of the proposed provisions
which stated, ``A unit as defined in section 1 of the Basic Provisions,
will be divided into additional basic units by each stonefruit crop
designated in the Special Provisions that you elect to insure.'' FCIC
instead has revised section 2 to conform with the new unit language in
the Basic Provisions. As defined in the Basic Provisions, each
stonefruit crop designated in the Special Provisions will be a basic
unit.
Comment: An insurance service organization and a reinsured company
expressed concerns with sections 2(f)(3)(i) and (ii) of the proposed
rule. One commenter stated the proposed language restricts
policyholders to optional units either by non-contiguous land or by
type, or by varietal group. The commenter recommended allowing optional
units for non-contiguous land and by type or varietal group by changing
section 2(f)(3) to read, ``each optional unit must meet at least one of
the following criteria, as applicable, unless otherwise specified in
the Special Provisions,'' and delete the ``or'' between subparagraphs
(i) and (ii). One commenter questioned if optional units are available
for non-contiguous land, even if the land is under the same ownership
and possibly separated only by another crop.
Response: FCIC agrees that optional units should be offered by non-
contiguous land and by type or varietal group and has deleted ``or''
between subparagraphs (i) and (ii) for clarification. Under these
proposed provisions, optional units are not available for non-
contiguous land, if the land is under the same ownership or separated
by another crop.
Comment: An insurance service organization stated that the current
1988-CHIAA 796 policy includes a statement that fresh market stonefruit
may be insured as processing stonefruit, with converted or appraised
production. The commenter asked if this should be included in the Crop
Provisions, or be covered only in the underwriting procedure.
Response: FCIC agrees that the statement on the CHIAA 796 allows
any fresh market stonefruit to be insured as processing stonefruit by
converting harvested or appraised fresh market stonefruit lugs to
processing stonefruit tons. The conversion procedure is covered by
underwriting procedures.
Comment: An insurance service organization asked if section 8(b)(2)
indicates that anyone who attempts to acquire a new orchard between the
cancellation date and the acreage reporting date but is unsuccessful
will be considered to have coverage and owe premium.
Response: FCIC believes that the commenter misinterpreted the
provisions. Section 8(b)(2) allows a producer to avoid liability for
premium in some circumstances for an orchard on which a policy was in
force on the cancellation date. Under that section, the insurance can
be transferred to a qualified third party under certain circumstances.
Comment: A reinsured company expressed concerns with section 10(b),
stating that the direct marketing provisions contained in this section
will be difficult to monitor and control.
Response: The producer is required to give notice at least 15 days
prior to any production being marketed directly to consumers, and the
insurance provider is required to complete the appraisal within that 15
day period. FCIC believes that 15 days is appropriate to meet the needs
of both the producer and the insurance provider. Therefore, no change
has been made.
Comment: An insurance service organization stated that the language
in section 10(c) does not address timely notice of damage or loss if
damage is discovered less than 15 days prior to harvest.
Response: The notice requirements in section 10 are in addition to
the requirements of section 14 of the Basic Provisions that require
notice of loss within 72 hours of initial discovery of damage. If
damage is discovered during harvest, notice must be given immediately.
FCIC believes that these provisions, as a whole, are adequate as
stated. Therefore, no change has been made.
Comment: An insurance service organization stated that section 12
of the proposed provisions, which explains how a claim is settled, is
difficult to follow.
Response: Settlement of claims is covered in section 11. Section 11
has been revised to illustrate the calculations of a claim for
indemnity, and has been explicitly worded to eliminate any
misunderstanding or confusion.
Comment: An insurance service organization stated that section
[[Page 29935]]
11(c)(1)(iv) should not allow the insured to defer settlement and wait
for a later, generally lower appraisal, especially on crops that have a
short ``shelf life.''
Response: A later appraisal will only be necessary if the producer
continues to care for the crop. If the producer does not continue to
care for the crop, the original appraisal will be used. If the producer
does not care for the crop, the original appraisal is used. If the
insurance provider believes the original appraisal is accurate,
resolution of the dispute may be sought through arbitration or appeal
procedures, whichever is applicable. Therefore, no change has been
made.
Comment: An insurance service organization stated that section
11(c)(2)(ii) was confusing. The commenter stated the provisions seem to
mean that harvested production packed and sold as California Utility
grade fresh fruit was not considered production to count if the
production was not damaged by an insurable cause. The commenter stated
that any production that can be packed and sold as fresh fruit should
be included as production to count.
Response: FCIC agrees with the comment and has amended the
provisions, redesignated 11(c)(3)(i) and (ii) to clarify the
provisions.
Comment: An insurance service organization suggested that sections
12 (a) and (e) be combined since both deal with deadlines to request
written agreements. The commenter suggested this provision might be
less misleading if the acreage reporting date ``exception'' be
incorporated. The insurance service organization also asked that the
requirement for annual renewal be removed from 12(d).
Response: Section 12 ``written agreements'' has been removed from
the proposed provisions and placed in the Basic Provisions. FCIC
believes that the annual renewal date in these provisions are clearly
stated, so no change will be made in this regard. Written agreements
are intended to supplement policy terms or permit insurance in unusual
situations that require modification of the otherwise standard
insurance provisions. If such practices continue year to year, they
should be incorporated into the policy or Special Provisions. It is
important to minimize written agreement exceptions to assure that the
insured are well aware of the specific terms of the policy. Therefore,
no change has been made to the requirement that written agreements be
renewed each year.
In addition to the changes described above, FCIC has made minor
editorial changes and has amended the following Stonefruit Crop
Provisions:
1. Amended the paragraph preceding section 1 to provide that
provisions of any Catastrophic Risk Protection Endorsement take
precedence over any conflicting provision in any other policy
provision.
2. Section 1--Removed definitions for ``days,'' ``FSA,'' ``good
farming practices,'' ``irrigated practice,'' ``non-contiguous,''
``production guarantee (per acre),'' ``USDA,'' and ``written
agreement'' because these definitions now appear in the Basic
Provisions. Added a new definition of ``grading standards'' to these
provisions for clarification. Added to the definition of lug the
weights used for processing apricots, cling peaches, and freestone
peaches are in tons.
3. Section 2--Revised the provisions regarding units to conform
with new language in the Basic Provisions.
4. Section 9(a)(3) and (6)--Revised the wildlife cause of loss by
deleting the language ``unless proper measures to control wildlife have
not been taken'' because it is impossible to control wildlife. Also
clarified the cause of loss ``failure of the irrigation water supply''
by adding ``if due to a cause of loss contained in sections 9(a) (1)
through (5) that occurs during the insurance period'' to be consistent
with other crop policies.
5. Section 10(c)--Deleted the limitation on notifying us at least
15 days prior to harvest ``if you previously gave notice so we can
inspect the damaged production,'' because notice prior to harvest is
required in all cases.
6. Section 11(b)--Revised and added a settlement of claim example
for clarity.
7. Section 11(c)(4)--Revised to clarify when harvested production
of stonefruit is eligible for quality adjustment when packed and sold
as fresh fruit and for all other fresh stonefruit. Also this section
has been reformatted for clarity.
8. Section 12--Deleted the written agreement provisions since these
have been placed in the Basic Provisions and added a provision that the
late and prevented planting provisions of the Basic Provisions are not
applicable to stonefruit since stonefruit is a perennial crop.
List of Subjects in 7 CFR Parts 401 and 457
Crop insurance, Stonefruit endorsement, Stonefruit.
Final Rule
Accordingly, as set forth in the preamble, the Federal Crop
Insurance Corporation amends 7 CFR parts 401 and 457 as follows:
PART 401--GENERAL CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1988 THROUGH 1998 CONTRACT YEARS
1. The authority citation for 7 CFR part 401 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
2. The part heading is revised as set forth above.
3. Section 401.122 introductory paragraph is revised to read as
follows:
Sec. 401.122 Stonefruit endorsement.
The provisions of the Stonefruit Crop Insurance Endorsement for the
1988 through 1998 crop years are as follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
4. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
5. Section 457.159 is added to read as follows:
Sec. 457.159 Stonefruit Crop Insurance Provisions.
The Stonefruit Crop Insurance Provisions for the 1999 and
succeeding crop years are as follows:
FCIC Policies:
UNITED STATES DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
Reinsured Policies:
(Appropriate title for insurance provider)
Both FCIC and Reinsured Policies
Stonefruit Crop Insurance Provisions
If a conflict exists among the policy provisions, the order of
priority is as follows: (1) the Catastrophic Risk Protection
Endorsement, if applicable; (2) the Special Provisions; (3) these
Crop Provisions; and (4) the Basic Provisions with (1) controlling
(2), etc.
1. Definitions
Direct marketing. Sale of the insured crop directly to consumers
without the intervention of an intermediary such as wholesaler,
retailer, packer, processor, shipper, or buyer. Examples of direct
marketing include selling through an on-farm or roadside stand,
farmer's market, and permitting the general public to enter the
field for the purpose of picking all or a portion of the crop.
Grading standards. The California Tree Fruit Agreement Marketing
Order, or California State Department of Food and Agriculture Code
of Regulations in effect for the appropriate crop, type, or varietal
group.
[[Page 29936]]
Harvest. The picking of mature stonefruit either by hand or
machine.
Interplanted. Acreage on which two or more crops are planted in
any form of alternating or mixed pattern.
Lug. A container of fresh stonefruit of specified weight. Lugs
of varying sizes will be converted to standard lug equivalents on
the basis of the following average net pounds of packed fruit:
------------------------------------------------------------------------
Pounds
Crop per lug
------------------------------------------------------------------------
Fresh Apricots................................................. 24
Fresh Nectarines............................................... 25
Fresh Freestone Peaches........................................ 22
------------------------------------------------------------------------
Weight for Processing Apricots, Processing Cling Peaches, and
Processing Freestone Peaches are specified in tons.
Marketable. Stonefruit production acceptable for processing or
other human consumption, even if it fails to meet the State
Department of Food and Agriculture minimum grading standard.
Processor. A business enterprise regularly engaged in processing
fruit for human consumption that possesses all licenses and permits
for processing fruit required by the state in which it operates, and
that possesses facilities, or has contractual access to such
facilities, with enough equipment to accept and process contracted
fruit within a reasonable amount of time after harvest.
Stonefruit. Any of the following crops grown for fresh market or
processing:
(a) Fresh Apricots,
(b) Fresh Freestone Peaches,
(c) Fresh Nectarines,
(d) Processing Apricots,
(e) Processing Cling Peaches, and
(f) Processing Freestone Peaches.
Ton. Two thousand (2,000) pounds avoirdupois.
Type. Class of a stonefruit crop with similar characteristics
that are grouped for insurance purposes.
Varietal group. A subclass of type.
2. Unit Division
Notwithstanding the provisions of section 34 of the Basic
Provisions that allow optional units by section, section equivalent,
or FSA farm serial number and by irrigated and non-irrigated
practices, optional units will only be allowed as stated herein or
by written agreement.
(a) Optional Units on Acreage Located on Non-contiguous Land:
Optional units may be established if each optional unit is located
on non-contiguous land.
(b) Optional Units by Type or Varietal Group: Optional units may
be established by type or varietal group if allowed by the Special
Provisions.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
In addition to the requirements of section 3 of the Basic
Provisions:
(a) You may select only one price election and coverage level
for each crop grown in the county and listed in the Special
Provisions that is insured under this policy. If separate price
elections are available by type or varietal group of a crop, the
price elections you choose for each type or varietal group must have
the same percentage relationship to the maximum price offered by us
for each type or varietal group. For example, if you choose 100
percent of the maximum price election for one type of cling peaches,
you must choose 100 percent of the maximum price election for all
other types of cling peaches.
(b) You must report, by the production reporting date designated
in section 3 of the Basic Provisions, by type or varietal group, if
applicable, for each stonefruit crop:
(1) Any damage, removal of trees, change in practices, or any
other circumstance that may reduce the expected yield below the
yield upon which the insurance guarantee is based, and the number of
affected acres;
(2) The number of bearing trees on insurable and uninsurable
acreage;
(3) The age of the trees and the planting pattern; and
(4) For the first year of insurance for acreage interplanted
with another perennial crop, and any time the planting pattern of
such acreage is changed:
(i) The age of the interplanted crop, and type or varietal group
if applicable;
(ii) The planting pattern; and
(iii) Any other information that we request in order to
establish your approved yield.
We will reduce the yield used to establish your production
guarantee as necessary, based on our estimate of the effect of
interplanting a perennial crop, removal of trees, damage, change in
practice, and any other circumstance that could affect the yield
potential of the insured crop. If you fail to notify us of any
circumstance that may reduce your yields from previous levels, we
will reduce your production guarantee as necessary at any time we
become aware of the circumstance.
4. Contract Changes
In accordance with section 4 of the Basic Provisions, the
contract change date is October 31 preceding the cancellation date.
5. Cancellation and Termination Dates
In accordance with section 2 of the Basic Provisions, the
cancellation and termination dates are January 31.
6. Insured Crop
In accordance with section 8 of the Basic Provisions, the crop
insured will be all of each stonefruit crop you elect to insure,
that is grown in the county, and for which premium rates are
provided in the actuarial documents:
(a) In which you have a share;
(b) That is grown on trees that:
(1) Were commercially available when the trees were set out;
(2) Is adapted to the area; and
(3) Is grown on a root stock that is adapted to the area;
(c) That is irrigated;
(d) That have produced at least 200 lugs of fresh market
production per acre, or at least 2.2 tons per acre for processing
crops, in at least 1 of the 3 most recent actual production history
crop years, unless we inspect such acreage and give our approval in
writing;
(e) That are regulated by the California Tree Fruit Agreement or
related crop advisory board for the state (for applicable types);
(f) That are grown in an orchard that, if inspected, is
considered acceptable by us; and
(g) That have reached at least the fifth growing season after
set out. However, we may agree in writing to insure acreage that has
not reached this age if it meets the requirements of subsection (d)
of this section.
7. Insurable Acreage
In lieu of the provisions of section 9 of the Basic Provisions
that prohibit insurance attaching to a crop planted with another
crop, stonefruit interplanted with another perennial crop is
insurable unless we inspect the acreage and determine that it does
not meet the requirements for insurability contained in your policy.
8. Insurance Period
(a) In accordance with the provisions of section 11 of the Basic
Provisions:
(1) Coverage begins on February 1 of each crop year, except that
for the year of application, if your application is received after
January 22 but prior to February 1, insurance will attach on the
10th day after your properly completed application is received in
our local office unless we inspect the acreage and determine that it
does not meet insurability requirements. You must provide any
information that we require for the crop or to determine the
condition of the orchard.
(2) The calendar date for the end of the insurance period for
each crop year is:
(i) July 31 for all apricots; and
(ii) September 30 for all nectarines and peaches.
(b) In addition to the provisions of section 11 of the Basic
Provisions:
(1) If you acquire an insurable share in any insurable acreage
after coverage begins but on or before the acreage reporting date
for the crop year, and after an inspection we consider the acreage
acceptable, insurance will be considered to have attached to such
acreage on the calendar date of acquisition.
(2) If you lose or relinquish your insurable share on any
insurable acreage of stonefruit on or before the acreage reporting
date for the crop year and if the acreage was insured by you the
previous crop year, insurance will not be considered to have
attached to, and no premium or indemnity will be due for such
acreage for that crop year unless:
(i) A transfer of coverage and right to an indemnity, or a
similar form approved by us, is completed by all affected parties;
(ii) We are notified by you or the transferee in writing of such
transfer on or before the acreage reporting date; and
(iii) The transferee is eligible for crop insurance.
9. Causes of Loss
(a) In accordance with the provisions of section 12 of the Basic
Provisions, insurance is provided only against the following causes
of loss that occur during the insurance period:
(1) Adverse weather conditions;
(2) Fire, unless weeds and other forms of undergrowth have not
been controlled or pruning debris has not been removed from the
orchard;
[[Page 29937]]
(3) Wildlife;
(4) Earthquake;
(5) Volcanic eruption; or
(6) Failure of the irrigation water supply, if due to a cause of
loss contained in sections 9(a)(1) through (5) that occurs during
the insurance period.
(b) In addition to the causes of loss excluded by section 12 of
the Basic Provisions, we will not insure against damage or loss of
production due to:
(1) Disease or insect infestation, unless adverse weather:
(i) Prevents the proper application of control measures or
causes properly applied control measures to be ineffective; or
(ii) Causes disease or insect infestation for which no effective
control mechanism is available;
(2) Split pits regardless of cause; or
(3) Inability to market the insured crop for any reason other
than actual physical damage from an insurable cause of loss
specified in this section. For example, we will not pay you an
indemnity if you are unable to market due to quarantine, boycott, or
refusal of any person to accept production.
10. Duties in the Event of Damage or Loss
In addition to the requirements of section 14 of the Basic
Provisions, the following will apply:
(a) You must notify us within 3 days after the date harvest
should have started if the insured crop will not be harvested.
(b) You must notify us at least 15 days before any production
from any unit will be sold by direct marketing. We will conduct an
appraisal that will be used to determine your production to count
for production that is sold by direct marketing. If damage occurs
after this appraisal, we will conduct an additional appraisal. These
appraisals, and any acceptable records provided by you, will be used
to determine your production to count. Failure to give timely notice
that production will be sold by direct marketing will result in an
appraised amount of production to count of not less than the
production guarantee per acre if such failure results in our
inability to make the required appraisal.
(c) In addition to section 14 of the Basic Provisions, if you
intend to claim an indemnity on any unit, you must give us notice at
least 15 days prior to the beginning of harvest. You must not
destroy the damaged crop until after we have given you written
consent to do so. If you fail to notify us and such failure results
in our inability to inspect the damaged production, we may consider
all such production to be undamaged and include it as production to
count.
11. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event
you are unable to provide separate acceptable production records:
(1) For any optional units, we will combine all optional units
for which such production records were not provided; or
(2) For any basic units, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for the units.
(b) In the event of loss or damage covered by this policy, we
will settle your claim by:
(1) Multiplying the insured acreage for each type or varietal
group by its respective production guarantee;
(2) Multiplying each result of section 11(b)(1) by the
respective price election for the type or varietal group;
(3) Totaling the results of section 11(b)(2). (If there is only
one type or varietal group, the result of (3) will be the same as
the result of (2));
(4) Multiplying the total production to count (see section
11(c)), for each type or varietal group, by the respective price
election;
(5) Totaling the results of section 11(b)(4);
(6) Subtracting the result of section 11(b)(5) from the result
of section 11(b)(2). (If there is only one type or varietal group,
the result of (6) will be the same as the result of (5)); and
(7) Multiplying the result of section 11(b)(6) by your share.
For example:
You have a 100 percent share in 50 acres of varietal group A
stonefruit in the unit, with a guarantee of 500 lugs per acre and a
price election of $6.00 per lug. You are only able to harvest 5,000
lugs. Your indemnity would be calculated as follows:
(1) 50.0 acres x 500 lugs = 25,000 lugs guarantee;
(2) and (3) 25,000 lugs x $6.00 price election = $150,000.00 value
of guarantee;
(4) 5,000 lugs x $6.00 price election = $30,000.00 value of
production to count;
(5) and (6) $150,000.00--$30,000.00 = $120,000.00 loss; and
(7) $120,000.00 x 100 percent = $120,000 indemnity payment.
You also have a 100 percent share in 50 acres of varietal group
B stonefruit in the unit, with a guarantee of 300 lugs per acre and
a price election of $3.00 per lug. You are only able to harvest
3,000 lugs. Your indemnity would be calculated as follows:
(1) 50.0 acres x 500 lugs varietal group A = 25,000 lugs
guarantee; and 50.0 acres x 300 lugs varietal group B = 15,000
lugs guarantee;
(2) 25,000 lugs x $ 6.00 price election = $150,000.00 value of
guarantee for varietal group A; and 15,000 lugs x $3.00 price
election = $45,000.00 value of guarantee for varietal group B;
(3) $150,00.00 + $45,000.00 = $195,000.00 total value of
guarantee;
(4) 5,000 lugs varietal group A x $6.00 price election =
$30,000.00 value of production to count; and 3,000 lugs varietal
group B x $3.00 price election = $9,000.00 value of production to
count; and
(5) $30,000.00 + $9,000.00 = $39,000.00 total value of
production to count;
(6) $195,000.00--$39,000.00 = $156,000.00 loss
(7) $156,000.00 loss x 1.000 = $156,000 indemnity payment.
(c) The total production to count (in lugs or tons) from all
insurable acres on a unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee per acre for acreage:
(A) That is abandoned;
(B) That is sold by direct marketing if you fail to meet the
requirements contained in section 10;
(C) That is damaged solely by uninsured causes; or
(D) For which you fail to provide production records that are
acceptable to us;
(ii) Production lost due to uninsured causes;
(iii) Unharvested production that would be marketable if
harvested; and
(iv) Potential production on insured acreage that you intend to
abandon or no longer care for, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end. If you do not agree with our appraisal, we
may defer the claim only if you agree to continue to care for the
insured crop. We will then make another appraisal when you notify us
if any further damage or that harvest is general in the area unless
you harvested the crop. If you harvest the crop we will use the
harvested production. If you do not continue to care for the crop,
our appraisal made prior to deferring the claim will be used to
determine the production to count; and
(2) All harvested production from the insurable acreage.
(3) The quantity of harvested production will be reduced if the
following conditions apply:
(i) The value of the damaged production is less than 75 percent
of the marketable value of undamaged production due to an insured
cause of loss; and
(ii) For stonefruit insured as fresh fruit only, the stonefruit
either is packed and sold as fresh fruit and meets only the utility
grade requirements of the applicable grading standards, or fails to
meet the applicable grading standards but is or could be sold for
any use other than fresh packed stonefruit.
(4) Harvested production of stonefruit that is eligible for
quality adjustment as specified in section 11(c)(3) will be reduced
as follows:
(i) When packed and sold as fresh fruit or when insured as a
processing crop, by dividing the marketable value per lug or ton by
the highest price election (for the applicable coverage level) and
multiplying the result (not to exceed 1.00) by the quantity of such
production; or
(ii) For all other fresh stonefruit, multiplying the number of
tons that could be marketed by the value per ton (for the applicable
coverage level) and dividing that result by the highest price
election available for that type.
12. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions (Sec. 457.8) are not applicable.
Signed in Washington, D.C., on May 20, 1998.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 98-14545 Filed 6-1-98; 8:45 am]
BILLING CODE 3410-08-P
