2023-19584. Request for Information on Prevented Planting

AGENCY:

Federal Crop Insurance Corporation and Risk Management Agency, Department of Agriculture (USDA).

ACTION:

Notice of request for information; reopening of comment period.

SUMMARY:

The Federal Crop Insurance Corporation (FCIC) is reopening the comment period for 30 days to allow the public additional time to provide comments on the prevented planting provisions of the Common Crop Insurance Policy (CCIP), Basic Provisions published on May 23, 2023. Prevented planting is a feature of many crop insurance plans that provides a payment to cover certain pre-plant costs for a crop that was prevented from being planted due to an insurable cause of loss. FCIC is interested in public input on the following: additional prevented planting coverage based on harvest prices in situations when harvest prices are higher than established prices initially set by FCIC prior to planting; the requirement that acreage must have been planted to a crop, insured, and harvested, in at least 1 of the 4 most recent crop years; additional levels of prevented planting coverage; prevented planting coverage on contracted crops; and other general prevented planting questions.

DATES:

The comment period for the Request for Information on Prevented Planting published on May 23, 2023, (at 88 FR 33081) is reopened. We will consider comments that we receive by October 12, 2023.

ADDRESSES:

We invite you to submit comments in response to this notice. Send your comments through the method below:

• Federal eRulemaking Portal: Go to https://www.regulations.gov and search for Docket ID FCIC–23–0001. Follow the instructions for submitting comments.

All comments will be posted without change and will be publicly available on www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Francie Tolle; telephone [phone]; or email [e-mail]. Persons with disabilities who require alternative means for communication should contact the USDA Target Center at (202) 720–2600 (voice).

SUPPLEMENTARY INFORMATION:

Background

FCIC is reopening the comment period for the Request for Information on Prevented Planting that was published on May 23, 2023, (at 88 FR 33081–33084). The comment period for the original notice closed on September 1, 2023. Based on requests received during the initial comment period, FCIC is reopening the comment period for an additional 30 days to allow the public to comment on the prevented planting provisions.

FCIC serves America's agricultural producers through effective, market-based risk management tools to strengthen the economic stability of agricultural producers and rural communities. FCIC is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool. The Risk Management Agency (RMA) administers the FCIC regulations. The Approved Insurance Providers (AIP) sell and service Federal crop insurance policies in every state through a public-private partnership. FCIC reinsures the AIPs who share the risk associated with losses due to natural causes. FCIC's vision is to secure the future of agriculture by providing world class risk management tools to rural America.

Prevented planting coverage pays when a producer is unable to plant an insured crop due to an insured cause of loss. The payment is intended to assist in covering the normal costs associated with preparing the land up to the point of the seed going in the ground (pre-plant costs). These pre-plant costs can include seed, purchase of machinery, land rent, fertilizer, actions taken to ready the field, pesticide, labor, and repairs. Coverage is calculated as a percent of the producer's insurance guarantee (for example, 60 percent for soybeans).

FCIC is interested in all general prevented planting comments but requests public input from stakeholders on the following specific topics:

Prevented Planting Coverage Based on Harvest Prices for Revenue Protection Insurance

Revenue protection is a plan of insurance that provides protection against loss of revenue due to a production loss, price decline or increase, or a combination of both. Under the revenue protection plan of insurance, yield losses are compensated using the harvest-time price if it is higher than the price FCIC projected prior to planting. This compensates producers for the replacement value of lost bushels. This type of coverage was intended to help producers mitigate the risk of having to buy out of delivery contracts they are unable to fulfill due to production losses. Currently, the prevented planting calculation for revenue protection is based on the projected price and does not increase with the harvest price.

Revenue protection is the most popular insurance coverage in the crop insurance program. Under revenue protection, producers may elect a harvest price exclusion option which removes the protection against loss of revenue due to harvest price increase. Over 99 percent of revenue protection policies maintain harvest price coverage.

Following the volume of prevented planting payments for 2019 and 2020, a consistent suggestion emerged to allow prevented planting payments to increase with the harvest price, as is currently done for lost production. Allowing the harvest price for prevented planting payments would not impact most years as there needs to be both an increase in the harvest price and a prevented planting claim. Historical data suggests the additional coverage would increase prevented planting payments by approximately 6 percent on average for those policies with harvest price revenue coverage. Consequently, there would need to be a corresponding increase in premium for these policies.

The following are questions for input regarding prevented planting coverage based on the harvest price:

1. Should prevented planting payments be based on the harvest price or the price used to establish the insurance guarantee (projected price)?

2. What specific advantages or disadvantages do you see for allowing prevented planting coverage to be based on the harvest price?

3. When a producer is prevented from planting, what additional loss does a producer suffer when the harvest price increases and what should be considered to estimate the value of the loss?

4. Do you have any concerns about allowing prevented planting coverage to be based on the harvest price?

Prevented Planting “1 in 4” Requirement

Beginning with the 2021 crop year, FCIC revised the prevented planting provisions to implement the “1 in 4” requirement nationwide. The “1 in 4” requirement states that acreage must have been planted to a crop, insured, and harvested (or if not harvested, adjusted for claim purposes due to an insurable cause of loss) in at least 1 out of the previous 4 crop years. This was meant to reduce prevented planting payments on land that is not generally available to plant, thus lowering insurance costs for all producers. Prior to the 2021 crop year, the “1 in 4” requirement was only applicable to the Prairie Pothole National Priority Area and required that the acreage must be physically available for planting.

In late 2022, FCIC announced the “1 in 4” requirement would be removed from western states that have experienced significant ongoing drought in recent years. The purpose of removing the requirement in these states was to give FCIC more time to better understand the unique needs of western producers and to also ensure all parties can provide input on the change.

The following are questions regarding the prevented planting “1 in 4” requirement:

1. Since the nationwide implementation of the “1 in 4” requirement, what situations have created challenges due to this requirement for producers that have been prevented from planting?

2. Do you have recommendations that would make the requirement more flexible for producers while protecting the integrity of the Federal Crop Insurance Program?

3. Are there specific situations that should exempt land from the “1 in 4” requirement and why?

4. Should the requirement be removed from specific areas and why?

5. A portion of the “1 in 4” requirement allows crops that have been adjusted for claims purposes due to an insured cause of loss to be considered harvested. However, this allowance excludes claims adjusted due to the following causes of loss: flood, excess moisture, and drought. Should the requirement exclude specific causes of loss adjusted for claims purposes and why?

6. Are you aware of additional program integrity measures or safeguards that should be considered beyond what is in place today?

7. Do you believe there should be a limit on the number of consecutive years that a producer is eligible to receive a prevented planting payment on the same acreage? If so, what do you believe the limit should be?

Prevented Planting 10 Percent Additional Coverage

Insureds with additional coverage, a coverage level greater than catastrophic risk protection, may elect an additional level of prevented planting coverage, commonly referred to as buy-up coverage, on or before the sales closing date. The additional coverage level allows producers to better tailor their coverage to match their actual prevented planting costs. The additional level of prevented planting coverage also requires the producer pay additional premium. Prior to the 2018 crop year, two additional prevented planting coverage levels were available, 5 percent (+5) and 10 percent (+10). FCIC removed the +10 additional coverage option beginning in the 2018 crop year. Removing the +10 additional coverage option maintained the balance between providing coverage to producers and the cost to taxpayers. While FCIC has removed the +10 additional coverage option, the +5 additional coverage option is still available.

RMA is considering reinstating the +10 additional coverage option. The following are questions regarding the +10 additional coverage option:

1. What specific advantages or disadvantages do you see regarding reinstating the +10 additional coverage option?

2. If you believe reinstating the +10 additional coverage option will provide needed protection for producers, why is it needed in addition to the current +5 additional coverage option?

3. Do you have any concerns about reinstating the +10 additional coverage option?

Prevented Planting Coverage on Contracted Crops

For several crops, crop types, or specific practices grown under a contract with a processor, a contract price option allows a producer to use their contract price to determine the insurance guarantee. For example, the Contract Price Addendum allows organic certified and transitional producers of many crops to use the price contained in their organic contract for insurance. Currently, when the contract price option is elected, the prevented planting coverage is based on the contract price. However, it has been suggested that prevented planting costs may be the same regardless of whether the producer had a contract. FCIC is requesting input on whether the prevented planting guarantee should use the RMA established price (price election or projected price), regardless of if the contract price option has been elected.

The price election is the amount contained in the actuarial documents that is the value per pound, bushel, ton, carton, or other applicable unit of measure for the purposes of determining premium and indemnity under the policy. The projected price is the price for each crop determined in accordance with the Commodity Exchange Price Provisions.^[1] The applicable projected price is used for each crop for which revenue protection is available, regardless of whether you elect to obtain revenue protection or yield protection for the crop.

The following are questions regarding prevented planting coverage on contracted crops that can elect the contract price option:

1. Are pre-planting costs higher for contracted crops? If so, explain.

2. Should prevented planting payments be based on the contract price or RMA's established price (price election or projected price)? Please explain why.

3. If a contract price is used for prevented planting guarantee purposes, should there be any limitations as to when the contract is secured, specifically when a cause of loss is present that may prevent planting?

Other General Prevented Planting Questions

1. Do you believe all producers will support paying higher premiums to cover the costs of expanded prevented planting benefits?

2. Are pre-planting costs the same for all causes of loss? For example: Does a multi-year drought leading to failure of irrigation supply have the same pre-planting costs as unexpected flooding prior to planting?

Marcia Bunger,

Manager, Federal Crop Insurance Corporation; and Administrator, Risk Management Agency.

Footnotes

1.  The Commodity Exchange Price Provisions (CEPP) are used in conjunction with either the Common Crop Insurance Policy Basic Provisions or the Area Risk Protection Insurance Basic Provisions, along with Crop Provisions for the following crops: barley, canola or rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat. CEPP specifies how and when the projected and harvest price components will be determined. Updated CEPP documents are on the RMA website at www.rma.usda.gov/​Policy-and-Procedure/​Insurance-Plans/​Commodity-Exchange-Price-Provisions-CEPP.