[Federal Register Volume 62, Number 202 (Monday, October 20, 1997)]
[Rules and Regulations]
[Pages 54339-54346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27652]
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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.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 62, No. 202 / Monday, October 20, 1997 /
Rules and Regulations
[[Page 54339]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 401 and 457
General Crop Insurance Regulations, Canning and Processing Tomato
Endorsement; and Common Crop Insurance Regulations, Processing Tomato
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 processing tomatoes. 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 canning and processing tomato endorsement with the Common Crop
Insurance Policy for ease of use and consistency of terms, and to
restrict the effect of the current canning and processing tomato
endorsement to the 1997 and prior crop years.
EFFECTIVE DATE: November 19, 1997.
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 6413, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order No. 12866
The Office of Management and Budget (OMB) has determined this rule
to be exempt for the purposes of Executive Order 12866, and therefore,
this rule has not been reviewed by OMB.
Paperwork Reduction Act of 1995
Following publication of the proposed rule, the public was afforded
60 days to submit written comments and opinions on information
collection requirements currently being reviewed by OMB pursuant to the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) under OMB
control number 0563-0053. No public comments were received.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This rule contains no Federal
mandates (under the regulatory provisions of title II of the UMRA) for
State, local, and tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
the UMRA.
Executive Order No. 12612
It has been determined under section 6(a) of Executive Order No.
12612, Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions, or on the
distribution of power and responsibilities among 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
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 producer or the reinsured company.
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 No. 12372
This program is not subject to the provisions of Executive Order
No. 12372, which require intergovernmental consultation with State and
local officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order No. 12988
This final 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 prior to the effective date. The
provisions of this rule will preempt State and local laws to the extent
such State and local laws are inconsistent herewith. The administrative
appeal provisions published at 7 CFR part 11 must be exhausted before
any action for judicial review may be brought.
Environmental Evaluation
This action is not expected to have a significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review Initiative to eliminate unnecessary or duplicative
regulations and improve those that remain in force.
Background
On Monday, June 23, 1997, FCIC published a proposed rule in the
Federal Register at 62 FR 33763-33768 to add to the Common Crop
Insurance Regulations (7 CFR part 457), a new section, 7 CFR 457.160,
Processing Tomato Crop Insurance Provisions. The new provisions will be
effective for the 1998 and succeeding crop years. These provisions will
replace and supersede the current provisions for insuring canning and
processing tomatoes found at 7 CFR part 401 (Canning and Processing
Tomato Endorsement). FCIC
[[Page 54340]]
also amends 7 CFR 401.114 to limit its effect to the 1997 and prior
crop years.
Following publication of that proposed rule, the public was
afforded 30 days to submit written comments and opinions. A total of 62
comments were received from an insurance service organization,
reinsured companies, agents, a California Tomato Growers Association,
and tomato growers. The comments received, and FCIC's responses are as
follows:
Comment: An insurance service organization recommended that a
number of definitions common to most crops be removed from the crop
provisions and placed into the Basic Provisions.
Response: FCIC agrees and is currently in the regulatory review
process that will move commonly used definitions from the crop
provisions to the Basic Provisions and this rule will be revised to
delete the definitions when the Basic Provisions are published as a
final rule.
Comment: A reinsured company and a crop insurance agent recommended
changing the sales closing date in California from January 15 to
February 28. The commenter indicated that the sales closing date of
January 15 causes inefficiency because it differs from the February 28
sales closing date for most other spring crops.
Response: The Federal Crop Insurance Reform Act of 1994 required
the sales closing date to be moved from February 15 to January 15. This
date cannot be extended without appropriate legislative changes.
Therefore, no change has been made.
Comment: An insurance service organization recommended changing the
definition of ``bypassed acreage'' to read as follows: ``Land on which
production is ready for harvest but is left unharvested in favor of
harvesting other fields.''
Response: The definition of bypassed acreage has been revised to
clarify that land on which production is ready for harvest but the
processor elects not to accept such production so it is not harvested.
Comment: An insurance service organization expressed concern with
the definition of ``good farming practice,'' which makes reference to
cultural practices generally in use in the county and that are
recognized by the Cooperative State Research, Education, and Extension
Service (CSREES) as compatible with agronomic and weather conditions in
the county. The comment questioned whether cultural practices exist
that are not necessarily recognized (or possible known) by the CSREES.
The comment suggested changing the term ``county'' to ``area.''
Response: FCIC believes that the CSREES recognizes farming
practices that are considered acceptable for producing processing
tomatoes. If a producer is following practices not recognized as
acceptable by the CSREES, such recognition can be sought by interested
parties. Although cultural practices recognized by the CSREES may only
pertain to specific areas within a county, the actuarial documents are
on a county basis. No change has been made.
Comment: An insurance service organization recommended changing the
definition of ``planted acreage'' so that either initially or replanted
acreage must be planted in rows to be considered planted.
Response: FCIC agrees and has amended the definition as suggested.
The definition of replanting has also been changed accordingly.
Comment: An insurance service organization recommended that the
definition of ``replanting'' be clarified by inserting ``processing
tomato'' between the last two words (``successful'' and ``crop'') in
the sentence.
Response: To be consistent with language contained in the proposed
rule of the Basic Provisions, FCIC has revised the definition to
clarify that ``replanting'' is performing the cultural practices
necessary to prepare the land to replace the seed or plants of the
damaged or destroyed crop and then replacing the seed or plants in the
insured acreage.
Comment: An insurance service organization recommended that the
definition of ``timely planted'' be clarified by inserting the word
``initially'' at the beginning of the definition.
Response: To be consistent with language contained in the proposed
rule of the Basic Provisions, FCIC believes the definition is clearly
stated. Therefore, no change has been made.
Comment: An insurance service organization, a reinsured company,
insurance agents, a tomato growers association, and a tomato grower
disagreed with the provisions that remove ``units by share'' in
California (section 2(a.). The comments indicated that: (1) Unit
division by share is no more difficult to administer for tomatoes than
it is for other crops in California; (2) The change will give producers
a greater incentive to purchase CAT than buy-up, since the CAT
Endorsement allows basic units by share; and (3) Inequitable loss
payments between tenants and landlords would result.
Response: FCIC agrees that optional units based on share should be
provided. Section 2(a) has been deleted and the remaining sections have
been redesignated accordingly. The language in 8(b) is intended to
cover a producer who has a crop share agreement, who rents, or who owns
acreage. This should be separate from the unit issue.
Comment: An insurance service organization, reinsured companies, a
grower association, insurance agents, and tomato producers stated that
section 2(b) eliminates optional units for nearly all California
producers since most contracts are written for a specific amount of
production. Removal of this benefit will have a detrimental impact on
producers who had optional units in the past. For example: A producer
with 6,000 contracted tons, 200 acres of land, an approved yield of 30
tons per acre, and a production guarantee of 22.5 tons per acre,
receives no benefit if only one unit is allowed and 4,500 tons of
tomatoes are produced. However, if two 100 acre units are allowed, the
first unit produces 3,000 tons and the second unit produces 1,500 tons
(4,500 total tons), an indemnity based on 750 tons would be allowed on
the second unit.
Response: FCIC agrees that optional units should remain available
in California and has amended section 2(b) (redesignated 2(a))
accordingly. Premium rates also will reflect adoption of this change.
Comment: An insurance service organization and reinsured companies
indicated that the ``earlier of'' * * * aspect of section 3(b)
eliminates the need for item (1). Item (2), the acreage reporting date,
will always be earlier than item (1) (August 20). One comment
questioned why the provision allows until August 20 to obtain signed
contracts in all but a few counties in California.
Response: Section 3(b) was not intended to indicate the earlier of
item (1) or (2). It was intended to indicate the earlier of August 20
or the date of damage only in those counties with a July 15 acreage
reporting date, and the earlier of the acreage reporting date or the
date of damage in all other counties. In years of high production, it
is common for contracts in northern California counties to be signed as
late as August 20. The provision was designed to accommodate this
practice and permit insurance to continue for all contracted tonnage.
The provision has been clarified accordingly.
Comment: Five comments from reinsured companies asked why section
3(c) was changed to reduce the price election rather than the
production guarantee.
[[Page 54341]]
Response: The Federal Crop Insurance Act authorizes FCIC to reduce
the payment to producers who elect catastrophic coverage for acreage
that is not harvested or for any other costs that are not incurred if
the crop is lost prior to harvest. The change is in compliance with
this provision of law.
Comment: An insurance service organization and a reinsured company
stated that provisions in section 6 that require the producer to
provide a copy of the processor contract no later than the acreage
reporting date: (1) Could allow producers to wait until the acreage
reporting date to decide if they want coverage; and (2) will be nearly
impossible to implement since processor contracts will not be finalized
by the dates specified in section 3.
Response: Virtually all processor contracts should be completed
within the time frame provided for in the policy. Production covered by
contracts completed after these time frames will not be insured.
Therefore, no change has been made.
Comment: A reinsured company questioned why the price election for
unharvested acreage is used in the premium calculations in section 7.
Response: The provision should have referred to the price election
for the third (final) stage. The provision has been revised
accordingly.
Comment: An insurance service organization and a reinsured company
stated that section 8(b) is confusing and seems to indicate that the
landlord does not have a share unless the landlord's name is written on
the tomato contract. Another reinsured company interpreted the
provision to mean that a tenant cannot have a share since that person
does not retain possession of the acreage.
Response: The language in 8(b) is intended to cover a producer who
has a crop share arrangement, who rents, or who owns acreage. The
provision has been clarified by indicating that control of the acreage
is retained rather than possession.
Comment: An insurance service organization stated that section
8(a)(4) would allow coverage by written agreement or Special Provisions
on tomatoes following tomatoes in either of the two previous years,
interplanted with another crop or planted into an established grass or
legume and asked if these practices would ever be allowed by the
processor contract. The comment indicated that consideration should be
given to inserting some of this language into the Basic Provisions
since it is duplicated in most Crop Provisions.
Response: Some processor contracts may not stipulate rotation or
planting practices. Therefore, the provisions have been retained to
limit insurance when a crop is interplanted, planted into a grass or
legume, or is planted in an unusual rotation. These provisions vary
among Crop Provisions and therefore, should not be moved to the Basic
Provisions. Therefore, no change has been made.
Comment: An insurance service organization and a reinsured company
questioned whether the provisions in sections 10(a) and (b) that end
the insurance period on the date sufficient production is harvested to
fulfill the producers processor contract: (a) Eliminate unit division
benefits or (b) conflict with the provision in section 12(a) that
states ``We will determine your loss on a unit basis.'' The commenters
questioned whether production to count from an appraisal prior to
harvest would be included when determining fulfillment of the processor
contract. The insurance service organization questioned whether the
insured would know when enough production is harvested to fulfill the
processor contract. This commenter asked if production exceeding the
contracted amount is considered production to count for APH or loss
adjustment or whether the processor settlement sheet is the only
acceptable record. One commenter also questioned whether ``delivered
to'' is the same as ``acceptable by'' the processor.
Response: Sections 10(a) and (b) do not eliminate unit division
provisions or conflict with section 14(a). All indemnities will be paid
on a unit basis. Once acreage is harvested and the processor contract
is fulfilled, the insurance period ends. If there is unharvested
production and the processor contract has not been fulfilled, due to an
insured cause of loss is still covered. Appraised acreage will not be
used to determine whether the contract has been fulfilled and the
insurance period ends, although it will be used to determine production
to count and in determining the producer's APH. When determining
production to count, only the harvested production shown on the
settlement sheet or rejected as a result of uninsured cause of loss
will be used. FCIC has revised section 10(a) to clarify that insurance
ceases ``the date you harvest sufficient production to fulfill your
processor contract if your processor contract stipulates a specific
amount of production to be delivered.'' The contract is not fulfilled
if the production is not accepted by the processor. However, rejected
production maybe considered as production to count unless damaged by an
insurable cause of loss occurring during the insurance period. Further,
records are maintained as production is delivered to the processor.
Therefore, the insured should know when the contract is fulfilled.
Comment: An insurance service organization questioned the summary
of changes to the proposed rule in section 13(a)(2). The commenter
stated the summary of changes says ``the producer must give notice on
or before the date the tomatoes should be harvested if any acreage on a
unit will not be harvested,'' but the provision states the producer
must give notice ``not later than 48 hours after: (1) Total destruction
of the tomatoes in the unit; or (2) Discontinuance of harvest on a unit
on which production remains.
Response: FCIC agrees that the summary was in error and the
provisions as proposed are correct.
Comment: An insurance service organization questioned the
notification requirement in section 13(b), which states that the
insured must notify the insurance provider ``within 3 days of the date
harvest should have started on any acreage that will not be
harvested...'' The commenter stated there is a difference between
notice ``within 3 days'' as the policy provision indicates and ``on or
before'' as item 21 of the summary of changes indicates. The commenter
also asked how the date tomatoes should have been harvested will be
determined.
Response: The summary of changes was not correct. It should have
indicated ``within 3 days after the date harvest should have
started....'' The insured is best able to assess the date tomatoes
should be harvested based on the maturity of the crop. Therefore, no
change has been made.
Comment: An insurance service organization stated that the language
in 13(c) does not address timely notice if damage is discovered less
than 15 days prior to harvest.
Response: The notice requirement in section 13 are in addition to
the requirements in section 14 of the Basic Provisions that require
notice of loss within 72 hours of initial discovery of damage. Notice
within this time period would be required if damage is discovered less
than 15 days before harvest. If damage is discovered during harvest,
notice must be given immediately. FCIC believes that these provisions,
as a whole, are adequate. Therefore, no change has been made.
Comment: An insurance service organization stated that section
14(c)(1)(iii) 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.''
[[Page 54342]]
Response: A later appraisal will only be necessary if the insurance
provider agrees that such an appraisal would result in a more accurate
determination and 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. Therefore, no change has been made.
Comment: A reinsured company recommended removal of the requirement
to renew written agreements each year if there are no significant
changes to the farming operation.
Response: Written agreements are intended to supplement policy
terms or permit insurance in unusual situations that require
modification of the otherwise standard insurance provisions. If such
practices continue from 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 is well aware of the
specific terms of the policy. FCIC has proposed that the written
agreement provision be included in the Basic Provisions. Therefore, no
change has been made.
In addition to the changes described above, FCIC has made minor
editorial changes and has amended the following Processing Tomato
Provisions:
1. The paragraph preceding section 1 is amended to include the
Catastrophic Risk Protection Endorsement.
2. Section 1--Added a definition of ``approved yield''. The
definitions of ``bypassed acreage,'' ``planted acreage'' ``practical to
replant'' ``production guarantee (per acre)'' and ``replanting'' have
been revised for clarification.
3. Removed the reference to ``written agreement'' in section 2(a)
of the proposed rule and added it to section 2(e)(4) of the final rule
to clarify which provisions may be revised by written agreement.
4. Section 2(a)--Added provisions to clarify that no indemnity will
be paid for any loss of production on any unit if the insured produced
a crop sufficient to fulfill the processor contracts forming the basis
for the guarantee, and any indemnity will be limited to the amount
necessary to compensate for loss in yield at the price elected between
production to count and the contract requirements.
5. Section 3(b)--Has been revised for clarification.
6. Section 3(e)--Added provisions to clarify when appraised
production on bypassed acreage not bypassed due to an insurable cause
of loss will be used when determining the producer's approved yield.
7. Section 3(f)--Added provisions to clarify when acreage is
bypassed because it was damage by an insurable cause of loss to the
extent that the processor cannot use the product will be considered to
have a zero yield when determining your approved yield.
8. Section 6--Clarify a producer must provide a copy of all
processor contracts to us on or before the acreage reporting date in
all counties, unless otherwise specified in the Special Provisions.
9. Sections 8(b), (c)(1), (2), and (3)--Have been revised for
clarification.
10. Section 10(a)--Revised to conform this provision with other
processing crop provisions, which specify that once the processor
contract has been fulfilled, the insurance period will end if the
processor contract stipulates a specific amount of production.
11. Section 10(b)--Clarify that the insurance period will end when
the crop should have been harvested.
12. Section 11(a)(5)--Clarified the wildlife cause of loss by
deleting the language ``unless proper measures to control wildlife have
not been taken'' to be consistent with other crop provisions.
13. Section 11(a)(ii)--Has been revised for clarification.
14. Section 11(a)(9)--Deleted this provision because it is
unnecessary since other listed causes of loss are what results in
physical damage.
15. Section 11(b)(4)--Deleted this provision since such damage
would occur outside the insurance period specified in section 10.
16. Section 13(b)--Clarified that the insured must give notice of
loss within 3 days after the date harvest should have started is the
acreage will not be harvested. The insured must also provide
documentation stating why the acreage was bypassed.
17. Section 14(b)(1) thru (7)--Revised and added an example of
settlement of claim.
18. Section 14(c)(E)--Deleted this provision as proposed.
19. Section 14(c)(iii)--Added provisions to clarify production on
acreage that is bypassed unless the acreage was bypassed due to an
insured cause of loss which resulted in production which would not be
acceptable under the terms of the processor contract. 14(c)(iii) as
proposed has been redesignated as 14(c)(iv).
20. Section 14(d)--Clarified that once harvest has begun on acreage
covered by a processor contract that specifies the number of tons to be
delivered, the total indemnity payable will be limited to an amount
based on the lesser of the guaranteed tons, or the tons remaining
unfulfilled under the processor contract.
21. Section 15--Added statement that late and prevented planting is
not applicable to processing tomatoes.
22. Section 16--Written agreements had been redesignated. Clarify
when provisions of the policy may be altered by written agreement.
List of Subjects in CFR Parts 401 and 457
Crop insurance, Canning and processing tomato endorsement,
Processing tomato.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation hereby amends 7 CFR parts 401 and 457 as
follows:
PART 401--GENERAL CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR part 401 is revised to read as
follows:
Authority: 7 U. S. C. 1506(1), 1506(p).
2. Section 401.114 introductory text is revised to read as follows:
Sec. 401.114 Canning and processing tomato endorsement.
The provisions of the Canning and Processing Tomato Crop Insurance
Endorsement for the 1988 through the 1997 crop years are as follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
3. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
4. Section 457.160 is added to read as follows:
Sec. 457.160 Processing tomato crop insurance provisions.
The Processing Tomato Crop Insurance Provisions for the 1998 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 polices:
Processing Tomato Crop Provisions
If a conflict exists among the policy provisions the order of
priority is as follows: (1) the Catastrophic Risk Protection
Endorsement, if applicable; (2) the Special Provisions; (3) these
Crop Provisions; and (4) the Basic Provisions (Sec. 457.8) with (1)
controlling (2) etc.
[[Page 54343]]
1. Definitions
Acre. 43,560 square feet of land on which row widths do not
exceed 6 feet, or the land on which at least 7,260 linear feet rows
are planted if row widths exceed 6 feet.
Approved yield. The yield determined in accordance with 7 CFR
part 400, subpart (g).
Bypassed acreage. Land on which production is ready for harvest
but the processor elects not to accept such production so it is not
harvested.
Days. Calendar days.
FSA. The Farm Service Agency, an agency of the United States
Department of Agriculture, or a successor agency.
Final planting date. The date contained in the Special
Provisions for the insured crop by which the crop must initially be
planted in order to be insured for the full production guarantee.
First fruit set. The reproductive stage of the plant at which 30
percent of the plants have produced a fruit that has reached a
minimum of one inch in diameter.
Good farming practices. The cultural practices generally in use
in the county for the crop to make normal progress toward maturity
and produce at least the yield used to determine the production
guarantee and are those required by the tomato processor contract
with the processing company, and are those recognized by the
Cooperative State Research, Education, and Extension Service as
compatible with agronomic and weather conditions in the county.
Harvest. The severance of tomatoes from the vines.
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.
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 irrigated production guarantee on the irrigated
acreage planted to the insured crop.
Plant stand. The number of plants per acre considered to be
normal for the applicable tomato variety and growing area.
Planted acreage. Land in which seed or plants have been placed
by a machine appropriate for the insured crop and planting method,
at the correct depth, into a seedbed that has been properly prepared
for the planting method and production practice. Tomatoes must
initially be placed in rows to be considered planted. Acreage
planted in any other manner will not be insurable unless otherwise
provided by the Special Provisions or by written agreement.
Practical to replant. In lieu of the definition of ``Practical
to replant'' contained in section 1 of the Basic Provisions,
practical to replant is defined as our determination, after loss or
damage to the insured crop, based on factors, including but not
limited to moisture availability, marketing window, condition of the
field, and time to crop maturity, that replanting the insured crop
will allow the crop to attain maturity prior to the calendar date
for the end of the insurance period. It will not be considered
practical to replant unless the replanted acreage can produce at
least 75% of the approved yield, and the processor agrees in writing
that it will accept the production from the replanted acreage.
Processor. Any business enterprise regularly engaged in
processing tomatoes for human consumption, that possesses all
licenses and permits for processing tomatoes 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 processing tomatoes within a
reasonable amount of time after harvest.
Processor contract. A written agreement between the producer and
a processor, containing at a minimum:
(a) The producer's commitment to plant and grow processing
tomatoes, and to deliver the tomato production to the processor;
(b) The processor's commitment to purchase all the production
stated in the processor contract; and
(c) A price per ton that will be paid for the production.
Production guarantee (per acre). The number of tons determined
by multiplying the approved yield per acre by the coverage level
percentage you elect.
Replanting. Performing the cultural practices necessary to
prepare the land to replace the seed or plants of the damaged or
destroyed crop and then replacing the seed or plants in the insured
acreage.
Timely planted. Planted on or before the final planting date
designated in the Special Provisions for the insured crop in the
county.
Ton. Two thousand (2,000) pounds avoirdupois.
USDA. United States Department of Agriculture.
Written agreement. A written document that alters designated
terms of this policy in accordance with section 16.
2. Unit Division
(a) Unless limited by the Special Provisions, a basic unit, as
defined in section in section 1 of the Basic Provisions, may be
divided into optional units if, for each optional unit, you meet all
the conditions of this section. Notwithstanding the provisions of
this section on unit division, no indemnity will be paid for any
loss of production on any unit if the insured produced a crop
sufficient to fulfill the processor contracts forming the basis for
the guarantee, and any indemnity will be limited to the amount
necessary to compensate for loss in yield at the price elected
between production to count and the contract requirements.
(b) Basic units may not be divided into optional units on any
basis other than as described in this section.
(c) If you do not comply fully with these provisions, we will
combine all optional units that are not in compliance with these
provisions into the basic unit from which they were formed. We will
combine the optional units at any time we discover that you have
failed to comply with these provisions. If failure to comply with
these provisions is determined to be inadvertent, and the optional
units are combined into a basic unit, that portion of the additional
premium paid for the optional units that have been combined will be
refunded to you.
(d) All optional units you selected for the crop year must be
identified on the acreage report for that crop year.
(e) The following requirements must be met for each optional
unit:
(1) You must have provided records by the production reporting
date, which can be independently verified, of planted acreage and
production for each optional unit for at least the last crop year
used to determine your production guarantee;
(2) You must plant the crop in a manner that results in a clear
and discernable break in the planting pattern at the boundaries of
each optional unit;
(3) For each crop year, records of marketed production or
measurement of stored production from each optional unit must be
maintained in such a manner that permits us to verify the production
from each optional unit, or the production from each unit must be
kept separate until loss adjustment is completed by us; and
(4) Each optional unit must meet one or more of the following
criteria, as applicable, unless otherwise specified by written
agreement:
(i) Optional units by Section, Section Equivalent, or FSA Farm
Serial Number: Optional units may be established if each optional
unit is located in a separate legally identified section. In the
absence of sections, we may consider parcels of land legally
identified by other methods of measure, such as Spanish grants, as
the equivalent of their sections for unit purposes. In areas that
have not been surveyed using sections are equivalent systems, or in
areas where such systems exist but boundaries are not readily
discernable, each optional unit must be located in a separate farm
identified by a single FSA Farm Serial Number.
(ii) 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 FSA Farm Serial
Number, optional units may be based on irrigated acreage and non-
irrigated acreage (in those counties where ``non-irrigated''
practice is allowed in the actuarial table) if both are located in
the same section, section equivalent, or FSA Farm Serial Number. To
qualify as separate irrigated and non-irrigated optional units, the
non-irrigated acreage may not continue into the irrigated acreage in
the same rows or planting pattern. The irrigated acreage may not
extend beyond the point at which the irrigation system can deliver
the quantity of water needed to produce the yield on which the
guarantee is based, except the corners of a field in which a center-
pivot irrigation system is used will be considered as irrigated
acreage if separate acceptable records of production from the
corners are not provided. If the corners of a field in which a
center-pivot irrigation system is used do not qualify as a separate
non-irrigated optional unit, they will be a part of the unit
containing the irrigated acreage. Non-irrigated acreage that is not
a part of a field in which a center-pivot irrigation system is used
may qualify as a separate optional unit provided that all other
requirements of this section are met.
[[Page 54344]]
(iii) Optional Units on Separate Acreage Planted to Tomatoes: In
California only, in addition to or instead of establishing optional
units by section, section equivalent, or FSA Farm Serial Number,
optional units may be established if acreage planted to tomatoes is
separated by a field that is not planted to tomatoes, or by a
permanent boundary such as a permanent waterway, fence, public road
or woodland. Such optional unit must consist of the minimum number
of acres stated in the Special Provisions. Acreage planted to
tomatoes that is less than the minimum number of acres required will
attach to the closest unit within the section, section equivalent or
FSA Farm Serial Number.
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 for all the
processing tomatoes in the county insured under this policy unless
the Special Provisions provide different price elections by type.
The percentage of the maximum price election you choose for one type
will be applicable to all other types insured under this policy. For
example, if you choose 100 percent of the maximum price election for
one type, you must also choose 100 percent of the maximum price
election for all other types.
(b) Liability under this policy will not exceed the number of
tons required to be accepted by the processor under a processor
contract in effect on or before:
(1) The earlier of August 20 or the date of damage to the
insured crop in all counties with an acreage reporting date of July
15; or
(2) The earlier of the acreage reporting date or the date of
damage in all other counties. (Exclude indemnities that occur in
stage one and replant payments.)
(c) The price election used to determine the amount of an
indemnity is progressive by stage and increases, at specified
intervals, to the price used for final stage losses. Stages will be
determined on an acre basis. The stages and applicable price
elections are:
(1) First stage is from planting until first fruit set. If any
acreage of the insured crop is destroyed in this stage, the price
used to establish the amount of any indemnity owed for such acreage
will be 50 percent of your price election;
(2) Second stage is from the first fruit set until harvest. If
any acreage of the insured crop is destroyed in this stage, the
price used to establish the amount of any indemnity owed for such
acreage will be 80 percent of your price election; and
(3) Third stage (final stage) is harvested acreage. The price
election used in this stage to establish the amount of any indemnity
owed will be 100 percent of your price election.
(d) Any acreage of tomatoes damaged to the extent, that the
majority of producers in the area would not normally further care
for the tomatoes, will be deemed to have been destroyed even though
you may continue to care for it. The price election used to
determine the amount of an indemnity will be that applicable to the
stage in which the tomatoes were destroyed.
(e) The appraised production from bypassed acreage that could
have been accepted by the processor will be included when
determining your approved yield.
(f) Acreage that is bypassed because it was damaged by an
insurable cause of loss to the extent that the processor cannot use
the product will be considered to have a zero yield when determining
your approved yield.
4. Contract Changes
In accordance with section 4 of the Basic Provisions, the
contract change date is August 31 preceding the cancellation date
for California and November 30 preceding the cancellation date for
all other states.
5. Cancellation and Termination Dates
In accordance with section 2 of the Basic Provisions, the
cancellation and termination dates are January 15 in California and
March 15 in all other states.
6. Report of Acreage
In addition to the provisions of section 6 of the Basic
Provisions, you must provide a copy of all processor contracts to us
on or before the acreage reporting date in all counties, unless
otherwise specified in the Special Provisions.
7. Annual Premium
In lieu of the premium amount determinations contained in
section 7 of the Basic Provisions, the annual premium amount per
acre is determined by multiplying the production guarantee per acre
by the price election for the third (final) stage; by the premium
rate; by the insured acreage; by the applicable share at the time of
planting; and ultimately by any applicable premium adjustment
factors contained in the Actuarial Table.
8. Insured Crop
(a) In accordance with section 8 of the Basic Provisions, the
crop insured will be all the tomatoes in the county for which a
premium rate is provided by the actuarial table:
(1) In which you have a share;
(2) That are planted for harvest as processing tomatoes;
(3) That are grown under, and in accordance with, the
requirements of a processor contract executed on or before August 20
in all counties with an acreage reporting date of July 15, or on or
before the acreage reporting date in all other counties, and are not
excluded from the processor contract for or during the crop year;
and
(4) That are not (unless allowed by the Special Provisions or by
written agreement):
(i) Grown on acreage on which tomatoes were grown in either of
the two previous years, except in California;
(ii) Interplanted with another crop; or
(iii) Planted into an established grass or legume.
(b) You will be considered to have a share in the insured crop
if, under the processor contract, you retain control of the acreage
on which the tomatoes are grown, you are at risk of loss, and the
processor contract provides for delivery of processing tomatoes
under specified conditions and at a stipulated price.
(c) A tomato producer who is also a processor may establish an
insurable interest if the following requirements are met:
(1) The processor must comply with these Crop Provisions;
(2) Prior to the sales closing date, the Board of Directors or
officers of the processor must execute and adopt a resolution that
contains the same terms as an acceptable processor contract. Such
resolution will be considered a contract under this policy; and
(3) Our inspection provides that the processing facilities
comply with the definition of a processor contained in these Crop
Provisions.
9. Insurable Acreage
In addition to the provisions of section 9 of the Basic
Provisions:
(a) Any acreage of the insured crop that is damaged before the
final planting date, to the extent that the majority of producers in
the area would normally not further care for the crop, must be
replanted unless we agree that it is not practical to replant; and
(b) We will not insure any acreage that does not meet the
rotation requirements, if applicable, contained in the Special
Provisions.
10. Insurance Period
In lieu of the provisions contained in section 11 of the Basic
Provisions, regarding the end of the insurance period, insurance
ceases at the earlier of the date:
(a) You harvest sufficient production to fulfill your processor
contract if the processor contract stipulates a specific amount of
production to be delivered;
(b) The tomatoes should have been harvested but was not
harvested;
(c) The tomatoes were abandoned;
(d) Harvest was completed;
(e) Final adjustment of a loss was completed; or
(f) The following calendar date for the end of the insurance
period
(1) October 20 in California; and
(2) October 10 in all other states.
11. Causes of Loss
In accordance with the provisions of section 12 of the Basic
Provisions:
(a) Insurance is provided only against the following causes of
loss that occur during the insurance period:
(1) Adverse weather conditions, including:
(i) Excessive moisture that prevents the harvesting equipment
from entering the field or that prevents the timely operation of
harvesting equipment; and
(ii) Abnormally hot or cold temperatures that cause an
unexpected number of acres over a large producing area to be ready
for harvest at the same time, affecting the timely harvest of a
large number of such acres or the processing of such production
being beyond the capacity of the processor, either of which causes
the acreage to be bypassed;
(2) Fire;
(3) Insects, but not damage due to insufficient or improper
application of pest control measures;
(4) Plant disease, but not damage due to insufficient or
improper application of disease control measures;
(5) Wildlife;
(6) Earthquake;
(7) Volcanic eruption; or
(8) Failure of the irrigation water supply, if due to a cause of
loss contained in sections
[[Page 54345]]
11(a)(1) through (7) that occurs during the insurance period.
(b) In addition to the causes of loss excluded by section 12 of
the Basic Provisions, we will not insure against any loss of
production due to:
(1) Acreage being bypassed, if the acreage is bypassed because:
(i) The breakdown or non-operation of equipment or facilities;
or
(ii) The availability of a crop insurance payment. We may deny
any indemnity immediately in such circumstance or, if an indemnity
has been paid, require you to repay it to us with interest at any
time acreage was bypassed due to the availability of a crop
insurance payment;
(2) The processing tomatoes not being timely harvested, unless
such delay in harvesting is solely and directly due to an insured
cause of loss; or
(3) Your failure to follow the requirements contained in the
processor contract.
12. Replanting Payment
(a) In accordance with section 13 of the Basic Provisions, a
replanting payment is allowed if the crop sustained a loss exceeding
50 percent of the plant stand and it is practical to replant.
(b) The maximum amount of the replanting payment per acre will
be the lesser of 20 percent of the production guarantee or three
tons, multiplied by your third stage (final) price election,
multiplied by your share.
13. Duties in the Event of Damage or Loss
In addition to the notice required by section 14 of the Basic
Provisions, you must give us notice:
(a) Not later than 48 hours after:
(1) Total destruction of the tomatoes in the unit; or
(2) Discontinuance of harvest on a unit on which unharvested
production remains;
(b) Within 3 days after the date harvest should have started on
any acreage that will not be harvested. You must also provide
acceptable documentation of the reason the acreage was bypassed.
Failure to provide such documentation will result in our
determination that the acreage was bypassed due to an uninsured
cause of loss. If the crop will not be harvested and you wish to
destroy the crop, you must leave representative samples of the
unharvested crop for our inspection. The samples must be at least 10
feet wide and extend the entire length of each field in the unit.
The samples must not be destroyed until the earlier of our
inspection or 15 days after notice is given to us; and
(c) At least 15 days prior to the beginning of harvest if you
intend to claim an indemnity on any unit, or immediately if damage
is discovered during the 15 day period or during harvest, so that we
may inspect the damaged production. If you fail to notify us and
such failure results in our inability to inspect the damaged
production, we will consider all such production to be undamaged and
include it as production to count. You are not required to delay
harvest.
14. 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 by its respective production
guarantee, by type if applicable;
(2) Multiplying each result of section 14(b)(1) by the
respective price election, by type if applicable;
(3) Totaling the results of section 14(b)(2) if there are more
than one type;
(4) Multiplying the total production to counted (see section
14(c)), for each type if applicable, by its respective price
election;
(5) Totaling the results of section 14(b)(4) if there are more
than one type;
(6) Subtracting the result of section 14(b)(4) from the result
of section 14(b)(2) if there is only one type or subtracting the
result of section 14(b)(5) from the result of section 14(b)(3) if
there are more than one type; and
(7) Multiplying the result of section 14(b)(6) by your share.
For example:
You have a 100 percent share in 50 acres of type A processing
tomatoes in the unit, with a guarantee of 18.8 tons per acre and a
price election of $50.00 per ton. You are only able to harvest 10.0
tons. Your indemnity would be calculated as follows:
(1) 50.0 acres x 18.8 tons = 940.0 tons guarantee;
(2) 940.0 tons x $50.00 price election = $47,000.00 value
guarantee;
(4) 10.0 tons x $50.00 price election = $500.00 value of
production to count;
(6) $47,000.00-$500.00 = $46,500.00 loss; and
(7) $46,500 x 100 percent = $46,500.00 indemnity payment.
You also have a 100 percent share in 50 acres of type B
processing tomatoes in the same unit, with a guarantee of 15.0 tons
per acre and a price election of $35.00 per ton. You are only able
to harvest 5.0 tons. Your total indemnity for both types A and B
would be calculated as follows:
(1) 50.0 acres x 18.8 tons = 940.0 ton guarantee for type A
and 50.0 acres x 15.0 tons = 750.0 ton guarantee for type B;
(2) 940.0 ton guarantee x $50.00 price election = $47,000.00
value of guarantee for type A and 750.0 ton guarantee x $35.00 =
$26,500.00 value of guarantee for type B;
(3) $47,000.00 + $26,500.00=$72,500.00 total value of guarantee;
(4) 10.0 tons x $50.00 price election=$500.00 value of
production to count for type A and 5.0 tons x $35.00 price
election=$175.00 value of production to count for type B;
(5) $500.00 + $175.00=$675.00 total value of production to
count;
(6) $72,500.00-$675.00=$71,575.00 loss; and
(7) $71,575 loss x 100 percent=$71,575.00 indemnity payment.
(c) The total production to count, specified in tons, from all
insurable acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee for acreage:
(A) That is abandoned;
(B) Put to another use without our consent;
(C) 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) Production on acreage that is bypassed unless the acreage
was bypassed due to an insured cause of loss which resulted in
production which would not be acceptable under the terms of the
processor contract;
(iv) Potential production on insured acreage that you intend to
put to another use or abandoned, if you and we agree on the
appraised amount of production. Upon such agreement, the insurance
period for that acreage will end when you put the acreage to another
use or abandon the crop. If agreement on the appraised amount of
production is not reached:
(A) If you do not elect to continue to care for the crop, we may
give you consent to put the acreage to another use if you agree to
leave intact, and provide sufficient care for, representative
samples of the crop in locations acceptable to us, (The amount of
production to count for such acreage will be based on the harvested
production or appraisals from the samples at the time harvest should
have occurred. If you do not leave the required samples intact, or
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); or
(B) If you elect to continue to care for the crop, the amount of
production to count for the acreage will be the harvested
production, or our reappraisal if additional damage occurs and the
crop is not harvested;
(2) All harvested production (in tons) delivered to the
processor which meets the quality requirements of the processor
contract (expressed as usable or payable weight).
(3) All harvested tomato production delivered to processor which
does not meet the quality requirements of the processor contract due
to not being timely delivered.
(d) Once harvest has begun on any acreage covered by a processor
contract that specifies the number of tons to be delivered, the
total indemnity payable will be limited to an amount based on the
lesser of the guaranteed tons, or the tons remaining unfulfilled
under the processor contract.
15. Late and Prevented Planting
The late and prevented planting provisions of the Basic
Provisions are not applicable.
16. Written Agreements.
Terms of this policy which are specifically designated for the
use of written agreements may be altered by written agreement in
accordance with the following:
(a) You must apply in writing for each written agreement no
later than the sales closing date, except as provided in section
16(e);
(b) The application for a written agreement must contain all
variable terms of the
[[Page 54346]]
contract between you and us that will be in effect if the written
agreement is not approved;
(c) If approved, the written agreement will include all variable
terms of the contract, including, but not limited to, crop type or
variety, the guarantee, premium rate, and price election;
(d) Each written agreement will only be valid for one year (If
the written agreement is not specifically renewed the following
year, insurance coverage for subsequent crop years will be in
accordance with the printed policy); and
(e) An application for a written agreement submitted after the
sales closing date may be approved if, after physical inspection of
the acreage, it is determined that no loss has occurred and the crop
is insurable in accordance with the policy and written agreement
provisions.
Signed in Washington, D.C., on October 10, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-27652 Filed 10-17-97; 8:45 am]
BILLING CODE 3410-08-P
