[Federal Register Volume 62, Number 210 (Thursday, October 30, 1997)]
[Rules and Regulations]
[Pages 58621-58628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28771]
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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
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Federal Register / Vol. 62, No. 210 / Thursday, October 30, 1997 /
Rules and Regulations
[[Page 58621]]
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DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 401 and 457
General Crop Insurance Regulations, Canning and Processing Bean
Endorsement; and Common Crop Insurance Regulations, Processing Bean
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 processing beans. 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 bean crop insurance 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 bean
crop insurance endorsement to the 1997 and prior crop years.
EFFECTIVE DATE: December 1, 1997.
FOR FURTHER INFORMATION CONTACT: Ron Nesheim, Insurance Management
Specialist, Research and Development, Product Development Division,
Federal Crop Insurance Corporation, United States Department of
Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)
926-7730.
SUPPLEMENTARY INFORMATION:
Executive Order No. 12866
The Office of Management and Budget (OMB) has determined this rule
to be exempt for the purposes of Executive Order No. 12866, and,
therefore, 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. Thus, 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 the 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 No. 12988 on Civil Justice Reforms. The provisions of this rule
will not have a retroactive effect prior to the effective date. The
provisions of this rule will preempt State and local laws to the extent
such State and local laws are inconsistent herewith. The administrative
appeal provisions published at 7 CFR part 11 must be exhausted before
any action for judicial review may be brought.
Environmental Evaluation
This action is not expected to have a significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review Initiative to eliminate unnecessary or duplicative
regulations and improve those that remain in force.
Background
On Thursday, May 1, 1997, FCIC published a proposed rule in the
Federal Register at 62 FR 23675 to add to the Common Crop Insurance
Regulations (7 CFR part 457), a new section, 7 CFR 457.155, Processing
Bean 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 processing beans
found at 7 CFR 401.118 (Canning and Processing Bean Endorsement). FCIC
also amends 7 CFR
[[Page 58622]]
401.118 to limit its effect to the 1997 and prior crop years.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments and opinions. A total of 27 comments
were received from a reinsured company and an insurance service
organization. The comments received, and FCIC's responses, are as
follows:
Comment: An insurance service organization recommended that several
definitions common to most crops be put into the Basic Provisions.
Response: The Basic Provisions, which are currently in the
regulatory review process, will include definitions of commonly used
terms, and this rule will be revised to delete these definitions when
the Basic Provisions are published as a final rule.
Comment: An insurance service organization recommended that the
sentence in the definition of ``bypassed acreage'' that states
``Bypassed acreage upon which an indemnity is payable will be
considered to have a zero yield for Actual Production History (APH)
purposes'' be deleted since it is addressed elsewhere and does not
belong in the definition.
Response: FCIC has deleted the second sentence from, and revised,
the definition of bypassed acreage. Provisions have been added in
section 3 to explain bypassed acreage when determining approved yield.
Comment: An insurance service organization and a reinsured company
expressed concern with the definition of ``good farming practices''
which makes reference to ``cultural practices generally in use in the
county * * * recognized by the Cooperative State Research, Education,
and Extension Service as compatible with agronomic and weather
conditions in the county.'' The commenters questioned whether cultural
practices that are not explicitly recognized (or possibly known) by the
Cooperative State Research, Education, and Extension Service might
exist. The commenters indicated that the term ``county'' in the
definition of ``good farming practice'' should be changed to ``area.''
The insurance service organization also recommended adding the word
``generally'' before ``recognized by the Cooperative State Research,
Education, and Extension Service * * *.''
Response: The Cooperative State Research, Education, and Extension
Service (CSREES) recognizes farming practices that are considered
acceptable for producing processing beans. If a producer is following
practices currently not recognized as acceptable by the CSREES, such
recognition can be sought by interested parties. Use of the term
``generally'' will only create an ambiguity and make the definition
more difficult to administer. Although the cultural practices
recognized by the CSREES may only pertain to specific areas within a
county, the actuarial documents are on a county basis. Therefore, no
change has been made.
Comment: An insurance service organization recommended that the
definition of ``replanting'' be clarified by inserting ``processing
beans'' between the last two words (``successful'' and ``crop'') of 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 of the damaged or
destroyed crop and then replacing the seed in the insured acreage.
Comment: An insurance service organization recommended that section
2(c) clarify whether optional units are available if the processor
contract stipulates the number of contracted acres, or only if the
contract does not specify an amount of production.
Response: FCIC agrees and has amended section 2(a) to clarify that
for processor contracts that stipulate a specific amount of production
to be delivered, the basic unit will consist of all acreage planted to
the insured crop in the county that will be used to fulfill the
processor contract, and optional units will not be established. The
language in section 2 has also been revised and reformatted to clearly
state the requirements for both the acreage based and production based
processor contracts.
Comment: A reinsured company and an insurance service organization
asked if, in section 2(f)(3) of the proposed rule, measurement of
stored production is applicable to processing beans.
Response: Processing beans are not put into storage before
processing. Therefore, FCIC has removed this provision.
Comment: An insurance service organization recommended removal of
the opening phrase in section 2(f)(4)(ii) of the proposed rule that
states ``In addition to, or instead of, establishing optional units by
section, section equivalent, or FSA Farm Serial Number, * * *'' since
section 2(f)(4) of the proposed rule specifies that ``Each optional
unit must meet one or more of the following criteria, * * *.''
Response: FCIC agrees and has revised section 2(b)(5) of the final
rule accordingly.
Comment: An insurance service organization suggested that section 3
should be part of the Basic Provisions since it appears to be standard
language in most crop provisions.
Response: The requirement that the price election (for each type,
varietal group, etc.) have the same percentage relationship to the
maximum price does not apply to all crop policies. FCIC considered this
suggestion when it revised the Basic Provisions. Section 3(a) is
revised to clarify that the percentage of the maximum price election
the insured chooses for one type will be applicable to all other types
insured under this policy.
Comment: An insurance service organization stated that section 6,
which requires the insured to provide a copy of the processor contract
no later than the acreage reporting date, could provide a loophole by
allowing producers to wait until acreage reporting time to decide if
they want to have coverage.
Response: There is no evidence that allowing the producer to
provide a copy of the processor contract as late as the acreage
reporting date has resulted in producers waiting to decide until the
acreage reporting date if they want coverage. Processing bean producers
usually have a processor contract in-force by the final planting date.
The requirement to provide a copy of the processor contract with the
acreage report is convenient for the producer. Therefore, no change has
been made.
Comment: An insurance service organization questioned whether any
processor contract would allow interplanted processing beans or
processing beans planted into an established grass or legume. The
commenter further indicated that consideration should be given to
inserting the language in section 7(a)(4) of the proposed rule into the
Basic Provisions.
Response: FCIC agrees that processing beans have seldom, if ever,
been interplanted with another crop or planted into an established
grass or legume. However, production practices are constantly evolving.
FCIC chooses to retain the provisions of section 7(a)(3) of the final
rule to accommodate such developments if they should occur. In
addition, the interplanted language is not consistent among the crop
policies and, therefore, will be retained in the crop provisions.
Comment: An insurance service organization indicated that language
in section 7(b) that states ``You will be considered to have a share in
the insured crop if, under the processor contract, you retain
possession of the
[[Page 58623]]
acreage on which the processing beans are grown, * * *'' suggests that
only a landlord would have a share in the insured crop. The commenter
questioned whether the provision in section 7(b) is already covered in
sections 7(a)(1) and (3).
Response: The language in section 7(b) was intended to cover
producers who have a crop share agreement, rent, or own acreage. The
word ``possession'' has been changed to ``control'' for clarification.
Section 7(a) specifies requirements for insurance, while section 7(b)
specifies requirements for a share in the crop. Therefore, both
provisions are necessary.
Comment: A reinsured company and an insurance service organization
questioned whether section 9(b), which states that the insurance period
ceases on the date you harvested sufficient production to fulfill your
processor contract, conflicts with 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 also questioned if the insured would
know when enough production is harvested to fulfill the processor
contract. This commenter asked if production in excess of the
contracted amount is considered production to count for APH or loss
adjustment or whether the processor settlement sheet is an acceptable
record. The insurance service organization noted that the provisions in
section 9(b) state ``* * * the insurance period ends when the
production delivered to the processor equals the amount of production
stated in the processor contract.'' However, the commenter questioned
whether ``delivered to'' is the same as ``accepted by'' the processor.
Response: Section 9(b) does not conflict with section 12(a). For
processor contracts based on a stated amount of production, FCIC is
only insuring the contract amount and the producer can only obtain
basic units by processor contract. Therefore, once the contract is
fulfilled, insurance ceases on the unit and there is no payable loss.
If the contract is not fulfilled and there is still unharvested
production, any insurable cause of loss is covered. With respect to the
issue of production from appraised acreage, such production will not
count toward fulfillment of the processor contract, although it may be
used to determine production to count for the unit or the producer's
approved yield if the acreage is not bypassed due to an insurable cause
of loss that renders such production unacceptable to the processor.
With respect to when the producer would know when the processor
contract was fulfilled, records are kept as production is delivered to
the processor. Therefore, the producer can determine when the contract
was fulfilled. All production from the unit, including any excess of
the amount stated in the contract, will be considered as production to
count when determining the producer's approved yield. For the purposes
of loss adjustment, the amount shown on the settlement sheet, plus any
appraised production that was not bypassed due to an insurable cause
that rendered the production unacceptable to the processor, will be
included as production to count. FCIC has revised section 9(b) to
clarify that insurance ceases when the contract is fulfilled if the
processor contract stipulates a specific amount of production.
Comment: An insurance service organization questioned the provision
in section 10(a)(4), which states that insurance is provided against
``Plant disease on acreage not planted to the processing beans the
previous crop year, * * * '' The commenter assumed this would apply
even if a rotation requirement was not specified in the Special
Provisions.
Response: This provision has been revised to specify that insurance
coverage will be provided against plant disease on acreage not planted
to processing beans the previous crop year, unless provided for in the
Special Provisions or by written agreement, but not damage due to
insufficient or improper application of disease control measures.
Comment: An insurance service organization suggested changing the
wording in section 10(a)(8) to eliminate reference to 10(a)(1) through
(7) because the causes of loss have been identified.
Response: Referencing 10(a)(1) through (7) makes it clear that
failure of the irrigation water supply must be due to these specific
causes of loss. Therefore, no change has been made.
Comment: An insurance service organization questioned how to
determine or enforce the provision in section 10(b) which states that
insurance coverage is not provided if acreage is bypassed based on ``*
* * the availability of a crop insurance payment.''
Response: The adjuster should be able to make this determination
based on factors such as a harvest pattern exists that clearly
indicates the processor is bypassing producers with crop insurance
coverage in favor of producers without crop insurance, even though the
quality of the crop is similar. Language has been added to state that
an indemnity will be denied or have to be repaid if it is determined
that the bypassed acreage was due to the availability of a crop
insurance payment.
Comment: An insurance service organization questioned a need for
section 9(b) of the proposed rule, which states that the insurance
period ends on ``The date you harvested sufficient production to
fulfill your processor contract,'' because section 10(b)(5) of the
proposed rule states that loss of production will not be insured if it
is ``Due to damage that occurs to unharvested production after you
deliver the production required by the processor contract.'' The
commenter indicated that this provision is not necessary since any
damage occurring after delivery would be outside the insurance period,
as indicated in section 9(b).
Response: FCIC agrees and section 10(b)(5) has been deleted.
Comment: An insurance service organization stated that the language
in section 11(c) does not address timely notice if damage is discovered
less than 15 days prior to harvest.
Response: FCIC agrees and has revised section 11(c) to clarify that
an immediate notice of loss is required if damage is discovered within
15 days prior to harvest or during harvest.
Comment: An insurance service organization stated that section
12(b), which explains how a claim is settled, is too wordy and
difficult to follow.
Response: This section has been revised to clarify the settlement
of claims calculation, including the addition of an example.
Comment: An insurance service organization suggested that bypassed
acreage payments by the processor be considered to have some value to
count as with salvage grains.
Response: There is nothing in this policy which precludes a
producer from obtaining any other form of insurance against losses as
long as such insurance is not under the Federal Crop Insurance Act.
Since the producer contributes to the unharvested acreage pool, such
payment will not be considered when determining production to count.
Comment: An insurance service organization asked if section
12(c)(1)(i)(E) of the proposed rule permits bypassed acreage to be
appraised as production to count.
Response: FCIC has removed section 12(c)(1)(i)(E) of the proposed
rule and added section 12(c)(1)(iii) of the final rule to clarify that
production to count includes appraised production on
[[Page 58624]]
acreage that is bypassed unless the acreage was bypassed due to a cause
of loss which would not be acceptable under the terms of the processor
contract.
Comment: An insurance service organization stated that section
12(c)(1)(iii) of the proposed rule 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 be necessary only 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 and an insurance service organization
asked if there will be any provisions for late or prevented planting.
Response: FCIC agrees that a late planting period for processing
beans may be appropriate for some growing areas. Therefore, section 13
is revised to provide a late planting period if allowed by the Special
Provisions and the insured provides written approval from the processor
by the acreage reporting date that it will accept the production from
the late planted acreage. Prevented planting provision has also been
added if available in the Basic Provisions.
Comment: A reinsured company and an insurance service organization
suggested that written agreements should not be limited to one year. If
no substantive changes occur from one year to the next, allow the
written agreement to be continuous.
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 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. Therefore, no change has been made to the
requirement that written agreements be renewed each year. FCIC has
proposed that the Written Agreement provisions be included in the Basic
Provisions.
In addition to the changes described above, FCIC has made the
following minor editorial changes and has amended the following
Processing Bean Crop Insurance Provisions:
1. Amended and clarified the paragraph preceding section 1 to
include the Catastrophic Risk Protection Endorsement.
2. Amended the definitions of ``base contract price,'' ``bypassed
acreage,'' ``processor,'' and ``processor contract'' for clarification.
The definition of ``practical to replant'' is amended to clarify that
it will not be considered practical to replant unless the acreage can
produce at least 75 percent of the approved yield and the processor
agrees in writing that it will accept the production from the replanted
acreage. The definition of ``processor contract'' is amended to clarify
that multiple contracts with the same processor that specify amounts of
production will be considered as a single processor contract unless the
contracts are for different types of processing beans. Added the
definitions of ``approved yield,'' ``processing beans,'' and ``type.''
A definition of ``broker'' is added and pertinent sections of the
policy have been revised to accommodate those producers who have a
broker as an intermediary with a processor.
3. Section 2--Removed the provision in section 2(a) of the proposed
rule that allowed for establishment of a basic unit by snap type beans
or lima type beans, if provided for in the Special Provisions. Section
2(b)(5)(C) of the final rule is added to provide optional units by
processing bean type. This change makes the provision consistent with
other crop provisions offering optional units by type. In addition, the
reference to ``written agreement'' was removed from section 2(b) of the
proposed rule and was added to section 2(b)(5) of the final rule to
clarify which provision may be revised by written agreement.
4. Section 7--Removed section 7(a)(2) of the proposed rule. This
provision is not necessary since section 7(a)(3) of the proposed rule
stated that the processing beans must be grown under, and in accordance
with, the requirements of a processor contract. If grown under a
processor contract, the processing beans will be canned or frozen.
Section 7(c) is amended for clarity.
5. Section 9--Changed the end of insurance to October 5 for all
processing beans in the states of Idaho, Oregon, and Washington.
Section 9(a)(2) is amended to clarify that the insurance period ends
when the crop should have been harvested but was not harvested. Also,
the word ``fresh'' has been removed from sections 9(d)(3), (4) and (5)
because these Crop Provisions are not applicable to fresh market crops.
6. Section 10--Amended section 10(a) for clarity. Section 10(b) is
reformatted and amended for clarity. Also, removed section 10(b)(3) of
the proposed rule which stated ``Due to processing beans not being
timely harvested unless such delay in harvesting is solely and directly
due to an insured cause of loss;'' because it is unnecessary.
7. Section 11--Clarified that the insured must give notice of loss
within 3 days after the date harvest should have started if the acreage
will not be harvested. The insured must also provide documentation
stating why the acreage is bypassed.
8. Section 12--A new section 12(c)(3) of the final rule is added to
clarify that appraised production will include all harvested production
from any other insurable units that have been used to fill the
processor contract for a unit. Section 12(d) of the proposed rule is
deleted because of duplication with section 12(c)(2).
9. Section 14--Clarified that only terms of this policy that are
specifically designated for the use of written agreements may be
altered by written agreement if the listed conditions are met.
List of Subjects in 7 CFR Parts 401 and 457
Crop insurance, Canning and processing beans, Canning and
processing bean endorsement.
Final Rule
Accordingly, for 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--REGULATIONS FOR THE
1988 AND SUBSEQUENT 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 introductory text of Sec. 401.118 is revised to read as
follows:
Sec. 401.118 Canning and processing bean endorsement.
The provisions of the Canning and Processing Bean Endorsement for
the 1988 through 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 457.155 is added to read as follows:
[[Page 58625]]
Sec. 457.155 Processing bean crop insurance provisions.
The Processing Bean 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 policies:
Processing Bean Crop Provisions
If a conflict exists among the policy provisions the order of
priority is as follows: (1) the Catastrophic Risk Endorsement, if
applicable; (2) the Special Provisions; (3) these Crop Provisions;
and (4) the Basic Provisions (Sec. 457.8) with (1) controlling (2),
etc.
1. Definitions
Approved yield. Your yield determined in accordance with 7 CFR
part 400 subpart G.
Base contract price. The price stipulated in the processor
contract for the grade factor or sieve size that is designated in
the Special Provisions, if applicable, without regard to discounts
or incentives that may apply.
Broker. A business enterprise that has all the licenses and
permits required by the state in which it operates, and has a long
term agreement in writing with a processor to purchase and deliver
processing beans.
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.
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 bean processor contract with
the processing company, and recognized by the Cooperative State
Research, Education, and Extension Service as compatible with
agronomic and weather conditions in the county.
Harvest. The mechanical picking of bean pods 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.
Planted acreage. Land in which seed has been placed by a machine
appropriate for the insured crop and planting method, at the correct
depth, into a seedbed that has been properly prepared for the
planting method and production practice. Processing beans must
initially be placed in rows far enough apart to permit mechanical
cultivation. 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, condition of the field, time to
crop maturity, and marketing window, 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 percent of the approved yield, and the processor agrees in
writing that it will accept the production from the replanted
acreage.
Processing beans. Lima, snap, or other bean types identified in
the Special Provisions that are grown under a processor contract to
be canned or frozen and sold for human consumption.
Processor. Any business enterprise regularly engaged in canning
or freezing processing beans for human consumption, that possesses
all licenses and permits for processing beans 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 the contracted beans within a reasonable amount
of time after harvest.
Processor contract. A written agreement between the producer and
a processor, or between the producer and a broker, containing at a
minimum:
(a) The producer's commitment to plant and grow processing
beans, and to deliver the bean production to the processor or
broker;
(b) The processor's, or broker's, commitment to purchase all the
production stated in the processor contract; and
(c) A base contract price.
Multiple contracts with the same processor that specify amounts
of production will be considered as a single processor contract
unless the contracts are for different types of processing beans.
Production guarantee (per acre). The number of tons determined
by multiplying the approved actual production history yield per acre
by the coverage level percentage you elect.
Replanting. Performing the cultural practices necessary to
prepare the land to replace the seed of the damaged or destroyed
crop and then replacing the seed 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.
Type. A category of processing beans identified as a type in the
Special Provisions.
Written agreement. A written document that alters designated
terms of this policy in accordance with section 14.
2. Unit Division
For processor contracts that stipulate:
(a) The amount of production to be delivered:
(1) In lieu of the definition of unit in section 1 of the Basic
Provisions, a basic unit will consist of all acreage planted to the
insured crop in the county that will be used to fulfill the
processor contract;
(2) There will be no more than one basic unit for each processor
contract;
(3) In accordance with section 12, all production from any basic
unit in excess of the amount under contract will be included as
production to count if such production is applied to any other basic
unit for which the contracted amount has not been fulfilled; and
(4) Optional units will not be established.
(b) The number of acres to be planted:
(1) Unless limited by the Special Provisions, a unit as defined
in section 1 of the Basic Provisions (basic unit) may be divided
into optional units if, for each optional unit, you meet all the
conditions of this section. Basic units may not be divided into
optional units on any basis other than as described in this section;
(2) 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;
(3) All optional units you selected for the crop year must be
identified on the acreage report for that crop year;
(4) The following requirements must be met for each optional
unit:
(i) You must have records, 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;
(ii) 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; and
(iii) You must maintain records of marketed production from each
optional unit 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
(5) 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
[[Page 58626]]
as Spanish grants, as the equivalent of sections for unit purposes.
In areas that have not been surveyed using sections or their
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: Optional units may be based on irrigated
acreage and non-irrigated acreage 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.
(iii) Optional Units by Types: Optional units may be established
by type. To qualify as separate optional units, the acreage of one
type may not continue into the acreage of another type in the same
rows or planting pattern.
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 beans in the county insured under this policy unless the
Special Provisions provide different price elections by type. The
percentage of the maximum price elections you choose for one type
will be applicable to all other types insured under this policy.
(b) The appraised production from bypassed acreage that could
have been accepted by the processor will be included when
determining your approved yield.
(c) Acreage that is bypassed because it was damaged by an
insurable cause of loss 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 November 30 preceding the cancellation date.
5. Cancellation and Termination Dates
In accordance with section 2 of the Basic Provisions, the
cancellation and termination dates are March 15.
6. Report of Acreage
In addition to the provisions of section 6 of the Basic
Provisions, you must provide a copy of all processor contracts to us
on or before the acreage reporting date.
7. Insured Crop
(a) In accordance with section 8 of the Basic Provisions, the
crop insured will be all the processing beans in the county for
which a premium rate is provided by the actuarial table:
(1) In which you have a share;
(2) That are grown under, and in accordance with, the
requirements of a processor contract executed on or before the
acreage reporting date and are not excluded from the processor
contract at any time during the crop year; and
(3) That are not (unless allowed by the Special Provisions or by
written agreement):
(i) Interplanted with another crop; or
(ii) 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 processing beans are grown, you are at risk of loss,
and the processor contract provides for delivery of the processing
beans under specified conditions and at a stipulated base contract
price.
(c) A commercial processing bean producer who is also a
processor or broker may establish an insurable interest if the
following requirements are met:
(1) The producer must comply with these Crop Provisions;
(2) Prior to the sales closing date, the Board of Directors or
officers of the processor or the broker must execute and adopt a
resolution that contains the same terms as an acceptable processor
contract. Such resolution will be considered a processor contract
under this policy; and
(3) Our inspection reveals that the processing facilities comply
with the definition of a processor contained in these Crop
Provisions.
8. 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 acreage that does not meet any rotation
requirements, if applicable, contained in the Special Provisions.
9. 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:
(a) The date the processing beans:
(1) Were destroyed;
(2) Should have been harvested but were not harvested;
(3) Were abandoned; or
(4) Were harvested;
(b) The date you harvest sufficient production to fulfill your
processor contract if the processor contract stipulates a specific
amount of production to be delivered;
(c) Final adjustment of a loss; or
(d) The date shown below for the end of the insurance period in
the calendar year in which the processing beans would normally be
harvested, unless otherwise agreed to in writing, as follows:
(1) October 30 for all processing beans in the state of
Arkansas;
(2) October 15 for all processing beans in the states of
Delaware, Maryland, and New Jersey;
(3) October 5 for all processing beans in the states of Idaho,
Oregon, and Washington;
(4) September 30 for snap beans in the state of New York;
(5) September 20 for snap beans in all other states; or
(6) October 5 for lima beans in all other states.
10. 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 is
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 on acreage not planted to processing beans the
previous crop year. (In certain instances, contained in the Special
Provisions or in a written agreement, acreage planted to processing
beans the previous year may be covered. Damage due to insufficient
or improper application of disease control measures is not covered);
(5) Wildlife;
(6) Earthquake;
(7) Volcanic eruption; or
(8) Failure of the irrigation water supply, if due to a cause of
loss contained in section 10 (a)(1) through (7) that occurs during
the insurance period.
(b) In addition to the causes of loss excluded in section 12 of
the Basic Provisions, we will not insure any loss of production due
to:
(1) Bypassed acreage because of:
(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; or
(2) Your failure to follow the requirements contained in the
processor contract.
[[Page 58627]]
11. 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 processing beans on 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 unless we have previously
released the acreage. 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 each 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. 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.
12. Settlement of Claim
(a) We will determine your loss on a unit basis. In the event
you are unable to provide separate, acceptable production records:
(1) For any optional units, we will combine all optional units
for which such production records were not provided; or
(2) For any basic units, we will allocate any commingled
production to such units in proportion to our liability on the
harvested acreage for the units.
(b) In the event of loss or damage 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 12(b)(1) by the
respective price election, by type if applicable;
(3) Totaling the results of section 12(b)(2) if there are more
than one type;
(4) Multiplying the total production to count (see section
12(c)), for each type if applicable, by its respective price
election;
(5) Totaling the results of section 12(b)(4) if there are more
than one type;
(6) Subtracting the results of section 12(b)(4) from the results
of section 12(b)(2) if there is only one type or subtracting the
results of section 12(b)(5) from the result of section 12(b)(3) if
there are more than one type; and
(7) Multiplying the result of section 12(b)(6) by your share.
For example:
You have a 100 percent share in 100 acres of snap type
processing beans in the unit, with a guarantee of 3.0 tons per acre
and a price election of $110.00 per ton. You are only able to
harvest 200 tons. Your indemnity would be calculated as follows:
(1) 100 acres x 3.0 tons = 300 tons guarantee;
(2) 300 tons x $110.00 price election = $33,000.00 value of
guarantee;
(3) 200 tons x $110.00 price election = $22,000.00 value of
production to count;
(4) $33,000.00 - $22,000.00 = $11,000.00 loss; and
(5) $11,000.00 x 100 percent = $11,000.00 indemnity payment.
You also have a 100 percent share in 100 acres of lima type
processing beans in the same unit, with a guarantee of 1.0 ton per
acre and a price election of $225.00 per ton. You are only able to
harvest 75 tons. Your total indemnity for both snap and lima types
processing beans would be calculated as follows:
(1) 100 acres x 3.0 tons = 300 tons guarantee for the snap type,
and 100 acres x 1.0 ton = 100 tons guarantee for the lima type;
(2) 300 tons x $110.00 price election = $33,000.00 value of
guarantee for the snap type, and 100 tons x $225.00 price election
= $22,500.00 value of guarantee for the lima type;
(3) $33,000.00 + $22,500.00 = $55,500.00 total value of guarantee;
(4) 200 tons x $110.00 price election = $22,000.00 value of
production to count for the snap type, and 75 tons x $225.00 price
election = $16,875.00 value of production to count for the lima
type;
(5) $22,000.00 + $16,875.00 = $38,875.00 total value of production
to count;
(6) $55,500.00 - $38,875.00 = $16,625.00 loss; and
(7) $16,625.00 loss x 100 percent = $16,625.00 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) That is put to another use without our consent;
(C) That is damaged solely by uninsured causes; or
(D) For which you fail to provide production records that are
acceptable to us.
(ii) Production lost due to uninsured causes.
(iii) 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 abandon, if you and we agree on the appraised
amount of production. Upon such agreement, the insurance period for
that acreage will end when you put the acreage to another use or
abandon the crop. If agreement on the appraised amount of production
is not reached:
(A) If you do not elect to continue to care for the crop, we may
give you consent to put the acreage to another use if you agree to
leave intact, and provide sufficient care for, representative
samples of the crop in locations acceptable to us (The amount of
production to count for such acreage will be based on the harvested
production or appraisals from the samples at the time harvest should
have occurred. If you do not leave the required samples intact, or
fail to provide sufficient care for the samples, our appraisal made
prior to giving you consent to put the acreage to another use will
be used to determine the amount of production to count); or
(B) If you elect to continue to care for the crop, the amount of
production to count for the acreage will be the harvested
production, or our reappraisal if additional damage occurs and the
crop is not harvested.
(2) All harvested processing bean production from the insurable
acreage. The amount of such production will be:
(i) The usable tons of processing beans shown on the processor
settlement sheet, if available; or
(ii) Determined by dividing the dollar amount paid, payable, or
which should have been paid under the terms of the processor
contract for the quality and quantity of beans to be delivered to
the processor by the base contract price per ton; and
(3) All harvested processing bean production from any other
insurable units that have been used to fulfill your processor
contract for this unit.
13. Late and Prevented Planting
Late planting provisions are not applicable to processing beans
unless allowed by the Special Provisions and you provide written
approval from the processor by the acreage reporting date that it
will accept the production from the late planted acres when it is
expected to be ready for harvest. Prevented planting insurance will
be available if contained in the Basic Provisions.
14. Written Agreement
Terms of this policy that 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
14(e);
(b) The application for a written agreement must contain all
variable terms of the 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 a 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.
[[Page 58628]]
Signed in Washington, D.C., on October 27, 1997.
Suzette M. Dittrich,
Deputy Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-28771 Filed 10-29-97; 8:45 am]
BILLING CODE 3410-08-P
