[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Rules and Regulations]
[Pages 6099-6110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3327]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 /
Rules and Regulations
[[Page 6099]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Parts 433 and 457
RIN 0563-AB02
Common Crop Insurance Regulations, Dry Bean Crop Insurance
Provisions; and Dry Bean Crop Insurance Regulations
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 dry 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 dry bean
crop insurance regulation with the Common Crop Insurance Policy for
ease of use and consistency of terms, and to restrict the effect of the
current dry bean crop insurance regulation to the 1996 and prior crop
years.
EFFECTIVE DATE: February 11, 1997.
FOR FURTHER INFORMATION CONTACT: Arden Routh, Program Analyst, 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, 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, data, and opinions on information
collection requirements previously approved by OMB under OMB control
number 0563-0003 through September 30, 1998. 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 impact on a substantial
number of small entities. The effect of this regulation on small
entities will be no greater than on larger entities. Under the current
regulations, a producer is required to complete an application and an
acreage report. If the crop is damaged or destroyed, the insured is
required to give notice of loss and provide the necessary information
to complete a claim for indemnity.
The insured must also annually certify to the previous years
production if adequate records are available to support the
certification. The producer must maintain the production records to
support the certified information for at least three years. This
regulation does not alter those requirements.
The amount of work required of the insurance companies delivering
and servicing these policies will not increase significantly from the
amount of work currently required. This rule does not have any greater
or lesser impact on the producer. 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 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order No. 12778
The Office of the General Counsel has determined that these
regulations meet the applicable standards provided in sections 2(a) and
2(b)(2) of Executive Order No. 12778. 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 Tuesday, November 26, 1996, FCIC published a proposed rule in
the Federal Register at 61 FR 60049-60057 to add to the Common Crop
Insurance Regulations (7 CFR part 457) a new section, 7 CFR 457.150,
Dry Bean Crop Provisions. The new provisions will be
[[Page 6100]]
effective for the 1997 and succeeding crop years. These provisions will
replace and supersede the current provisions for insuring dry beans
found at 7 CFR part 433 (Dry Bean Crop Insurance Regulations). FCIC
also amends 7 CFR part 433 to limit its effect to the 1996 and prior
crop years. FCIC will later publish a regulation to remove and reserve
part 433.
Following publication of the proposed rule, the public was afforded
30 days to submit written comments, data, and opinions. A total of 80
comments were received from the crop insurance industry and FCIC. The
comments received, and FCIC's responses, are as follows:
Comment: The crop insurance industry questioned if consideration
had ever been given to having two bean polices, one for contract seed
beans and one for dry beans. It would be easier for policyholders to
have crop provisions that address only the kind of beans they are
insuring.
Response: FCIC will consider this option for a future rule.
However, there is not sufficient time to divide this policy for the
1997 crop year. Therefore, no change has been made.
Comment: The crop insurance industry recommended defining
``properly handled.''
Response: The requirements for handling seed beans are contained in
the seed bean processor contract. Therefore, it would be difficult for
FCIC to define ``properly handled'' due to the differing requirements
of seed bean companies. However, FCIC will amend the definition of
``actual value'' to clarify that production must be handled in
accordance with requirements contained in the seed bean processor
contract.
Comment: The crop insurance industry recommended that the
definition of ``Base price'' be amended to exclude any bonus offered
when the germination percentage is above the minimum required by the
seed contract.
Response: FCIC agrees with the comment and has amended the
definition accordingly.
Comment: The crop insurance industry expressed confusion with the
definitions of ``beans,'' ``dry beans,'' and ``contract seed beans.''
The definition of ``contract seed beans,'' is also covered by the ``dry
beans'' definition which makes the definition of ``beans'' seem
redundant. The commenter questions if the definition for ``dry beans''
needs to include the intended use of the production.
Response: Throughout these provisions the term ``beans'' applies to
both dry beans and contract seed beans. The term ``dry beans'' includes
all classes of beans included in The United States Standards for Beans.
The term ``contract seed beans'' distinguishes dry beans grown under a
contract for the specific purpose of producing seed for a subsequent
crop year. The definition of ``dry beans'' was changed to exclude
contract seed beans.
Comment: The crop insurance industry agreed that the definition for
``county'' should be deleted in these provisions so that the definition
in the Basic Provisions will be effective. The commenter emphasized
that if these provisions are approved for the 1997 crop year, these
changes and subsequent procedures need to be issued soon enough for
companies to provide training to their agents, rearrange APH data bases
for units that previously included land in another county, and to allow
policyholders to decide whether to insure any land in another county in
which they have an interest.
Response: FCIC will provide instructions for changing the data
bases for units that previously included land in another county. These
instructions will be made available at the time the policy is released.
FCIC does not anticipate that a large number of producers farm in more
than one county and, therefore, does not expect a large number of data
base revisions to be necessary.
Comment: The crop insurance industry was concerned with the
definition of ``Good farming practices,'' which makes reference to
``generally recognized by the Cooperative Extension Service.'' The
commenters indicated that there are areas or situations where good,
accepted farming practices may not necessarily be recognized by the
Extension Service.
Response: FCIC has removed the word ``generally'' from this part of
the definition. However, the Cooperative State Research, Education, and
Extension Service recognizes most farming practices that are considered
acceptable for producing beans. The use of practices not recognized as
acceptable by the Cooperative State Research, Education, and Extension
Service provides no standards by which to measure performance.
Comment: The crop insurance industry recommended adding the words
``and quality'' after the word ``quantity'' in the definition of
``irrigated practice.'
Response: Water quality is an important issue. However, since no
standards or procedures have been developed to measure water quality
for insurance purposes, quality cannot be included in the definition.
Therefore, no change has been made.
Comment: A representative of FCIC recommended changing the second
sentence in the definition of ``local market price'' to ``Moisture and
factors * * *'' and delete ``such as moisture content.''
Response: FCIC agrees with the comment and has amended the
definition accordingly.
Comment: The crop insurance industry recommended changing the
definition of ``net price'' to read, ``The dollar value of dry bean
production received or that could have been received * * *''
Response: FCIC agrees with comment and has amended the definition
accordingly.
Comment: One comment received from the insurance industry
recommended changing the definition of ``pick'' to consider defects
based on the original grade of the beans.
Response: Dockage does not include defects to the beans and,
therefore, should not be included in any calculation of the pick, which
applies only to defects of the beans. Therefore, no change has been
made.
Comment: The crop insurance industry recommended adding a final
sentence to the definition of ``prevented planting,'' which would
require the insured to have past history of the bean type which the
insured is declaring as being prevented from being planted.
Response: FCIC cannot penalize new producers of a bean type, who
can prove that they had the inputs available to plant that particular
bean type, by denying them prevented planting coverage. Therefore, no
change has been made.
Comment: A representative of FCIC recommended replacing the
reference to ``Special Provisions'' in the definition of ``Production
guarantee (per acre)'' with ``Actuarial Table,'' since the adjustment
factors are in the Actuarial Table and not the Special Provisions.
Response: FCIC agrees with the comment and has amended the
definition accordingly.
Comment: The crop insurance industry questioned if the term
``production guarantee'' applies only to dry beans and if the term
``amount of insurance'' is used only for contract seed beans. If so, it
would be helpful to identify dry beans in the definition of
``production guarantee'' and include a definition for ``amount of
insurance'' for contract seed beans.
Response: The term ``production guarantee'' applies to both dry
beans and contract seed beans. The amount of insurance for contract
seed beans is
[[Page 6101]]
obtained by using the production guarantee per acre for each contract
seed bean variety in the unit, as provided in section 3(b) of these
provisions. Therefore, no change has been made.
Comment: The crop insurance industry recommended changing the
definition of ``Replanting.'' The commenter indicated that the wording
``* * * replace the bean seed and then replacing the bean seed * * *''
is confusing and awkward.
Response: FCIC agrees with the comment and will clarify the
definition accordingly. Comment: The crop insurance industry and a
representative of FCIC indicated that the definition of ``Seed
company'' should not limit the seed company to only being a
corporation.
Response: FCIC agrees with the comments and has amended the
definition.
Comment: The crop insurance industry questioned if the term
``type'' applies only to dry edible beans. If so, the definition should
be clarified.
Response: For the purpose of establishing insurability of the crop,
FCIC's Special Provisions identify classes of all beans as types.
Contract seed beans are a specific type under a seed bean processor
contract.
Comment: The crop insurance industry recommended clarifying the
language of section 2(a) of the proposed rule by substituting language
similar to that contained in section 2(a) of the Sugar Beet Crop
Provisions. The wording of this section would be ``Unless limited by
the Special Provisions, a unit (basic unit) as defined in section 1
(Definitions) of the Basic Provisions (Sec. 457.8), may be divided * *
*''
Response: FCIC agrees with the comment and has amended section 2(a)
of the proposed rule to indicate that a unit as defined in the Basic
Provisions is a basic unit.
Comment: A comment from the crop insurance industry asked the
following: (1) Are optional units available by type or variety for
contract seed beans; (2) if an insured has a processor contract for one
seed variety and another processor contract for another seed variety,
would each variety be eligible for a separate unit; and (3) if the
contract specifies an amount of production rather than the number of
acres, are optional units available?
Response: Optional units are only available for contract seed beans
if the contract specifies a number of acres under contract and all
acreage under the seed bean processor contract will be included in the
optional unit. There are no separate optional units by type for
contract seed beans. Optional units are not available for contract seed
beans if the seed bean processor contract specifies an amount of
production. Section 2 has been amended to clarify the available
optional units for contract seed beans.
Comment: The crop insurance industry recommended that section 2(c)
of the proposed rule be clarified to indicate that it affects only
optional units by section and irrigated or non-irrigated practices and
does not authorize separate optional units for different types of seed
beans.
Response: Types of contract seed beans do not qualify for optional
units. Optional units by type, section, or irrigation practice are
available for contract seed beans if the seed bean processor contract
specifies the number of acres under contract. The provisions in section
2 have been amended accordingly.
Comment: Representatives of FCIC questioned the need for the
provisions contained in section 2(c) of the proposed rule, since the
definitions of ``base price,'' ``contract seed beans,'' and ``seed bean
processor contract,'' specify that acreage is not eligible to be
insured as seed beans if the total production is not contracted. The
commenter recommended deleting section 2(c) of the proposed rule.
Response: Section 2(c) of the proposed rule is necessary to protect
the integrity of the program. The insured production is determined
based on the number of acres under contract. If FCIC allows optional
units when the contract only specifies an amount of production, this
amount of production is prorated over the optional units to determine
the per unit amount of insurance. If the value of the production from
any unit is less than the amount of insurance for that unit, an
indemnity is paid, even though the insured may have fulfilled all
obligations under the contract from production in other units. This
will result in FCIC insuring amounts in excess of that under contract,
which would adversely affect the actuarial soundness of the program.
Comment: The crop insurance industry and a representative of FCIC
recommended clarifying the last sentence of section 2(d) of the
proposed rule. The commenter believes that the current wording may lead
the insured to believe that premium may be refunded any time optional
units are combined. Premium is refunded when there are no optional
units within a basic unit. One of the comments recommended changing the
provisions to read as follows: ``If failure to comply with the
provisions is determined to be inadvertent and if all of the optional
units within a basic unit are combined, that portion of the premium
paid for the purpose of electing optional units will be refunded to
you.''
Response: FCIC agrees with the comment and has amended the
provision in redesignated section 2(e).
Comment: A representative of FCIC recommended clarifying the
language in section 2(e) of the proposed rule to indicate that optional
units not planted in the current crop year need not be identified on
the acreage report.
Response: FCIC has clarified this provision in redesignated section
2(f) to indicate that only those optional units established for the
specific crop year need be identified on the acreage report.
Comment: The insurance industry indicated that provisions in
section 2(f)(4)(i) of the proposed rule authorize optional units by
type for dry beans. The commenter questioned if optional units by bean
type are available for contract seed beans, since the definition of
``bean'' suggests it applies to all types of dry beans. This language
needs to be more clearly distinguished. The commenter recommended that
contract seed beans and other dry beans should be handled as separate
basic units since procedures will be more complicated under these
provisions. Production of one type would count against the guarantee of
another type if insured as one basic unit, which creates difficulties.
The commenter also questioned if the premium rates are being adjusted
to reflect the change from basic to optional units by type (will the
premium rates be 10-11 percent higher than last year's premium rates)?
Policyholders must be provided the necessary information and advance
time to decide how to accommodate the extra costs and requirements
involved.
Response: Optional units by type are only applicable to dry beans
and the provision has been amended for clarification. Contract seed
beans qualify as a basic unit. If the policyholder elects to obtain
optional units, the premium rates will be adjusted to reflect any
additional risk of loss. Any changes in the insurance coverage,
including premium rates, will be available on or before the contract
change date. This should provide the policyholder with ample time to
make their business decisions. The provisions in section 2 have been
amended accordingly.
Comment: The crop insurance industry and a representative of FCIC
questioned if the language in section 2(f)(4)(ii) of the proposed rule
should be amended to read ``In addition to, or instead of * * *'' or if
that phrase
[[Page 6102]]
should be omitted since the possibility of ``besides or instead'' is
covered by the statement in section 2(f)(4) of the proposed rule that
``one or more'' of these criteria must be met for each optional unit.
Response: FCIC agrees that the phrase ``In addition to, or instead
of'' should be incorporated into the first sentence of redesignated
section 2(g)(4)(ii), and has modified this provision accordingly.
Comment: The crop insurance industry had the following comments
regarding the provisions in section 3(a). The provisions allow
different price election percentages by dry bean type, which is not
consistent with other crop provisions unless each type is treated as a
separate crop. Based on the provisions of section 3(a), one comment
questioned the change that no longer allows dry bean basic units by
type. The comment indicated that if different price election
percentages are allowed, each type should continue to be a separate
basic unit. One of the comments questioned if other crops will be
changed to permit different price percentages within the same basic
unit and how the computer edits will handle these situations.
Response: Producers can elect optional units for different types of
dry beans. However, in those cases where multiple types are in a single
unit, FCIC has provided producers the flexibility to select a different
percentage of the maximum price election for each type. The costs to
produce different types of dry beans can vary considerably as can the
economic significance of each to the producer. It may be necessary for
some insurance providers to reprogram computer systems to allow this
variation in price election percentages.
Comment: The crop insurance industry questioned the new requirement
that the producer submit a copy of the seed bean processor contract at
acreage reporting time. What would happen if an acreage report is
received without a copy of the processor contract? This requirement
could lead to policyholders waiting until acreage reporting time to
decide if they want to insure the crop as contract seed beans.
Response: FCIC has always required the seed bean processor contract
to be executed on or before the acreage reporting date. Now, FCIC
requires the insured to submit a copy of the contract no later than
that date in order to ensure that such contract exists, prior to any
likely loss. Thus, there is no greater effect upon the producer's
decision as to how to insure the beans. If a copy of the contract is
not provided at the time acreage is reported, the beans may be
insurable as dry beans, but not as contract seed beans.
Comment: The crop insurance industry questioned the language of
section 7(a)(2)(i), which references dry beans. The commenter explained
that the definition of ``dry beans'' seems to include both dry edible
beans and contract seed beans instead of distinguishing between the
two.
Response: Contract seed beans are defined separately from dry beans
so that they may be identified and treated differently in several
sections of the policy, including price election determination, unit
division, insured crop, and loss calculations. FCIC agrees that some
contract seed beans would qualify under the definition of dry beans.
Therefore, FCIC has amended the definition of dry beans to exclude
contract seed beans.
Comment: A representative of FCIC stated that section 7(a)(3) of
the proposed rule is not necessary because section 8(b)(4) of the Basic
Provisions states that we do not insure volunteer crops.
Response: FCIC agrees and has deleted this provision and renumbered
the remaining provisions.
Comment: The crop insurance industry questioned the reference to
other ``types of beans'' in section 7(c) and whether it applies only to
dry edible beans or if it also applies to contract seed beans.
Response: The reference to other ``types of beans'' in section 7(c)
applies to classes of dry beans not listed as a type of dry beans in
the Special Provisions. Section 7(c) has been amended to specify ``dry
beans.''
Comment: The crop insurance industry recommended putting a period
at the end of section 8(a) and deleting the word ``or.'' As written,
this provisions could be misunderstood to mean that as long as the
rotation requirements are met, the insured would not have to replant
even if practical, or vice versa. Presumably, each of the statements in
section 8 (a) and (b) stand alone.
Response: The use of ``or'' has the effect of making these stand
alone requirements as written, if the insured fails to comply with
either requirement, the acreage would be uninsurable. Therefore, no
change will be made.
Comment: The crop insurance industry asked the following questions:
(1) Whether dry bean acreage that is replanted to another bean type
would be insured as a separate optional unit, and if so, would there be
an additional premium charged; (2) how the actual production history
(APH) yield for the following year would be affected; and (3) whether
the guarantee will be based on the type of dry bean originally planted
or the type of dry bean that was replanted. They also had the following
recommendations: (1) keep the original guarantee for acreage that is
replanted to another bean type; (2) that no additional premium be
charged for the new optional unit; (3) that the APH form be updated
based on the replanted type; and (4) by adding a sentence stating ``If
the crop is replanted, the price of the replanted type will determine
your price election.''
Response: The guarantee and premium must be based on the actual
production capability and risks associated with the type planted and
produced to maintain the actuarial soundness of the program. Optional
unit division will be available for the replanted type in accordance
with the provisions of section 2. Production from the replanted acreage
will be used to update APH records for the type replanted. The original
planted type will not be included in the APH data base for that
particular year. Section 11(d) has been added to specify that the
guarantee and premium amount for the replanted acreage will be based on
the replanted type when acreage is replanted to a different insurable
type. No premium will be due for the original type when acreage is
replanted to a different type.
Comment: The crop insurance industry questioned if replanting
payments are available for contract seed bean varieties.
Response: Provisions in section 11 allow a replanting payment for
``the bean crop'' which includes both dry beans and contract seed
beans.
Comment: The crop insurance industry indicated that language in
section 13(b) is not as clear as in other crop provisions. The comment
recommended that the provisions start as 13(b)(1) ``For each dry bean
type:'' followed by sub-items for the calculations in (1)-(3); then
section 13(b)(2) would be ``For each contract seed bean variety:'' etc.
Response: The provisions were written in this format to demonstrate
how to settle a claim when both dry beans and contract seed beans are
insured in one unit. If a unit contains only contract seed beans or
only dry beans the provisions that pertain to the kinds of beans that
are not in the unit are disregarded. Therefore, no change has been
made.
Comment: The crop insurance industry recommended revising section
13(c)(1)(i) to read ``Multiply the actual value received, actual value
at time of adjustment, or base price per pound, whichever is greater,
by the price election percentage you selected; and''
[[Page 6103]]
Response: Adding the suggested language would be redundant with the
language contained in the definition of ``actual value.'' In addition,
not all insurance providers require that the insured select a
percentage. Therefore, no change has been made.
Comment: The crop insurance industry recommended adding the word
``harvestable'' to section 13(d)(1) so that it would read, ``All
appraised harvestable production as follows:''
Response: When making an appraisal, the loss adjuster considers
whether the crop can be harvested. Therefore, no change has been made.
Comment: The crop insurance industry recommended clarifying section
13(d)(1)(i)(D). It is not necessary to use the word ``acceptable''
twice in this section.
Response: FCIC agrees with the comments and has amended the
provision accordingly.
Comment: The crop insurance industry questioned whether the
reference in section 13(d)(1)(iii), to ``dry beans'' excludes contract
seed beans.
Response: The provisions allow adjustment for quality deficiencies
and excess moisture for mature unharvested dry beans only.
Comment: The crop insurance industry recommended that section
13(d)(1)(iv) be revised as follows: (1) Add the phrase ``harvestable
beans'' to section 13(d)(1)(iv)(A) which would make the section read:
``* * * (The amount of production to count for such acreage will be
based on the harvested production or appraisals of harvestable beans
from the samples at the time harvest should have occurred * * *'' (2)
Add the phrase ``of harvestable beans'' to section 13(d)(1)(iv)(B),
which would make this section read: ``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 of harvestable beans if
additional damage occurs and the crop is not harvested; and'' The
comment also questioned the advisability of ``leaving representative
samples'' when agreement on the appraised amount of production can not
be reached. The commenter recommended the use of Arbitration (section
17 of the Basic Provisions) as the preferable process when agreement on
the appraised amount of production can not be reached.
Response: The ability to harvest the crop is considered when making
appraisals of the crop. Representative samples are the most accurate
method available to determine an accurate representation of production
when the parties disagree on the amount of appraised production and it
allows the insured to put most of the acreage to another use. If it is
not practical to leave representative samples the insurance provider
does not have to require such samples be left. Therefore, no change has
been made.
Comment: The crop insurance industry recommended changing the order
of the last two sentences of section 13(e) so the exclusion of these
adjustments for contract seed beans does not interrupt the information
that applies to dry edible beans.
Response: FCIC agrees with the comment and has amended the
provision accordingly.
Comment: A representative of FCIC recommended deleting any
reduction in the amount of production to count due to ``pick'' since it
is not a term used in ``The United States Standards for Beans'' upon
which quality adjustment is based. The reason for an excessive amount
of ``pick'' in the beans (other than damage) is generally due to
farming or cultural practices. ``Pick'' is normally controllable by the
producer. ``Pick'' charts are never the same two years in a row and
different charts are used each year by different bean dealers. ``Pick''
is driven by the market and supply and demand, depending on the size of
the crop in a given area. The commenter further stated that numerous
studies have been made on whether ``pick'' should be used as a
reduction of production to count, and each time it has been determined
that it is not feasible.
Response: ``Pick'' currently is used for quality adjustment
procedures in certain areas and has been found to be an acceptable
method to establish quality. It is defined in the rule. Therefore, no
change has been made.
Comment: The crop insurance industry recommended adding the phrase:
``and the beans are to be sold at time of adjustment or sold based on
the original grade;'' at the end of both sections 13(e)(2) (i) and
(ii).
Response: Neither FCIC nor the insurance provider can require the
insured to sell the production at the time of adjustment as a condition
of obtaining quality adjustment. Quality adjustments are applied at the
time of loss adjustment. Any further damage, whether the crop is sold
or not, is not covered. Therefore, no change has been made.
Comment; The crop insurance industry questioned if it was necessary
to say both ``damaged'' and ``badly damaged'' in section 13(e)(2)(ii).
The commenter recommended just the term ``damage'' should suffice.
Response: The provisions are consistent with different degrees of
damage defined in ``The United States Standards for Beans.'' Therefore,
no change has been made.
Comment: The crop insurance industry stated that dry beans are
rarely stored in most states. The adjuster would be required to obtain
a sample of the beans prior to or during harvest. Most samples of beans
are provided by the facility storing or purchasing the beans. It is
therefore unlikely that they are a ``disinterested third party,'' as
stated in section 13(e)(3)(iii). The commenter recommended that the
language be revised to include the ``place of storage or sale if the
company feels the sample is consistent with the quality of beans in the
surrounding area.''
Response: All samples must be obtained by disinterested third
parties to assure that such samples are genuinely representative of the
total production. If the insurance provider believes the samples were
not obtained in this manner, or that they are not representative, they
should not accept the results. Therefore, no change has been made.
Comment: The crop insurance industry recommended adding the phrase
``based on the applicable grade or pick which the production is to be
sold or sold at time of adjustment;'' at the end of section
13(e)(4)(i).
Response: As stated above, the insurance provider cannot require
the sale of the production at the time of loss adjustment or at any
other time. The amount of loss, including any quality adjustments, are
made at the time of loss adjustment and any subsequent damage is not
covered, so the time of sale should not affect this determination.
Therefore, no change has been made.
Comment: The crop insurance industry stated that conversion factors
adopted for several crops have provided the industry with consistent
quality adjustment, generally unaffected by the marketplace, and
questions whether FCIC intends to establish conversion charts for all
states in which dry beans are insurable.
Response: FCIC agrees that studies should be made to determine if
similar conversion charts for dry beans can be developed. Until this
can be further analyzed, no change will be made.
Comment: The crop insurance industry: (1) Recommended adding
``based on the applicable grade or pick for the production which you
will receive * * *'' at the end of the first sentence and after the
word ``production'' in the second sentence of section 13(e)(4)(ii)(A);
and (2)
[[Page 6104]]
questioned whether the current year's maximum price election for the
type should be used when a processor refuses to quote a No. 2 price.
Response: The price should be determined based on the quality and
quantity of the production as it was originally delivered and the
provisions clearly indicate that the value of the damaged production is
used in this calculation. Therefore, the recommended change has not
been made. Further, the current year's maximum price election is used
only when a local market price is not available. A local market price
may be established using price quotes from usual marketing outlets in
the area. Refusal of one processor to quote a price does not
automatically mean a local market price is not available.
Comment: One comment received from the crop insurance industry
recommended adding ``(to include trading tare for grade to obtain a
higher grade and price),'' after the word ``processing'' in section
13(e)(4)(ii)(A)(3).
Response: FCIC agrees with the comment and has amended the
provisions accordingly.
Comment: The crop insurance industry recommended that late and
prevented planting coverage should not be provided on crops grown under
contract with a processor. The processor determines what the producer
does if the insured crop is not planted during the normal planting
period.
Response: The inclusion of late and prevented planting is
appropriate for contract seed beans. As the comment indicates, the
processor may or may not allow planting within the late planting
period. Congress has determined that marketing windows should be a
factor in determining whether a crop has been prevented from planting.
The contracted planting period, and intended harvest period, is
considered as a marketing window. However, if planting is allowed under
the contract, and the crop can reach maturity, coverage should be
provided. Therefore, no change has been made.
Comment: The crop insurance industry recommended adding the phrase
``to a type for which you have history'' after the word ``planted'' in
section 14(c)(1).
Response: Changing the provision to require past history of the
bean type would prevent a new producer from obtaining late planting
coverage or diversifying their production. To protect the integrity of
the program, the insurance provider should require the producer to
prove that the producer had the inputs available to plant the new bean
type. Therefore, no change has been made.
Comment: The crop insurance industry recommended adding the phrase
``type for which you have history'' after the words ``insured crop'' in
the second and last sentences of section 14(d)(1)(ii) and at the end of
the first sentence of section 14(d)(1)(iii)(B).
Response: Changing the provision as suggested would prevent a new
producer from having late or prevented planting coverage or
diversifying their production. Therefore, no changes has been made.
Comment: The crop insurance industry and a representative of FCIC
recommended eliminating late and prevented planting provisions that
reference participating in a USDA program that limits acreage planted,
compliance with conservation plans, and base acreage. These do not
apply.
Response: FCIC agrees that acreage limiting programs and base
acreage do not apply to dry beans and has amended the appropriate
provisions. However, conservation plans may allow the insurance
provider to verify an intent to produce or not produce the crop.
Therefore, provisions regarding the use of conservation plans have not
been changed.
Comment: The crop insurance industry and a representative of FCIC
asked whether the prevented planting coverage available when a
substitute crop is planted will be dropped, or at least revised, for
all affected crops for the 1997 crop year, and whether it is possible
to remove (or revise) redesignated sections 14(d)(1)(iii)(B) and
14(d)(2)(iii)(B).
Response: The provisions that allow a prevented planting guarantee
when a substitute crop is planted are under review for all affected
crops for the 1998 crop year. Any changes will be made in a separate
rule for all affected crop provisions. No change will be made in these
provisions to maintain consistency with prevented planting provisions
for other crops.
Comment: The crop insurance industry questioned if the provisions
in section 14(d)(4)(ii) apply to dry beans only since ``dry beans'' are
referenced, or if this carryover prevented planting coverage would be
different for contract seed beans due to the requirement that they are
to be grown under a contract with a processor.
Response: The Federal Crop Insurance Act requires the insurance
period for prevented planting to begin on the sales closing date for
the previous crop year if coverage has been continuous. Therefore, this
``tail coverage'' would apply if any beans, including contract seed
beans, were insured previously. This provision has been clarified by
replacing the term ``dry beans'' with the term ``beans.''
Comment: The crop insurance industry recommended limiting the
number of contract seed bean acres eligible for prevented planting to
the number of acres that are under the processor contract for the crop
year.
Response: FCIC agrees with the comment and has amended the
provisions in section 14(d)(5)(iv)(A) to limit the number of acres
eligible for prevented planting to those specified in the seed bean
processor contract or the number needed to produce the contracted
production based on the APH yield for the acreage.
Comment: The crop insurance industry asked whether the language
contained in section 14(d)(5)(iv)(E) regarding double-cropping would be
liberalized or if proof that the acreage has a history of double-
cropping in each of the last four years would still be required. The
comment recommended changing the words ``* * * the acreage has a
history * * *'' to ``* * * the farm has a history * * *''
Response: The recommended change would allow double benefits on an
entire farm even though a very small number of acres may have been
double-cropped in the past. Therefore, no change has been made.
Comment: The crop insurance industry recommended revising section
14(d)(5)(v) if the current language allows use of total acreage from
both dry edible beans and contract seed beans for determining eligible
prevented planting acreage. The proposed provision could result in a
prevented planting payment for more than the acreage under contract for
contract seed beans.
Response: FCIC has revised section 14(d)(5)(iv)(A) to limit the
number acres of contract seed beans that are eligible for prevented
planting to the number of acres under contract in the current year.
Comment: The crop insurance industry suggested combining the
provisions contained in section 15(e) with the provisions in section
15(a).
Response: Approval of written agreements requested after the sales
closing date is the exception, not the rule. Therefore, these
provisions should be kept separate.
Comment: The crop insurance industry recommended that the
requirement for a written agreement to be renewed each year be removed.
Terms of the agreement should be stated in the agreement to fit the
particular situation for the policy, or if no substantive changes occur
from one year
[[Page 6105]]
to the next, allow the written agreement to be continuous.
Response: Written agreements are intended to change policy terms or
permit insurance in unusual situations where such changes will not
increase risk. If such practices continue year to year, they should be
incorporated into the policy or Special Provisions. It is important to
minimize exceptions to assure that the insured is well aware of the
specific terms of the policy. Therefore, no change will be made.
In addition to the changes described above, FCIC has made the
following changes to the Dry Bean Provisions:
1. Section 1--Amended the definition of ``practical to replant'' to
specify that it will not be considered practical to replant contract
seed beans unless production from the replanted acreage can be
delivered under the terms of the seed bean processor contract.
2. Section 14(d)(3)-Clarified that the insured must have possessed
the inputs to plant and produce the insured crop.
3. Revised part 433 to restrict its effect to the 1996 and prior
crop years.
Good cause is shown to make this rule effective upon publication in
the Federal Register. This rule improves the dry bean insurance
coverage and brings it under the Common Crop Insurance Policy Basic
Provisions for consistency among policies. The earliest contract change
date that can be met for the 1997 crop year is February 15, 1997. It is
therefore imperative that these provisions be made final before that
date so that the reinsured companies and insureds may have sufficient
time to implement these changes. Therefore, public interest requires
the agency to act immediately to make these provisions available for
the 1997 crop year.
List of Subjects in 7 CFR Parts 433 and 457
Crop insurance, Dry bean crop insurance regulations, Dry bean.
Final Rule
Accordingly, for the reasons set forth in the preamble, the Federal
Crop Insurance Corporation hereby amends 7 CFR parts 433 and 457 as
follows:
PART 433--DRY BEAN CROP INSURANCE REGULATIONS
1. The authority citation for 7 CFR part 433 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
2. The subpart heading preceding Sec. 433.1 is revised to read as
follows:
Subpart--Regulations for the 1986 Through 1996 Crop Years
3. Section 433.7 is amended by revising the introductory text of
paragraph (d) to read as follows:
Sec. 433.7 The application and policy.
* * * * *
(d) The application for the 1986 and succeeding crop years is found
at subpart D or part 400--General Administrative Regulations (7 CFR
400.37, 400.38). The provisions of the Dry Bean Insurance Policy for
the 1986 through 1996 crop years are as follows:
* * * * *
PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE
1994 AND SUBSEQUENT CONTRACT YEARS
4. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(l), 1506(p).
5. Section 457.150 is added to read as follows:
Sec. 457.150 Dry bean crop insurance provisions.
The Dry Bean Crop Insurance Provisions for the 1997 and succeeding
crop years are as follows:
FCIC policies:
Department of Agriculture
Federal Crop Insurance Corporation
Reinsured policies:
(Appropriate title for insurance provider)
Both FCIC and reinsured policies:
Dry Bean Crop Provisions
If a conflict exists among the Basic Provisions (Sec. 457.8),
these Crop Provisions, and the Special Provisions; the Special
Provisions will control these Crop Provisions and the Basic
Provisions; and these Crop Provisions will control the Basic
Provisions.
1. Definitions
Actual value--The dollar value received, or that could be
received, for contract seed beans under a seed bean processor
contract if the contract seed bean production is properly handled in
accordance with the requirements of such contract.
Base price--The price per pound (excluding any discounts or
incentives that may apply) that is stated in the seed bean processor
contract and that will be paid to the producer for at least 50
percent of the total production under contract with the seed
company.
Beans--Dry beans and contract seed beans.
Combining--A harvesting process that uses a machine to separate
the beans from the pods and other vegetative matter and place the
beans into a temporary storage receptacle.
Contract seed beans--Dry beans grown under the terms of a seed
bean processor contract for the purpose of producing seed to be used
for producing dry beans or vegetable beans in a future crop year.
Days--Calendar days.
Dry beans--The crop defined by The United States Standards for
Beans excluding contract seed beans.
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 recognized by the Cooperative State
Research, Education, and Extension Service as compatible with
agronomic and weather conditions in the county.
Harvest--Combining the beans. Beans which are swathed or knifed
prior to combining are not considered harvested.
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.
Late planted--Acreage planted to the insured crop during the
late planting period.
Late planting period--The period that begins the day after the
final planting date for the insured crop and ends 25 days after the
final planting date.
Local market price--The cash price per hundredweight for the
U.S. No. 2 grade of dry beans of the insured type offered by buyers
in the area in which you normally market the dry beans. Moisture
content and factors not associated with grading under the United
States Standards for Beans will not be considered in establishing
this price.
Net price--The dollar value of dry bean production received, or
that could have been received, after reductions in value due to
insurable causes of loss.
Pick--The percentage, on a weight basis, of defects including
splits, damaged (including discolored) beans, contrasting types, and
foreign material that remains in the dry beans after dockage has
been removed by the proper use of screens or sieves.
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. Beans must initially be
planted in rows far enough apart to permit cultivation 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
[[Page 6106]]
in section 1 of the Basic Provisions (Sec. 457.8), 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 after the end of the late planting period
unless replanting is generally occurring in the area. For contract
seed beans, it will not be considered practical to replant unless
production from the replanted acreage can be delivered under the
terms of the seed bean processor contract or the seed company agrees
to accept such production.
Prevented planting--Inability to plant the insured crop with
proper equipment by the final planting date designated in the
Special Provisions for the insured crop in the county or the end of
the late planting period. You must have been unable to plant the
insured crop due to an insured cause of loss that has prevented the
majority of producers in the surrounding area from planting the same
crop.
Production guarantee (per acre)--The number of pounds determined
by multiplying the approved yield per acre by the coverage level
percentage you elect, and multiplying the result by any applicable
adjustment factor specified in the Actuarial Table.
Replanting--Performing the cultural practices necessary to
prepare the land to replace the bean seed and then replacing the
bean seed in the insured acreage with the expectation of growing a
successful crop.
Seed bean processor contract--A written agreement between the
contract seed bean producer and the seed company, containing at a
minimum:
(a) The contract seed bean producer's promise to plant and grow
one or more specific varieties of contract seed beans, and deliver
the production from those varieties to the seed company;
(b) The seed company's promise to purchase all the production
stated in the contract; and
(c) A base price, or a method to determine such price based on
published independent information, that will be paid to the contract
seed bean producer for the production stated in the contract.
Seed company--Any business enterprise regularly engaged in the
processing of seed beans, that possesses all licenses and permits
for marketing seed beans required by the State in which it operates,
and that possesses or has contracted for facilities, with enough
drying, screening and bagging or packaging equipment to accept and
process the seed beans within a reasonable amount of time after
harvest.
Swathing or knifing--Severance of the bean plant from the
ground, including the pods and beans, and placing them into
windrows.
Timely planted--Planted on or before the final planting date
designated in the Special Provisions for the insured crop in the
county.
Type--A category of 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 15.
2. Unit Division
(a) In addition to section 1 (Definitions) of the Basic
Provisions (Sec. 457.8), (basic unit) all acreage of contract seed
beans qualifies as a separate basic unit. For production based seed
bean processor contracts, the unit will consist of all the acreage
needed to produce the amount of production under contract, based on
the actual production history of the acreage. For acreage based seed
bean processor contracts, the unit will consist of all acreage
specified in the contract.
(b) Unless limited by the Special Provisions, a unit as defined
in section 1 (Definitions) of the Basic Provisions (Sec. 457.8),
(basic unit) and section 2(a) of these crop provisions, may be
divided into optional units if, for each optional unit, you meet all
the conditions of this section or if a written agreement to such
division exists.
(c) Basic units may not be divided into optional units on any
basis including, but not limited to, production practice, variety,
and planting period, other than as described in this section.
(d) Contract seed beans may only qualify for optional units as
specified in section 2(g) of these Crop Provisions if the seed bean
processor contract specifies the number of acres under contract.
Contract seed beans produced under a seed bean processor contract
that specifies only an amount of production are not eligible for
optional units.
(e) 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.
(f) All optional units you selected for the crop year must be
identified on the acreage report for that crop year.
(g) The following requirements must be met for each optional
unit:
(1) 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;
(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) You must have records of marketed production or measurement
of stored 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
(4) Subject to section 2(d) each optional unit must meet one or
more of the following criteria, as applicable:
(i) Optional Units by bean type: A separate optional unit may be
established for each bean type shown in the Special Provisions.
(ii) Optional Units by Section, Section Equivalent, or FSA Farm
Serial Number: In addition to, or instead of, establishing optional
units by type, 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 including, but not limited to
Spanish grants, railroad surveys, leagues, labors, or Virginia
Military Lands, as the equivalent of sections for unit purposes. In
areas that have not been surveyed using the systems identified
above, or another system approved by us, 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.
(iii) Optional Units on Acreage Including Both Irrigated and
Non-irrigated Practices: In addition to, or instead of, establishing
optional units by type, section, section equivalent, or FSA Farm
Serial Number, optional units may be based on irrigated acreage or
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 your 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. However, 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 requirements
of this section are met.
3. Insurance Guarantees, Coverage Levels, and Prices for Determining
Indemnities
(a) In addition to the requirements of section 3(b) (Insurance
Guarantees, Coverage Levels, and Prices for Determining Indemnities)
of the Basic Provisions (Sec. 457.8), you may select only one price
election for all the dry beans in the county insured under this
policy unless the Special Provisions provide different price
elections by type, in which case you may select one price election
for each dry bean type designated in the Special Provisions. The
price elections you choose for each type are not required to have
the same percentage relationship to the maximum price offered by us
for each type. For example, if you choose 100 percent of the maximum
price election for one type, you may also choose 75 percent of the
maximum price election for another type.
(b) For contract seed beans only, the dollar amount of insurance
is obtained by multiplying the production guarantee per
[[Page 6107]]
acre for each variety in the unit by the insured acreage of that
variety, times the applicable base price, and times the price
election percentage you selected. The total of these results will be
the amount of insurance for contract seed beans in the unit.
4. Contract Changes
In accordance with section 4 (Contract Changes) of the Basic
Provisions (Sec. 457.8), the contract change date is November 30
preceding the cancellation date.
5. Cancellation and Termination Dates
In accordance with section 2 (Life of Policy, Cancellation, and
Termination) of the Basic Provisions (Sec. 457.8), the cancellation
and termination dates are:
----------------------------------------------------------------------------------------------------------------
State and county Cancellation and termination dates
----------------------------------------------------------------------------------------------------------------
California............................................ February 28.
All other States...................................... March 15.
----------------------------------------------------------------------------------------------------------------
6. Report of Acreage
For contract seed beans only, in addition to the requirements of
section 6 (Report of Acreage) of the Basic Provisions (Sec. 457.8),
you must submit a copy of the seed bean processor contract on or
before the acreage reporting date.
7. Insured Crop
(a) In accordance with section 8 (Insured Crop) of the Basic
Provisions(Sec. 457.8), the crop insured will be all the 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 planted for harvest as:
(i) Dry beans; or
(ii) If applicable, contract seed beans, if the seed bean
processor contract is executed on or before the acreage reporting
date; 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) For contract seed beans only:
(1) An instrument in the form of a ``lease'' under which you
retain control of the acreage on which the insured crop is grown and
that provides for delivery of the crop under substantially the same
terms as a seed bean processor contract may be treated as a contract
under which you have an insurable interest in the crop; and
(2) We will not insure any acreage of contract seed beans
produced by a seed company.
(c) In addition to the types of dry beans designated in the
Special Provisions, we will insure other types if:
(1) The type you intend to plant has been demonstrated to be
adapted to the area. Evidence of adaptability must include:
(i) Results of test plots for 2 years and recommendations by a
university or seed company; or
(ii) Two years of production reports that indicate your
experience producing the type in your production area;
(2) You submit on or before the sales closing date your
production reports and prices received, or the test plot results,
and evidence of market potential, including the price buyers are
willing to pay for the type; and
(3) Both parties (you and us) enter into a written agreement
allowing insurance on the type in accordance with section 15.
(d) Any acreage of beans that is destroyed and replanted to a
different insurable type of beans will be considered insured acreage
in accordance with section 11.
8. Insurable Acreage
In addition to the provisions of section 9 (Insurable Acreage)
of the Basic Provisions (Sec. 457.8):
(a) We will not insure any acreage that does not meet the
rotation requirements contained in the Special Provisions; or
(b) Any acreage of the insured crop damaged before the final
planting date, to the extent that the majority of growers in the
area would normally not further care for the crop, must be replanted
unless we agree that replanting is not practical. We will not
require you to replant if it is not practical to replant to the same
type of beans as originally planted.
9. Insurance Period
In accordance with the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8), the calendar date for
the end of the insurance period is the date immediately following
planting as follows:
(a) October 15 in Oklahoma, New Mexico, and Texas;
(b) November 15 in California; and
(c) October 31 in all other States.
10. Causes of Loss
In accordance with the provisions of section 12 (Causes of Loss)
of the Basic Provisions (Sec. 457.8), insurance is provided only
against the following causes of loss that occur during the insurance
period:
(a) Adverse weather conditions;
(b) Fire;
(c) Insects, but not damage due to insufficient or improper
application of pest control measures;
(d) Plant disease, but not damage due to insufficient or
improper application of disease control measures;
(e) Wildlife;
(f) Earthquake;
(g) Volcanic eruption; or
(h) Failure of the irrigation water supply, if caused by an
insured peril that occurs during the insurance period.
11. Replanting Payments
(a) In accordance with section 13 (Replanting Payment) of the
Basic Provisions (Sec. 457.8), a replanting payment is allowed if
the bean crop is damaged by an insurable cause of loss to the extent
that the remaining stand will not produce at least 90 percent of the
production guarantee for the acreage and it is practical to replant.
(b) The maximum amount of the replanting payment per acre will
be the lesser of 10 percent of the production guarantee for the type
to be replanted or 120 pounds multiplied by your price election for
the type to be replanted and by your insured share.
(c) When beans are replanted using a practice that is
uninsurable as an original planting, the liability for the unit will
be reduced by the amount of the replanting payment. The premium
amount will not be reduced.
(d) The guarantee and premium for acreage replanted to a
different insurable type will be based on the replanted type and
will be calculated in accordance with sections 3 (Insurance
Guarantees, Coverage Levels, and Prices for Determining Indemnities)
and 7 (Annual Premium) of the Basic Provisions (Sec. 457.8) and
section 3 of these Crop Provisions.
12. Duties in the Event of Damage or Loss
In accordance with the requirements of section 14 (Duties in the
Event of Damage or Loss) of the Basic Provisions (Sec. 457.8),
representative samples of the unharvested crop must be at least 10
feet wide and extend the entire length of each field in the unit.
The samples must not be harvested or destroyed until the earlier of
our inspection or 15 days after harvest of the balance of the unit
is completed.
13. 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 unit.
(b) In the event of loss or damage to your bean crop covered by
this policy, we will settle your claim by:
(1) Multiplying the insured acreage of each dry bean type by its
respective production guarantee;
(2) Multiplying each result in section 13(b)(1) by the
respective price election for each insured type;
(3) Totaling the results in section 13(b)(2);
(4) Multiplying the insured acreage of each contract seed bean
type by its respective production guarantee;
(5 ) Multiplying each result in section 13(b)(4) by the
applicable base price;
(6) Multiplying each result in section 13(b)(5) by your selected
price election percentage;
(7) Totaling the results in section 13(b)(6);
(8) Totaling the results in section 13(b)(3) and section
13(b)(6);
[[Page 6108]]
(9) Multiplying the total production to be counted of each dry
bean type if applicable, (see section 13(d)) by the respective price
election;
(10) Totaling the value of all contract seed bean production
(see section 13(c));
(11) Totaling the results in section 13(b)(9) and section
13(b)(10);
(12) Subtracting the total in section 13(b)(11) from the total
in section 13(b)(8); and
(13) Multiplying the result by your share.
(c) The value of contract seed bean production to count for each
type in the unit will be determined as follows:
(1) For production meeting the minimum quality requirements
contained in the seed bean processor contract and for production
that does not meet such requirements due to uninsured causes:
(i) Multiplying the actual value or base price per pound,
whichever is greater, by the price election percentage you selected;
and
(ii) Multiplying the result by the number of pounds of such
production.
(2) For production not meeting the minimum quality requirements
contained in the seed bean processor contract due to insurable
causes:
(i) Multiplying the actual value by the price election
percentage you selected; and
(ii) Multiplying the result by the number of pounds of such
production.
(d) The total bean production to count (in pounds) from all
insurable acreage on the unit will include:
(1) All appraised production as follows:
(i) Not less than the production guarantee per acre for acreage:
(A) That is abandoned;
(B) That is 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) Unharvested production (mature unharvested production of
dry beans may be adjusted for quality deficiencies and excess
moisture in accordance with section 13(e)); and
(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; and
(2) All harvested production from the insurable acreage.
(e) Mature dry bean production to count may be adjusted for
excess moisture and quality deficiencies. If moisture adjustment is
applicable, it will be made prior to any adjustment for quality.
Adjustment for excess moisture and quality deficiencies will not be
applicable to contract seed beans.
(1) Production will be reduced by 0.12 percent for each 0.1
percentage point of moisture in excess of 18 percent. We may obtain
samples of the production to determine the moisture content.
(2) Production will be eligible for quality adjustment if:
(i) A pick is designated in the Special Provisions and the pick
of the damaged production exceeds this designation; or
(ii) A pick is not designated in the Special Provisions and
deficiencies in quality, in accordance with the United States
Standards for Beans, result in dry beans not meeting the grade
requirements for U.S. No. 2 (grades U.S. No. 3 or worse) because the
beans are damaged or badly damaged; or
(iii) Substances or conditions are present that are identified
by the Food and Drug Administration or other public health
organizations of the United States as being injurious to human or
animal health.
(3) Quality will be a factor in determining your loss only if:
(i) The deficiencies, substances, or conditions resulted from a
cause of loss against which insurance is provided under these crop
provisions and which occurs within the insurance period;
(ii) The deficiencies, substances, or conditions result in a net
price for the damaged production that is less than the local market
price;
(iii) All determinations of these deficiencies, substances, or
conditions are made using samples of the production obtained by us
or by a disinterested third party approved by us; and
(iv) The samples are analyzed by a grader licensed to grade dry
beans under the authority of the United States Agricultural
Marketing Act or the United States Warehouse Act with regard to
deficiencies in quality, or by a laboratory approved by us with
regard to substances or conditions injurious to human or animal
health. (Test weight for quality adjustment purposes may be
determined by our loss adjuster.)
(4) Dry bean production that is eligible for quality adjustment,
as specified in sections 13(e) (2) and (3), will be reduced:
(i) If a conversion factor is designated by the Special
Provisions, by multiplying the number of pounds of eligible
production by the conversion factor designated in the Special
Provisions for the applicable grade or pick; or
(ii) If a conversion factor is not designated by the Special
Provisions as follows:
(A) The market price of the qualifying damaged production and
the local market price will be determined on the earlier of the date
such quality adjusted production is sold or the date of final
inspection for the unit. If a local market price is not available
for the insured crop year, the current years' maximum price election
available for the applicable type will be used. The price for the
qualifying damaged production will be the market price for the local
area to the extent feasible. We may obtain prices from any buyer of
our choice. If we obtain prices from one or more buyers located
outside your local market area, we will reduce such prices by the
additional costs required to deliver the dry beans to those buyers.
Discounts used to establish the net price of the damaged production
will be limited to those that are usual, customary, and reasonable.
The price of the damaged production will not be reduced for:
(1) Moisture content;
(2) Damage due to uninsured causes; or
(3) Drying, handling, processing, including trading tare for
grade to obtain a higher grade and price, or any other costs
associated with normal harvesting, handling, and marketing of the
dry beans; except, if the price of the damaged production can be
increased by conditioning, we may reduce the price of the production
after it has been conditioned by the cost of conditioning but not
lower than the value of the production before conditioning;
(B) The value per pound of the damaged or conditioned production
will be divided by the local market price to determine the quality
adjustment factor; and
(C) The number of pounds remaining after any reduction due to
excessive moisture (the moisture-adjusted gross pounds (if
appropriate)) of the damaged or conditioned production will then be
multiplied by the quality adjustment factor to determine the net
production to count.
(f) Any production harvested from plants growing in the insured
crop may be counted as production of the insured crop on a weight
basis.
14. Late Planting and Prevented Planting
(a) In lieu of provisions contained in the Basic Provisions
(Sec. 457.8), regarding acreage initially planted after the final
planting date and the applicability of a Late Planting Agreement
Option, insurance will be provided for acreage planted to the
insured crop during the late planting period (see section 14(c)),
and acreage you were prevented from planting (see section 14(d)).
These coverages provide reduced production guarantees. The premium
amount for late planted acreage and eligible prevented planting
acreage will be the same as that for timely planted. If the amount
of premium you are required to pay (gross premium less our subsidy)
for late planted acreage or prevented planting acreage exceeds the
liability on such acreage, coverage for those acres will not be
provided, no premium will be due, and no indemnity will be paid for
such acreage.
(b) You must provide written notice to us not later than the
acreage reporting date if you were prevented from planting.
(c) Late Planting
(1) For bean acreage planted during the late planting period,
the production guarantee or
[[Page 6109]]
amount of insurance for each acre will be reduced for each day
planted after the final planting date by:
(i) One percent per day for the 1st through the 10th day; and
(ii) Two percent per day for the 11th through the 25th day.
(2) In addition to the requirements of section 6 (Report of
Acreage) of the Basic Provisions (Sec. 457.8), you must report the
dates the acreage is planted within the late planting period.
(3) If planting of beans continues after the final planting
date, or you are prevented from planting during the late planting
period, the acreage reporting date will be the later of:
(i) The acreage reporting date contained in the Special
Provisions for the insured crop; or
(ii) Five days after the end of the late planting period.
(d) Prevented Planting (Including Planting After the Late
Planting Period)
(1) If you were prevented from timely planting beans, you may
elect:
(i) To plant beans during the late planting period. The
production guarantee or amount of insurance for such acreage will be
determined in accordance with section 14(c)(1);
(ii) Not to plant this acreage to any crop except a cover crop
not for harvest. You may also elect to plant the insured crop after
the late planting period. In either case, the production guarantee
or amount of insurance for such acreage will be 50 percent of the
production guarantee for timely planted acres. For example, if your
production guarantee for timely planted acreage is 1,500 pounds per
acre, your prevented planting production guarantee would be 750
pounds per acre (1,500 pounds multiplied by 0.50). If you elect to
plant the insured crop after the late planting period, production to
count for such acreage will be determined in accordance with section
13; or
(iii) Not to plant the intended crop but plant a substitute crop
for harvest, in which case:
(A) No prevented planting production guarantee will be provided
for such acreage if the substitute crop is planted on or before the
10th day following the final planting date for the insured crop; or
(B) A production guarantee equal to 25 percent of the production
guarantee for timely planted acres will be provided for such
acreage, if the substitute crop is planted after the 10th day
following the final planting date for the insured crop. If you
elected the Catastrophic Risk Protection Endorsement or excluded
this coverage, and plant a substitute crop, no prevented planting
coverage will be provided. For example, if your production guarantee
for timely planted acreage is 30 bushels per acre, your prevented
planting production guarantee would be 7.5 bushels per acre (30
bushels multiplied by 0.25). You may elect to exclude prevented
planting coverage when a substitute crop is planted for harvest and
receive a reduction in the applicable premium rate. If you wish to
exclude this coverage, you must so indicate, on or before the sales
closing date, on your application or on a form approved by us. Your
election to exclude this coverage will remain in effect from year to
year unless you notify us in writing on our form by the applicable
sales closing date for the crop year for which you wish to include
this coverage. All acreage of the crop insured under this policy
will be subject to this exclusion.
(2) Production guarantees for timely, late, and prevented
planting acreage within a unit will be combined to determine the
production guarantee for the unit. For example, assume you insure
one unit in which you have a 100 percent share. The unit consists of
150 acres, of which 50 acres were planted timely, 50 acres were
planted 7 days after the final planting date (late planted), and 50
acres were not planted but are eligible for a prevented planting
production guarantee or amount of insurance. The production
guarantee for the unit will be computed as follows:
(i) For the timely planted acreage, multiply the per acre
production guarantee or amount of insurance for timely planted
acreage by the 50 acres planted timely;
(ii) For the late planted acreage, multiply the per acre
production guarantee or amount of insurance for timely planted
acreage by 93 percent and multiply the result by the 50 acres
planted late; and
(iii) For prevented planting acreage, multiply the per acre
production guarantee or amount of insurance for timely planted
acreage by:
(A) Fifty percent and multiply the result by the 50 acres you
were prevented from planting, if the acreage is eligible for
prevented planting coverage, and if the acreage is left idle for the
crop year, or if a cover crop is planted not for harvest. Prevented
planting compensation hereunder will not be denied because the cover
crop is hayed or grazed; or
(B) Twenty five percent and multiply the result by the 50 acres
you were prevented from planting, if the acreage is eligible for
prevented planting coverage, and if you elect to plant a substitute
crop for harvest after the 10th day following the final planting
date for the insured crop. (This paragraph (B) is not applicable,
and prevented planting coverage is not available under these crop
provisions, if you elected the Catastrophic Risk Protection
Endorsement or you elected to exclude prevented planting coverage
when a substitute crop is planted (see section 14(d)(1)(iii)). Your
premium will be based on the result of multiplying the per acre
production guarantee or amount of insurance for timely planted
acreage by the 150 acres in the unit.
(3) You must have the inputs available to plant and produce the
intended crop with the expectation of at least producing the
production guarantee or amount of insurance. Proof that these inputs
were available may be required.
(4) In addition to the provisions of section 11 (Insurance
Period) of the Basic Provisions (Sec. 457.8), the insurance period
for prevented planting coverage begins:
(i) On the sales closing date contained in the Special
Provisions for the insured crop in the county for the crop year the
application for insurance is accepted; or
(ii) For any subsequent crop year, on the sales closing date for
the insured crop in the county for the previous crop year, provided
continuous coverage has been in effect since that date. For example:
If you make application and purchase insurance for beans for the
1997 crop year, prevented planting coverage will begin on the 1997
sales closing date for beans in the county. If the bean coverage
remains in effect for the 1998 crop year (is not terminated or
canceled during or after the 1997 crop year), prevented planting
coverage for the 1998 crop year began on the 1997 sales closing
date. Cancellation for the purpose of transferring the policy to a
different insurance provider when there is no lapse in coverage will
not be considered terminated or canceled coverage for the purpose of
the preceding sentence.
(5) The acreage to which prevented planting coverage applies
will not exceed the total eligible acreage on all FSA Farm Serial
Numbers in which you have a share, adjusted for any reconstitution
that may have occurred on or before the sales closing date. Eligible
acreage for each FSA Farm Serial Number is determined as follows:
(i) The number of acres planted to beans on the FSA Farm Serial
Number during the previous crop year; or
(ii) One hundred percent of the simple average of the number of
acres planted to beans during the crop years that you certified to
determine your yield.
(iii) Acreage intended to be planted under an irrigated practice
will be limited to the number of acres for which you had adequate
irrigation facilities prior to the insured cause of loss which
prevented you from planting.
(iv) A prevented planting production guarantee or amount of
insurance will not be provided for any acreage:
(A) Of contracted seed beans in excess of the number of acres
required to be grown in the current crop year under a seed bean
processor contract executed on or before the acreage reporting date,
or the number of acres needed to produce the amount of contracted
production, based on the APH yield for the acreage.
(B) That does not constitute at least 20 acres or 20 percent of
the acreage in the unit, whichever is less (Acreage that is less
than 20 acres or 20 percent of the acreage in the unit will be
presumed to have been intended to be planted to the insured crop
planted in the unit, unless you can show that you had the inputs
available before the final planting date to plant and produce
another insured crop on the acreage);
(C) For which the actuarial table does not designate a premium
rate unless a written agreement designates such premium rate;
(D) Used for conservation purposes or intended to be left
unplanted under any program administered by the United States
Department of Agriculture;
(E) On which another crop is prevented from being planted, if
you have already received a prevented planting indemnity, guarantee
or amount of insurance for the same acreage in the same crop year,
unless you provide adequate records of acreage and production
showing that the acreage was double-cropped in each of the last 4
years in which the insured crop was grown on the acreage;
(F) On which the insured crop is prevented from being planted,
if any other crop is
[[Page 6110]]
planted and fails, or is planted and harvested, hayed or grazed on
the same acreage in the same crop year, (other than a cover crop as
specified in section 14 (d)(2)(iii)(A), or a substitute crop allowed
in section 14 (d)(2)(iii)(B)), unless you provide adequate records
of acreage and production showing that the acreage was double-
cropped in each of the last 4 years in which the insured crop was
grown on the acreage;
(G) When coverage is provided under the Catastrophic Risk
Protection Endorsement if you plant another crop for harvest on any
acreage you were prevented from planting in the same crop year, even
if you have a history of double-cropping. If you have a Catastrophic
Risk Protection Endorsement and receive a prevented planting
indemnity, guarantee, or amount of insurance for a crop and are
prevented from planting another crop on the same acreage, you may
only receive the prevented planting indemnity, guarantee, or amount
of insurance for the crop on which the prevented planting indemnity,
guarantee, or amount of insurance is received; or
(H) For which planting history or conservation plans indicate
that the acreage would have remained fallow for crop rotation
purposes.
(v) For the purpose of determining eligible acreage for
prevented planting coverage, acreage for all units will be combined
and be reduced by the number of bean acres timely planted and late
planted. For example, assume you have 100 acres eligible for
prevented planting coverage in which you have a 100 percent share.
The acreage is located in a single FSA Farm Serial Number which you
insure as two separate optional units consisting of 50 acres each.
If you planted 60 acres of beans on one optional unit and 40 acres
of beans on the second optional unit, your prevented planting
eligible acreage would be reduced to zero (i.e., 100 acres eligible
for prevented planting coverage minus 100 acres planted equals
zero).
(6) In accordance with the provisions of section 6 (Report of
Acreage) of the Basic Provisions (Sec. 457.8), you must report by
unit any insurable acreage that you were prevented from planting.
This report must be submitted on or before the acreage reporting
date. For the purpose of determining acreage eligible for a
prevented planting production guarantee, the total amount of
prevented planting and planted acres cannot exceed the maximum
number of acres eligible for prevented planting coverage. Any
acreage you report in excess of the number of acres eligible for
prevented planting coverage, or that exceeds the number of eligible
acres physically located in a unit, will be deleted from your
acreage report.
15. Written Agreements.
Designated terms of this policy 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
15(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.
Signed in Washington, D.C., on February 6, 1997.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 97-3327 Filed 2-10-97; 8:45 am]
BILLING CODE 3410-FA-P
