October 20, 1995 BULLETIN NO.: MGR-95-041 TO: All Reinsured Companies CFSA Headquarters, Program Delivery and Field Operations All Risk Management Field Offices FROM: Kenneth D. Ackerman Deputy Administrator for Risk Management SUBJECT: Loss Adjustment Procedures for Potato Late Blight and Potato Decay BACKGROUND Several areas of the country are again experiencing varying degrees of damage to the potato crop due to conditions favorable to late blight infection and decay. Exceptionally hard hit are parts of the Pacific Northwest. For each of the past 3 years, the Federal Crop Insurance Corporation has issued loss adjustment procedures to handle late blight and decay. These procedures required insurance providers to inspect fields and obtain representative samples prior to harvest, except in heavily infested areas where the tubers are left in the field. Insurance providers may not be able to make inspections or properly identify late blight and decay prior to harvest, because: (1) a large number of inspections are expected; (2) tubers may not show physical symptoms of late blight infection, and university pathologists indicate there is currently no laboratory analysis that can positively identify late blight on symptomless tubers; (3) most infected potato vines have been killed by freeze or chemical applications, thus restricting or precluding visual identification of areas from which tuber samples should be obtained; and (4) digging potato samples too soon after vine-kill may spread the late blight fungus from the sample vines to the tubers which could result in contaminated samples with inflated infection percentages. ACTION Insurance providers are to handle claims as follows whenever the conditions described above exist in a production region. Throughout these instructions, when assessing the percentage of potatoes infected by late blight or decay, the percentage of each is to be treated separately (not combined). 1. Notifications Required from Insurance Providers Insurance providers must advise all insureds to: (1) notify the provider of any potato fields that are suspected of being infected with late blight or decay, and (2) use Extension Service (ES) or local university recommendations for controlling the potato late blight and potato decay. 2. Notification Required from Insureds Insureds must notify insurance providers prior to harvest of any fields that are suspected of being infected with late blight or decay. This is particularly critical if it is anticipated that there will be 5 percent or more of either late blight infection or decay of the tubers. Failure to provide such notification may result in appraisals for uninsured causes of loss if it jeopardizes the ability of insurance providers to: (1) determine the percentage of infection, (2) ensure that heavily infested areas have been properly handled separately, or (3) determine that other recognized good potato farming practices have been followed to minimize the loss. 3. Field Inspections A Insurance providers must inspect the fields prior to harvest to detect whether potato late blight and/or potato decay is in the field and to document the results of this inspection in the policyholder's file. However, if a heavy workload prevents the insurance provider from making a timely inspection prior to harvest, the inspection can be made during or immediately after harvest and representative samples can be obtained at that time. (See paragraph 4 D below, for documentation instructions.) (1) If it is possible to determine during the inspections that there are heavily infested areas, these areas should be marked off and handled separately from the rest of the field. If the insured intends to harvest these areas separately from the rest of the field, insurance providers are to inform the insured to keep the production from infested areas separate from production from non-infested areas. (2) If resources and conditions permit, the adjuster is to dig representative samples as indicated in B below. However, if vine kill prevents visual detection of vine infection and/or it has been recommended not to dig samples at this time to avoid spreading late blight fungus to the tubers, insurance providers are to use any practical means to verify the infestation (e.g., obtaining or verifying copies of chemical receipts and spraying records to substantiate efforts taken to control the fungus, etc.). (3) If, at the time of the inspection, harvest has not occurred and no samples have been taken (or tubers from samples do not show physical symptoms of late blight infection), instruct the insured to notify the insurance provider of the date potatoes are harvested. B Representative Samples If symptoms are evident in the tubers, loss adjusters are to take representative samples from heavily-infested areas in which the potatoes are left in the field (or storage facility if this is an inspection of stored potatoes) to determine the percentage of late blight infection and/or decay in the tubers. (1) If 5 percent or more of the sampled tubers are infected by either late blight or decay, the production from the sampled area may be considered zero. (2) If less than 5 percent of the sampled tubers are infected by late blight or decay, a tuber-by-tuber appraisal must be made as outlined in approved potato loss adjustment procedure using non-decayed, non-infected tuber weights to determine production to count. (3) If the tubers show no symptoms at the time of inspection, document this fact and inform the insured to notify the insurance provider immediately if symptoms of late blight or decay are subsequently discovered. Instruct the insured to notify the insurance provider immediately if symptoms become evident in stored potatoes within 60 days of harvest. Upon the insured's notification, the loss adjuster is to immediately obtain representative samples from infected lots of stored potatoes to verify and document the percentages of late blight and decay. C Loss adjusters are to make every effort to complete the final inspection no later than 60 days after harvest. If tubers show no symptoms at that time and the potatoes are determined not to have 5 percent or more late blight or decay, adjusters are to finalize the claim as instructed by their insurance provider. 4. Other Loss Adjustment Considerations A Waiver of Production Assessed for Early Digging Some Special Provisions state that appraisals will be made for any reduction in production that resulted from harvesting prior to the date specified in the Special Provisions. Where this is the case, no additional production appraisal will be assessed on potatoes having 5 percent or greater incidence of late blight or decay that have been harvested before the date shown on the Special Provisions, provided the insured killed the vines (for late blight infected potatoes) and harvested early in order to minimize the effects of late blight or decay. B Time Frame Allowed for Policyholders to Make Disposition of Stored Potatoes If an insured elects to harvest tubers from areas with a 5 percent or greater incidence of late blight or decay, or where loss adjusters have documented that late blight fungus was in the field/unit prior to harvest, a period of 60 days from the time the potatoes are harvested may be authorized for the insured to make disposition of the affected tubers. At the end of the 60-day period, the insured must agree to either: (1) destroy such potatoes to qualify for zero production to count, or (2) accept the tuber-by-tuber appraisal that was made prior to harvest or completed at the time symptoms became apparent. Any harvested production that is disposed of through selling or processing will be counted as production. C Insured's Awareness of Late Blight Problem in Previous Year When preparing claims involving damage resulting from disease (e.g., late blight), loss adjustment procedure considers first year damage from disease to be unavoidable if the insured was unaware of the conditions at planting time. However, if it is determined that the insured was aware of the late blight problem in the preceding crop year but did not follow recognized good farming practices for the current crop year, some or all of the loss will be considered an uninsured loss. For example, failing to follow recognized good farming practices might include the following: (1) failure to adequately dispose of infected cull potatoes from the prior year's production in accordance with methods recommended by university or ES representatives, or (2) failure to apply appropriate fungicides. NOTE: Insurance providers should promote an awareness of recommended production practices (including the use and application of appropriate fungicides) for the control of late blight and decay in potatoes by providing materials from the ES and/or local universities to their personnel. D Documentation Document, at the time of field inspections, phone contacts, and storage facility inspections: (1) Date of each inspection or phone contact; (2) Producer's management practices; (3) Fields/units where late blight or decay was present; (4) Extent of late blight and decay discovered (indicate the percentages of infection in any samples taken); (5) Date of harvest; (6) Date of storage; and (7) Any other pertinent information.