BULLETIN NO: MGR-96-064

TO:      All Reinsured Companies
         All Risk Management Field Offices
         FSA Headquarters, Program Delivery and Field Operations

FROM:    Kenneth D. Ackerman
         Acting Administrator

SUBJECT: Clarification for Peanut Loss Adjustment                        

BACKGROUND:

The Federal Agricultural Improvement and Reform Act of 1996 (1996 Act), 
limited the number of pounds of Segregation II and III peanuts eligible to be 
transferred to the Quota Loan Pool to twenty-five percent (25%) of the 
current year's effective marketing quota, excluding poundage leased in the 
fall.  The 1996 Act also limited the amount received for transferred peanuts 
to seventy percent (70%) of Quota Support Price by type.  These are the two 
major changes impacting the current quality adjustment provisions of the 
Peanut Crop Insurance Policy in effect.  

ACTION:

Peanut claims requiring quality adjustment will be completed according to 
current loss adjustment procedure except for grade price (value per pound) of 
Segregation II and III peanuts transferred to the Quota Loan Pool and the 
limitation of the number of pounds eligible for transfer.  United States 
Department of Agriculture (USDA) Peanut Regulations interprets seventy 
percent (70%) of the Quota Support Price to be seventy percent (70%) of the 
grade price (value per pound from Item P of the FSA-1007). The reduced value 
per pound will be used for quality adjustment when peanuts are transferred 
to the Quota Loan Pool or the Waiver (of right) To Transfer Segregation II 
And III Peanuts To Quota Loan (FCI-513) has not been signed.  Additionally, 
producers transferring Segregation II and III peanuts to the Quota Loan Pool 
are limited to twenty-five percent (25%) of the current year's effective 
marketing quota, excluding peanuts leased in the fall.  

The Peanut Crop Insurance Policy (93075), Section 9. e. (2), counts any 
threshed and appraised production in excess of the unit's effective poundage 
marketing quota as non-quota (additional) peanuts.  This means any non-quota 
(additional) peanuts (excess of quota) will be quality adjusted using the 
highest non-quota price election.  Peanuts short of quota will be quality 
adjusted using the Quota Support Price regardless of grade.  Clarification 
for calculating quality adjustment and implementing 1996 Act provisions will 
be issued in a Peanut Handbook update.