BULLETIN NO.: MGR-97-002

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

FROM:     Kenneth D. Ackerman
          Acting Administrator

SUBJECT:  Malting Barley Endorsement


BACKGROUND:

A new Malting Barley Price and Quality Endorsement was made available for 
the 1996 crop year.  However, since it was made available after the 1996 crop 
year contract change date, the previous Malting Barley Option was also 
available in 1996.  For the 1997 crop year, the Malting Barley Option will 
no longer be available and any insured who had such coverage must be advised 
they will no longer have malting barley coverage unless they elect and qualify 
for coverage under the new Malting Barley Price and Quality Endorsement.

In addition, FCIC has become aware a malting barley processor contract is now 
available that offers producers a variable price option that is not referred 
to in the Malting Barley Price and Quality Endorsement.  This option allows a 
producer to select a locally posted daily malting barely price on any day 
within the time frame that is specified in the malting barley contract.  It
also provides a price "floor" that is significantly lower than the 
"fixed amount" price options contained in the same contract.  This "floor" 
amount is not representative of the expected market price, nor would its use 
result in equitable price elections between producers who selected the
variable price option and those who did not.  Therefore, to allow equitable 
crop insurance price elections to be established, any producer who selects 
the variable price option in the processor contract must have the insurance 
price election based on the price that would have applied if he or she had 
chosen a "fixed amount" price option contained in the processor contract.

ACTION:

All insurance providers must advise insureds with coverage under the Malting 
Barley Option that the coverage is not available for the 1997 and succeeding 
crop years, and the insurance provider must cancel the coverage if the  
insured fails to do so.  No malting barley coverage will be in effect for 
these insureds unless they elect and qualify for coverage under the new 
Malting Barley Price and Quality Endorsement.
                                                              
Any insured who elects Option B of the new Malting Barley Price and Quality 
Endorsement and selects a variable price option contained in their malting 
barley contract, will have their additional value malting barley price 
election based on any "fixed amount" price option that is contained in the 
same malting barley contract.  The pricing method for the Malting Barley Price
and Quality Endorsement must be selected not later than the acreage report 
date and will remain in effect for the crop year.