BULLETIN NO.: MGR-97-008 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery and Field Operations FROM: Kenneth D. Ackerman Acting Administrator SUBJECT: 1997 Prevented Planting BACKGROUND: The Federal Crop Insurance Corporation (FCIC) has received questions regarding whether the prevented planting provisions that were in effect for the 1996 crop year will remain in effect for the 1997 crop year. Current policy provisions remain in effect for the 1997 crop year. ACTION: FCIC is restating prevented planting issues that were clarified in previously issued Manager's Bulletins and R&D Informational Memorandums, as well as clarifying several issues that were recently raised, to assure uniform administration for the 1997 crop year as stated below. 1. Eligible Acreage: (a) Maximum eligible prevented planting acres will be determined on a county crop basis. The combination of eligible acreage on all FSN's covered under the policy will constitute the total eligible acreage, subject to the acreage limitations contained in the policy provisions. Prevented planting acreage will be determined when insureds report their acreage by the acreage reporting date. Any acreage that is reported in excess of the maximum eligible acreage will be deleted from the acreage report. (b) Land which is added after the sales closing date, including CRP acreage that is transferred out of the CRP program after the sales closing date, can be eligible for a prevented planting production guarantee as follows: (1) The acreage must be added or transferred out of the CRP program at a time when there is still a reasonable expectation of being able to plant and produce the insured crop. (2) Land for which the insured has no actual production history can qualify for a prevented planting production guarantee by using the greater of the base acreage attributable to the added land or the number of acres of the applicable prevented planting crop planted the previous year by the previous owner or operator, and any eligible acreage from other land the insured has within the county. (3) Land that has no base acreage, no production history, and no acreage planted the previous year can qualify for a prevented planting production guarantee by using the eligible acreage from other land the insured has within the county. For example: If an insured is eligible for 100 acres of prevented planting coverage for soybeans on the original acreage, he/she may report up to that amount of prevented planting acreage on any of the acreage he/she farms, including the added land. Any acreage planted to soybeans on any farm covered under the insured's policy must be subtracted from eligible prevented planting acreage. (c) Insured crop acreage which had a prevented planting production guarantee in a prior year will be added to the number of acres planted to the insured crop the prior year when determining the maximum eligible acreage. (d) An insured cannot use the previous operator's yield and acreage history to qualify for eligible prevented planting acres except as noted in 1.(b)(2) above. (e) If a crop is insured under one policy number, is administered under one Farm Service Agency (FSA) Farm Serial Number (FSN), but is located in more than one county, eligible acreage is determined separately for the land in each county. However, since the FSN base acres are combined for the acreage in both counties, the number of base acres for the insured crop must be prorated between each of the counties based on the number of cropland acres in each county. For example, if 60 percent of the cropland in the FSN is located in county A, then 60 percent of the insured crop's base acres would be attributed to county A when determining eligible prevented planting acreage. (f) When eligible acreage for an FSN is determined using the simple average of the number of acres planted on the FSN, and there are multiple units in the FSN, the maximum eligible acreage for the FSN will be determined by adding all acreage in the FSN for each year in the database, totaling acreage for all years, and dividing the result by the number of years the insured crop was planted on the FSN. These calculations must be made on an FSN basis, rather than on an individual unit basis, because current policy provisions establish eligible acreage on an FSN basis. 2. Requests to Increase Maximum Eligible Acreage: (a) Requests to increase the maximum eligible prevented planting acreage above the limitations contained in the crop policy must be made by the sales closing date for the applicable crop. Insurance providers may not use "estimated" acres listed on an application to increase eligible prevented planting acreage above the policy limitations. The request must list the acreage "intended" to be planted. An approved intended acreage report may be used. Requests must account for all insured crops and the total number of acres requested may not exceed the total tillable cropland acres. The approved request should clearly state that if the total number of acres requested exceeds the tillable cropland acres, the approved requested acres will be reduced proportionately. The approved request should also specify that the maximum eligible acreage limitations contained in the policy will not apply and are superseded by the acres agreed to in writing. For example, if the insured requested 300 acres of wheat, 300 acres of canola, and 300 acres of sunflowers and it is determined during loss adjustment that the insured only had 300 tillable cropland acres, the eligible prevented planting acreage agreed to in writing would be adjusted proportionately to the tillable cropland acres, as 100 acres of wheat, 100 acres of canola, and 100 acres of sunflowers. These agreements in writing are not the same as written agreements; and therefore, are not subject to policy provisions that exclude the availability of written agreements (e.g., catastrophic risk protection policies, pilot programs, etc.). (b) Insurance providers are allowed until the later of the sales closing date or 30 days after the date the request to increase maximum eligible prevented planting acreage is made to take action on such requests. (c) Requests to increase maximum eligible prevented planting acreage that are made after the sales closing date must be denied, including such requests for land that is added after the sales closing date. (d) If a tenant requested an increase in acreage eligible for a prevented planting production guarantee by the sales closing date and the insurance provider accepted the request, the increase can apply to the landlord if the landlord's insurance provider agrees to such increase. A request that is approved for a landlord can also apply to the tenant. (e) Requests to increase maximum eligible prevented planting acreage that have been accepted by an insurance provider cannot be transferred to a different entity if acreage is transferred to that entity after the sales closing date, except for share arrangements as noted in 2.(d) above. 3. Prevented Planting Coverage for a Spring Crop Intended to Follow a Failed Fall Crop: (a) A producer may be eligible for a prevented planting production guarantee for a spring-planted crop that was intended to be planted, even though a fall-planted crop had been planted on the acreage, if the acreage has a history of double-cropping (see 5 below), or if all of the following apply: (1) The fall-planted crop failed, crop insurance coverage was not available for the fall-planted crop, and the producer is not eligible for any payment associated with the crop loss; (2) Failure of the fall-planted crop occurs prior to the time that planting of spring crops normally begins in the county; (3) The producer does not derive a benefit from the failed fall-planted crop by harvesting it (haying or grazing is allowed); and (4) An insurance policy with prevented planting coverage is in place for the spring crop that is intended to be planted. (b) A producer may be eligible for a prevented planting production guarantee when he/she intends to destroy an existing forage stand and plant a spring crop on the acreage, if the insured is unable to destroy the forage stand and plant the spring crop due to insurable causes, provided that all of the following apply: (1) Crop insurance coverage was not available for the forage crop and the producer is not eligible for any payment associated with the forage crop; (2) A majority of producers in the area were prevented from planting the same spring crop; (3) The forage crop was not hayed or grazed until after the spring crop's final planting date; and (4) An insurance policy with prevented planting coverage is in place for the spring crop that is intended to be planted. 4. Eligibility for a Fall-Planted Crop Intended to Follow a Spring-Planted Crop: A producer may be entitled to a prevented planting guarantee for a fall-planted crop if a mature spring-planted crop could not be harvested because adverse weather prevented harvesting and prevented the producer and other producers in the general area from planting the same fall planted crop. In counties that have crops with only spring final planting dates or both fall and spring final planting dates (e.g., small grains), the insured crop must be prevented from being planted until the spring final planting date to be eligible for a prevented planting guarantee. 5. Double-Cropping: (a) To qualify for double-cropped acreage (not allowed for ELS cotton or CAT policies), an insured must provide adequate records of acreage and production showing that the same acreage has a history of double-cropping in each of the last 4 years. This means adequate records of acreage and production for 8 crops planted in the last 4 years on the same physical acres. (b) The prevented planting production guarantee for eligible double-cropped acreage will be the same as for prevented planting acreage that is not planted to any crop (e.g., 50 percent for corn). This applies to both crops. 6. Cover Crops/Corn Silage: (a) Cover crops which may be planted without disqualifying acreage for a full prevented planting guarantee are the following: annual, biennial, or perennial grasses and legumes, including sweet sorghum, sorghum grass crosses, sudans, volunteer stands other than weeds, and crop residue from using no till or minimum till practices. Barley, oats, rice, wheat, or any other small grains qualify if the crop is not harvested for grain or seed. Such cover crops may be hayed or grazed only if allowed by prevented planting policy provisions. These cover crops are commonly recognized in the farming community and are consistent with those previously approved by the Department of Agriculture for ACR and CU acres. (b) Corn planted for silage is not considered to be a cover crop. If a crop other than corn is prevented from being planted and corn is subsequently planted, the corn would be a substitute crop whether or not it is insurable. If corn is prevented from being planted, and the insured plants corn after the end of the late planting period, a prevented planting guarantee would be established and production to count would be determined in accordance with all applicable policy provisions.* *Exception - In a county where the actuarial table provides a premium rate for grain only, a variety of corn adapted for silage use only will be considered a substitute crop when an insured reports that corn for grain is prevented from being planted and then plants a silage use only variety. 7. Prevented Planting Eligibility when a Substitute Crop is Planted (Not available for CAT policies or when substitute crop prevented planting coverage was excluded): Current prevented planting policy provisions do not allow prevented planting coverage for a crop intended to be planted (25 percent for most crops), when that crop is prevented from being planted and a substitute crop is planted on the same acreage within 10 days of the final planting date for the intended crop. However, prevented planting substitute crop coverage on one unit cannot be denied for the sole reason that another crop was planted on a different unit by the final planting date for the intended crop. Insurance providers must determine whether or not the acreage claimed as prevented planting, which was planted to a substitute crop more than 10 days after the final planting date for the intended crop, could have been planted to the intended crop by the final planting date for the intended crop. When determining if the insured was unavoidably prevented from planting due to an insured cause of loss, consideration must be given to acreage that may have been wetter than other acreage due to the location, topography, and soil drainage characteristics of the acreage, crop rotation, chemical application, etc., that resulted in the insured planting other acreage first. For example: Assume the insured plants in a normal corn\soybean rotation between two sections and plants corn during even years in one location and soybeans during odd years. If the insured claims corn prevented planting on the acreage intended to be planted to corn, and plants the remaining acreage to soybeans, the acreage planted to soybeans should not be deducted from the corn eligible prevented planting acreage just because the insured could have planted corn, when in fact, due to rotation practices corn was not intended to be planted on the remaining acres. 8. Under-Reported Liability: If the claim liability exceeds the acreage report liability, the claim liability will be limited* to the liability established on the acreage report. For example, if the insured reports 40 acres timely planted and 40 acres prevented planting on the acreage report, but it is determined the insured timely planted 50 acres and was prevented from planting only 30 acres, the liability used to compute the claim for indemnity will not exceed the acreage report liability established for 40 timely planted and 40 prevented planting acres. *Except for limited situations where FCIC approved procedures allow the liability to be increased [e.g., from P1 (25 percent substitute crop coverage) to P2 (50 percent black dirt coverage)