BULLETIN NO.: MGR-98-013 TO: All Reinsured Companies All Risk Management Offices All Other Interested Parties FROM: Kenneth D. Ackerman /s/ 6/4/98 Administrator SUBJECT: Approved Appraisal Deviation and Release Date for Texas Non-irrigated ELS Cotton BACKGROUND: Continued dry weather across much of Texas has inhibited seed germination of non-irrigated Extra Long Staple (ELS) cotton planted by the April 30, final planting date. ELS cotton policyholders have requested that the Risk Management Agency (RMA) deviate from approved policy and procedure and permit them to destroy these fields before an accurate appraisal can be made in order to plant a cover crop (such as "haygrazer") for conservation purposes and to control weeds. Earlier this year, RMA issued an informational memorandum to remind companies of approved policy and procedure regarding the planting of non-irrigated ELS cotton in Glasscock, Midland, Reagan, and Upton Counties, Texas. RMA had received reports that some producers planted this cotton in anticipation that the ELS planted acreage would fail to produce a crop and plant a second insurable crop. The memorandum reminded insurance providers of the policy and procedure requirements for accurately determining damage and potential production before releasing acreage for another use. There are no approved procedures for determining production potential for fields that have been dry planted and do not receive adequate moisture to cause the seed to germinate. In recognition of the inability to make accurate appraisals, insurance providers have been deferring appraisals on ELS cotton that has not emerged. The Natural Resources Conservation Service (NRCS) indicated that under current conditions, and in anticipation of continuing dry weather, it may be appropriate for some producers to plant a conserving cover crop in order to prevent erosion and make better use of any moisture that the area may receive over the next few weeks. NRCS advises that this may not be the best practice in all cases and that producers will need to assess their individual situations before opting to disturb these fields to plant a conserving cover crop. In order to assist producers who conclude that putting the ELS acreage to another use at this time is in the best long-term interests of their farming operations, RMA has determined that an appraisal deviation to accommodate these decisions should be approved. ACTION: For the 1998 crop year only, upon issuance of this bulletin, insurance providers are authorized to release Texas non-irrigated ELS cotton acreage as specified below. Non-irrigated ELS cotton that has not emerged as of June 4, 1998, may immediately request insurance providers to appraise and release such acreage with a "zero" appraisal. Acreage on which the non-irrigated ELS cotton has emerged at the time of the appraisal must be appraised using the applicable appraisal determination procedure, i.e. the stand reduction method. However, if hail damage should occur, use the stand reduction method in conjunction with the hail damage method for cotton, stage VI or greater. Insurance providers will instruct loss adjusters to fully document the acreage released under this deviation and reference this bulletin number in the remarks section of the loss documentation or on any other form which will be maintained in the file as part of the loss documentation. CC: FCIC COMPLIANCE OFFICES FCIC REGIONAL SERVICE OFFICES CFSA (ATTN: JOHN STENCEL, FAX: 202-690-2823; PH: (202) 690-2807, RM. 3096 - S MANDY WELTON, FAX: 202-205-2953; PH: (202) 720-6803 DIANE SHARP, FARM PROGRAMS, FAX: (202) 690-2130 NATIONAL CROP INSURANCE SERVICES AMERICAN ASSOCIATION OF CROP INSURERS CROP INSURANCE RESEARCH BUREAU NATIONAL ASSOCIATION OF CROP INSURANCE AGENTS NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS LINDA VICKERS HAWKINS, HAWKINS, AND BURT ATTN: DAVID BURT - FAX 904-258-1311 501 SOUTH RIDGEWOOD AVENUE DAYTONA BEACH, FL 32114 CC: K. ACKERMAN IS - PLEASE ROUTE MGR/CHRON DAM-RSO SDITTRICH CHIEF/FUS - PLEASE ROUTE MMULUGETA CHIEF/CS - PLEASE ROUTE HBAKER/RSLB - PLEASE ROUTE GWESTMORELAND/RCD--PLEASE ROUTE LDITTUS/ENAP - PLEASE ROUTE CC: KANSAS CITY OFFICES: TWITT/R&D--PLEASE ROUTE TIM HOFFMANN - PRODUCT DEVELOPMENT BRANCH VONDIE O'CONNER, RESEARCH AND EVALUATION BRANCH LARRY STIFFLER, ACTUARIAL BRANCH DENISE HOFFMANN, FISCAL OPERATIONS AND SYSTEMS BRANCH AGILMORE/AMC-PLEASE ROUTE FINAL:Michael Hand:mh:690-2499:Claims Services Division