INFORMATIONAL MEMORANDUM:  R&D-96-008

TO:       All Reinsured Companies
          All Risk Management Field Offices

FROM:     Tim B. Witt       /s/ TBW 3/5/96
          Director
          Research and Development Division

SUBJECT:  Malting Barley Price and Quality Endorsement for the 1996 Crop Year


Attached is a new Malting Barley Price and Quality Endorsement that will be 
available for the 1996 and succeeding crop years, and an updated index of 
policy forms in effect.  For the 1996 crop year only, producers may elect 
either the current Malting Barley Endorsement or the new Malting Barley 
Price and Quality Endorsement.  For the 1997 crop year, the Malting Barley 
Price and Quality Endorsement will replace the Malting Barley Endorsement.  
Following is a general description of the new coverage and actuarial 
information.   Please refer to the endorsement for more complete 
information.

Malting Barley Price and Quality Endorsement

1.  The Malting Barley Price and Quality Endorsement is
    divided into two coverage options.  Option A provides
    insurance coverage for producers who do not grow
    malting barley under contract with a brewery or other
    business that makes or sells malt or processed mash
    to a brewery or who grow a portion of their total
    production under contract.  Option B provides
    insurance coverage for producers who grow all of
    their malting barley under contract.  A producer may
    select only one option to cover all acreage planted
    to approved varieties of malting barley in the county
    during the crop year.

2.  A single unit, shown separately from feed barley
    units on the acreage report, will be established for
    malting barley.  All acreage planted to approved
    malting varieties will be considered one unit
    regardless of whether such acreage is owned, rented
    for cash, or rented for a share of the crop.  For
    example, if a producer has 320 acres planted to
    approved malting varieties that are divided into two
    160-acre units for feed barley coverage, there would
    be only one 320-acre malting barley unit.  The
    malting barley unit will be designated as a basic
    unit (the basic unit premium discount will apply).


3.  Option A requires a person to provide records of
    acreage planted to malting barley varieties and
    malting barley sale receipts for at least 4 crop
    years to be eligible for coverage.  Production
    guarantees will be the lesser of the applicable feed
    barley production guarantee or a guarantee based on
    the average amount of malting barley sold per planted
    acre. 

4.  Option B requires an applicant or insured to provide
    a copy of the malting barley contract by the acreage
    reporting date to be eligible for coverage. 
    Production guarantees will be determined by dividing
    the number of contracted bushels by the potential
    production (see definition of potential production in 
    the endorsement) and multiplying the result (not to
    exceed 1.0) by the production guarantee for feed
    barley that applies to the affected acreage.

5.  The maximum additional value price election under
    Option A will be $0.50 per bushel for the 1996 crop
    year.  The maximum price election available for the
    1997 and succeeding crop years will be shown on the
    Special Provisions.  For Option B, the additional
    value price election per bushel will be the lesser
    of: (a)$2; or (b) if applicable, the guaranteed sale
    price per bushel established by the malting barley
    contract(without regard to discounts or incentives)
    minus the maximum price election for feed barley; or,
      if applicable, the basis or premium per bushel
    (without regard to discounts or incentives) with
    respect to some market price established at some
    future date as specified in the malting barley
    contract.  The contractual price or basis/premium
    must be effective on or before the acreage reporting
    date.


6.  A claim may not be finalized until the earlier of
    final disposition of all production from the insured
    unit or May 31 of the calendar year following the
    crop year when production fails to meet the quality
    criteria specified in the option selected.  The
    extension of the settlement period is intended to
    prevent payment of indemnities for production that
    does not meet quality specifications but that is
    ultimately used for malting purposes.  Such
    production may be adjusted for quality deficiencies
    in accordance with the terms of the endorsement.

Actuarial Information

1.   The new endorsement will be available only in
     counties in which the current Malting Barley
     Endorsement is available.  Rate tables for these
     counties will not be refiled.  However, the
     actuarial data master for these counties has been
     updated to accept the information necessary to
     process this new coverage.  

2.  Option A will be elected by indicating option code 1
    on the application or a contract change form.  Option
    B will be elected by indicating option code 2 in the
    same manner.

3.  The base premium rate applicable to insured malting
    barley acreage will be the same base premium rate
    applicable to the acreage for feed (basic) barley
    coverage.  For example, if the R-5 base rate is
    applicable to a 40-acre parcel for feed barley
    coverage, the same R-5 base rate will apply to that
    same 40 acres in the malt barley unit.  A rate class
    option factor of 1.1 will be applied to the base rate
    in all cases.

The new endorsement has been placed on the Reporting Organization Server in 
WordPerfect 6.0.  You can find this file in the /Miscellaneous_Files/ 
directory as "96endor.zip".  Any questions regarding the new endorsement 
should be directed to the Product Development Branch at (816) 926-7730.

Attachment