INFORMATIONAL MEMORANDUM: R&D-96-066 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery & Field Operations FROM: Tim B. Witt /s/ Tim B. Witt 10/4/96 Acting Deputy Administrator SUBJECT: Prevented Planting Questions and Answers The following questions and answers have been developed to clarify several prevented planting coverage issues that have recently been raised. Insurance providers should forward this information to their sales agents and claims adjustment personnel. 1. Question - If a tenant requested an increase in acreage eligible for a prevented planting production guarantee prior to the sales closing date and the insurance provider accepted the request, will the landlord also be eligible for the increased amount? Answer - Yes. The increase can apply to the landlord if the landlord's insurance provider agrees. 2. Question - If land for which the insured has no actual production history (APH) is added after the sales closing date, can a request be submitted to increase eligible acreage above the policy limits? Answer - No. However, 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 may be used as the basis for determining eligible prevented planting acreage. 3. Question - Can land obtained after the sales closing date that has no base acreage, no production history, and no acreage planted the previous year qualify for a prevented planting production guarantee? Answer - The acreage would not be eligible if qualification were based on the added land alone. However, if the insured has eligible acreage from other land within the county, he/she may elect to use those eligible acres on the added land provided it is prevented from being planted. 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. Refer to MGR-96-045 for additional information regarding determination of acreage eligible for a prevented planting production guarantee. 4. Question - Can a request in writing for an increase in eligible prevented planting acreage that has been accepted by an insurance provider be transferred to a different entity if acreage is transferred to that entity after the sales closing date? Answer - No. Approved increases in eligible acreage may not be transferred to another entity except for share arrangements as noted in 1 above. 5. Question - Failed forage production acreage has been appraised and released in the spring of 1996 and the insured intends to plant another crop on the acreage. If the insured is prevented from planting an insured crop on this acreage, is he/she eligible for a prevented planting production guarantee? Answer - No. Policy provisions indicate that, if another crop fails in the same crop year, a prevented planting production guarantee is not provided unless the acreage has a history of double-cropping. The intent of this provision is to prevent multiple program benefits for the same acreage in the same crop year unless a history of double-cropping can be proven. 6. Question - Is an insured required to report acreage planted after the late planting period, and does the acreage have to be insured? Answer - If the acreage is claimed as prevented from being planted, and is planted to the insured crop after the late planting period, it is insured acreage and must be reported on the acreage report. If the acreage was not claimed as prevented from being planted, it is not insurable and should be listed as such in the remarks section of the acreage report. 7. Question - Is acreage that has received a prevented planting production guarantee considered when determining the number of insured crop acres planted the previous year, or the simple average of the number of acres planted during the actual production history (APH) base period? Answer - Yes. Insured crop acreage which had a prevented planting production guarantee in a prior year may be added to the number of acres planted to the insured crop. Prevented planting acreage will be considered when determining maximum eligible acreage by either method indicated in the question. To deny such would create an inequity as liability was established and premium paid the previous year. 8. Question - In some instances 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. How is the number of eligible prevented planting acres determined in this circumstance? Answer - 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 crops base acres would be attributed to county A for determining eligible prevented planting acreage. 9. Question - When a crop is prevented from being planted and the insured subsequently plants corn for silage, can the corn for silage be considered to be a cover crop? Answer - No. 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 MGR-96-006*. *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. 10. Question - In some cases, when determining the simple average of the number of acres planted to the insured crop in the crop years certified to determine the average yield, the acreage and production shown on the actual production history (APH) form is duplicated for more than one farm serial number. How is the simple average number of acres determined in these cases? Answer - Prevented planting policy provisions indicate that only the number of acres planted on the farm serial number will be considered. When the number of acres shown in the actual production history is not reflective of the number of planted acres on the farm, those acres must not be considered when determining the average.