INFORMATIONAL MEMORANDUM: R&D-97-003 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery and Field Operations FROM: Tim B. Witt Acting Deputy Administrator /s/ Tim. B. Witt 1/22/97 SUBJECT: Florida Citrus Fruit Crop Insurance Provisions Attached are the Florida Citrus Fruit Crop Provisions, effective for the 1998 and succeeding crop years. The following is a brief description of the significant changes to these provisions. Please refer to the provisions for more complete information. - Section 1 - deletes the reference to "white grapefruit" and "fresh-fruit basis for pink and red grapefruit" from Type III. This type is now all grapefruit that will be adjusted on a juice basis. - Section 1 - adds limes to the Florida Citrus Fruit Crop Provisions, under Type VI, as an insurable citrus crop. Limes were added in response to public interest in coverage and the findings of FCIC's field staff and Research and Evaluation Branch staff supporting the insurability of this additional citrus crop. - Section 1 - adds late oranges fresh to Type VII for those producers who have records demonstrating that their crop has been sold as fresh fruit. - Section 2 - describes the guidelines under which basic units may be divided into optional units. The definition of "unit" under section 1 (tt) of the Basic Provisions (part 457.8) provides for the division of units in accordance with applicable crop provisions. The previous endorsement did not clarify guidelines for determining optional units. Section 2 of these crop provisions provides guidelines for determining optional unit division of Florida citrus fruit basic units that are consistent with many other perennial crop provisions. Optional units may be divided on the basis of section, section equivalent, or Farm Service Agency (FSA) Farm Serial Number, or on acreage located on non-contiguous land. - Section 3(a) - specifies that the insured may select only 1 percentage of the maximum dollar amount of insurance for all fruit included in each type shown in section 1 of the Florida Citrus Fruit Crop Provisions or as designated in the Special Provisions. Since FCIC considers each type to be a "crop," the language in these crop provisions clearly limits producers to one percentage of the maximum dollar amount for each fruit within a type, regardless of variations in the maximum amount of insurance for the fruit. For example, if an insured chooses the 75 percent coverage level for Naval Oranges, then they must also choose the 75 percent coverage level for Tangerines since both are included as Type IV citrus fruit. - Subsection 3(c) - specifies that insureds with interplanted citrus acreage must report information needed by the insurer to establish the amount of insurance and number of acres of the interplanted insured crop, for the first year of insurance for acreage interplanted with another citrus fruit crop, and anytime the planting pattern of such acreage is changed. The insured must report the age of any interplanted crop, the planting pattern, and any other information needed to establish the amount of insurance for the interplanted acreage. The acreage or amount of insurance, or both, may be adjusted by us when we become aware of the situation if the insured has not previously reported it. Coverage for interplanted acreage is not provided under the current Florida Citrus Endorsement. - Section 4 - changes the contract change date from April 15 to March 15. This change will allow insureds more time to make insurance decisions before the April 30 cancellation date. - Section 6 - FCIC removed language from the previous endorsement that provided for us to exclude from insurance, or limit the amount of insurance on, any acreage that was not insured the previous crop year. This language is not necessary because we currently inspect new acreage or acreage added to an existing unit. - Section 6 - FCIC removed language from the previous endorsement that required producers to insure all their grapefruit under a single type, (ie either as fresh fruit or juice). - Section 6(b)(2) - changes the insurable tree age requirement from 10 years after set out to 5 years after set out based on industry recommendations. The amounts of insurance listed in the actuarial documents are based on tree age, and are reduced proportionately for younger trees. - Section 7 - makes Florida citrus fruit interplanted with another citrus fruit crop insurable unless the insurance provider inspects the acreage and determines it does not meet the requirements contained in the producer's policy. - Section 8(a)(1) - specifies that if the application is submitted less than 10 days before the date insurance attaches, (received after April 21) insurance will not attach until 10 days after the properly completed application, acreage report, and production reports are received in our local office. This provision allows the insurer time to inspect the grove and is designed to prevent producers from applying for insurance only when they believe a loss is probable. - Section 8(b)(1) specifies that if the producer acquires an insurable share in any insurable acreage after coverage begins but on or before the acreage reporting date for the crop year, insurance will be considered to have attached to such acreage on the calendar date for the beginning of the insurance period if after an inspection the insurance provider considers the acreage acceptable. - Section 8(b)(2) specifies that if the producer relinquishes an insurable share on any insurable acreage of Florida citrus fruit on or before the acreage reporting date of any crop year, insurance will not be considered to have attached. No premium will be due, and no indemnity paid, for such acreage for that crop year unless a transfer form is completed by all affected parties and the insurance provider is notified in writing of such transfer on or before the acreage reporting date. The transferee must meet eligibility requirements contained in the policy and the form must be subsequently approved by the insurance provider. - Section 10(b) - changes the deductible for determining when an indemnity is due for limited and additional coverage. The indemnity had been computed based on the determination of the percent of damage, less 10 percent. For the 1998 crop year, it will be the percent of damage, less the deductible (ie. 25 percent), divided by the coverage level percent. - Section 10(c) and (d) are amended to delete Type III pink and red grapefruit because the type changes make it a "juice only" fruit. - Section 10(e)(2) - changes the levels of juice content for types I, II, and III used to determine damage, whenever a producer does not furnish acceptable records, as follows: Type I - 52 pounds of juice per box Type II - 54 pounds of juice per box Type III - 45 pounds of juice per box These recommendations are based on improvements in processing technologies and processing equipment implemented during the past few years and documented weighted averages for the last three seasons. - Section 10(h) - removes Type III grapefruit from this section which lists types of fruit that are considered a total loss because they are unmarketable as fresh fruit due to serious hail damage. Type III grapefruit goes to juice and fresh grapefruit is currently under Type VII. - Section 11 - adds provisions for providing insurance coverage by written agreement. FCIC has a long-standing policy of permitting modification of certain provisions of insurance contracts by written agreement. This provision is not documented in the current Florida Citrus Endorsement. This section provides for the application for, and duration of, written agreements. Attachment - will follow in the mail