INFORMATIONAL MEMORANDUM: R&D-97-009 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery and Field Operations FROM: Tim B. Witt /s/ R. E. WAGGONER (for) 2/6/97 Acting Deputy Administrator SUBJECT: 1997 Dry Bean Crop Insurance Provisions Attached is a copy of the Dry Bean Crop Provisions that will be effective for the 1997 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. - The definition of "county" will now conform to the Basic Provisions of the Common Crop Insurance Policy; therefore, county will no longer include land identified by an FSA Farm Serial Number for the county but that is physically located in another county. Such land will be insured using the actuarial materials for the county in which it is physically located. - Unit division provisions contained in section 2 provide for separate dry bean types to qualify for optional units, rather than basic units. This change makes basic unit division provisions consistent with provisions for other crops. These provisions have also been expanded to include the insured's reporting responsibilities to qualify for optional units and the breakdown of units by irrigated and non- irrigated acreage. Contract seed beans qualify as one basic unit if the seed bean processor contract is for an amount of production. Contract seed beans optional units may be further subdivided if the seed bean processor contract is for a set amount of acreage. - Cancellation and termination dates are changed from March 31 to February 28 in California and from April 15 to March 15 in all other states. The changes are intended to minimize program vulnerabilities that may exist under current program dates by reducing the chances that insureds may be able to anticipate below normal yields and to implement amendments to the Federal Crop Insurance Act made by the Federal Crop Insurance Reform Act of 1994. - Section 3 specifies that the insured may select only one price election for all the dry beans in the county insured under the policy, unless the Special Provisions provide different price elections by type, in which case the insured may select one price election for each dry bean type. The price elections selected are not required to have the same percentage relationship to the maximum price offered for each type. - Section 6 specifies that a copy of any applicable seed bean processor contract must be submitted with the acreage report. This change is made to allow verification that the policy requirement for a contract has been met when establishing the liability under the policy. - Section 7(b) clarifies that any acreage of contract seed beans produced by a seed company is not insurable, as such seed beans are usually produced for experimental purposes. - Section 7(c) clarifies the number of years that test plot results must be provided for insurance to be offered on dry bean types not shown in the Special Provisions. - Section 8(b) clarifies that any acreage damaged prior to the final planting date must be replanted unless replanting is not practical. This provision specifies that you will not be required to replant if it is not practical to replant to the same type of beans as originally planted. - Section 9 establishes the end of the insurance period dates by state in accordance with the usual harvest dates published by National Agricultural Statistics Service. The previous policy contained only one end of the insurance date and was too late in some areas. - Section 10(c) and (d) specifies that damage or loss of production due to disease or insect infestation will not be insurable unless an insured cause of loss prevents the proper application of control measures. - Section 10(h) specifies that failure of the irrigation water supply must be caused by an insured peril that occurs during the insurance period. - Section 11(b) specifies that the maximum amount of a replanting payment will be the lesser of 10 percent of the production guarantee or 120 pounds, multiplied by the price election for the newly seeded beans times the insured's share. - Section 11(d) specifies that the guarantee and premium amount for acreage replanted to a different insurable type will be based on the replanted type. - Section 13(b) clarifies the calculations used to determine dry bean indemnities by allowing the aggregation of production guarantees and production to count when more than one dry bean type is in one unit or the unit has both contract seed beans and other bean production. - Section 13(e) specifies that the value of contract seed production must be multiplied by the elected price election percentage. The value of production to count must also be multiplied by the same elected price election percentage to be consistent with the amount of insurance for the insured acreage. - Section 13(f) specifies that adjustment in production to count containing excessive moisture be made separately from any adjustments for quality deficiencies. Also, quality adjustment procedures have been clarified for situations in which the pick exceeds the percentage shown on the Special Provisions or the production does not meet the grade requirements for U.S. No. 2. - Section 14 grants protection for acreage planted within 25 days after the final planting date, and for acreage that cannot be planted due to any insurable cause of loss. If the insured is prevented from planting by the final planting date, or intends to plant within the late planting period and is prevented from doing so, insurance protection is provided at a specified percent of the production guarantee for timely planted acreage. Reductions are made to recognize lower yield potential for late planting acreage. - Section 15 adds provisions for providing insurance coverage by written agreement. Attachment