INFORMATIONAL MEMORANDUM: R&D-97-027 TO: All Reinsured Companies All Risk Management Field Offices FSA Headquarters, Program Delivery and Field Operations FROM: Tim B. Witt /S/ TIM B. WITT 04/01/97 Deputy Administrator SUBJECT: Fresh Market Pepper Crop Insurance Provisions Attached is a copy of the Fresh Market Pepper Crop Insurance Provisions effective for the 1998 and succeeding crop years. A brief description of the significant changes to these provisions follows. Please refer to the provisions for complete information. - Section 1 clarifies the definition of crop year by stating that the crop year begins on the first day of the earliest planting period for fall-planted peppers and continues through the end of the insurance period for spring-planted peppers. - Section 1 changes the definition of excess rain to specify that it is an amount of precipitation that is sufficient to directly damage the crop. Previous regulations defined excessive rain as a minimum of 10 inches of rain within a 24-hour period. This change will provide coverage for crop damage that occurs when a lesser amount of precipitation is received. - Section 1 changes the definition of freeze to specify that freeze occurs when low air temperatures cause ice to form in the cells of the plant or its fruit to encompass conditions found in both frost and freeze. - Section 1 changes the definition of harvest to clarify and remove the term marketable. Peppers picked from the plant are considered harvested whether marketable or not. - Section 1 changes the definition of tropical depression to specify that it is a system identified by the U.S. Weather Service as a tropical depression and includes tropical storms, gales, and hurricanes. - Section 3(a) clarifies that an insured may select only one coverage level (and the corresponding amount of insurance designated in the Actuarial Table for the applicable planting period and practice) for all the fresh market peppers in the county insured under the policy. - Section 3(b) clarifies that the amounts of insurance the insured chooses for each planting period and practice must have the same percentage relationship to the maximum amount of insurance offered by FCIC for each planting period and practice. - Section 3(d) adds language listing three stages of coverage for direct seeded and transplanted acreage. This language was previously contained in the actuarial documents. - Section 6(b) specifies that the insured must report on or before the acreage reporting date for each planting period, all the dates the acreage was planted within each planting period. - Section 9(a) adds a provision that provides coverage on newly cleared land or former pasture land that is planted to fresh market peppers. It is a recognized practice to plant the insured crop on tilled acreage that has been newly cleared or that has been pasture land to eliminate some of the risk of disease and insect damage. This change also will standardize current regulations for the fresh market vegetable crops. - Section 9(b)(2) allows an insured to elect not to replant damaged peppers that were initially planted within the fall or winter planting periods, provided the final planting date for the planting period has passed and damage occurs after 30 days of transplanting or after 60 days of direct seeding. With this election, the insured may collect an indemnity and that particular acreage will be uninsurable for the next planting period. The insured may also elect to replant such pepper acreage, collect a replanting payment under section 12, and maintain the initial planting period coverage. This change incorporates and standardizes procedures utilized in the fresh market vegetable crops. - Section 9(b)(3) clarifies that any acreage previously planted to peppers (except for replanted peppers), tomatoes, eggplants, or tobacco is not insurable unless the soil has been fumigated or properly treated before planting peppers. - Section 10(f)(1) changes the calendar date for the end of the insurance period from 150 days to 165 days after the date of direct seeding or replanting with seed. This change will allow expansion of pepper crop insurance coverage into other areas. - Section 11(b)(1) specifies that disease and insect infestation are not an insured cause of loss, unless no effective control measure exists for such disease or insect infestation. - Section 12(b) specifies the maximum amount of the replanting payment per acre will be the lesser of the actual cost of replanting, or the result obtained by multiplying the per acre replanting payment amount contained in the Special Provisions by the insured shared. This change will allow the flexibility to set the amount at appropriate levels. - Section 14(b)(2) modifies the claim for indemnity calculations by providing calculations for catastrophic risk protection coverage and for coverage other than catastrophic risk protection. This provision includes the use of the catastrophic risk protection price election equivalent to determine the total dollar of production to count for indemnity purposes. This change is necessary to assure that producers that are insured based on a dollar amount of insurance are indemnified comparable to producers that are insured based on an actual production history (APH) yield basis. - Section 14(c)(2)(iv) requires the insured to continue to care for acreage when the insured does not agree with the appraisal on that acreage. Production to count for such acreage will be determined using the harvested production if the crop is harvested, or our reappraisal if the crop is not harvested. - Section 14(c)(3) changes the value to count for harvested production to the dollar amount obtained by subtracting the allowable cost from the price received (this resulting price must not be less than the minimum value shown in the Special Provisions), and multiplying this result by the number of boxes harvested. Current regulations allow the value of sold production to be as low as zero. Also, clarifies that harvested mature bell peppers that are damaged or defective due to insurable causes and are not marketable will not be counted as production. These changes are made to assure that the minimum value specified in the Special Provisions will be the lowest value considered for any marketable harvested production unless the insured selected the minimum value option. - Section 15 adds provisions for providing insurance coverage by written agreement. FCIC has a long standing policy of permitting certain modifications of the insurance contract by written agreement for some policies. This amendment allows FCIC to tailor the policy to a specific insured in certain instances. The new section will cover the procedures for and duration of written agreements. - Section 16 adds two minimum value options. The options will allow the value of each harvested box to be not less than the minimum value option price contained in the Special Provisions, or as low as zero. The options are selected on the insurance application. This change will provide consistency in regulations found in other fresh market vegetable crops. If you have any questions, please contact David Clauser of the Product Development Division at (816) 926-7730. Attachment - BULLETIN AND ATTACHMENT WILL BE MAILED