INFORMATIONAL MEMORANDUM: R&D-97-056 TO: All Reinsured Companies All Risk Management Field Offices FROM: Tim B. Witt /s/ Tim B. Witt 07/24/97 Deputy Administrator SUBJECT: Plum Crop Insurance Provisions Attached is a copy of the Plum Crop Insurance Provisions effective for the 1998 and succeeding crop years. The following is a brief description of the significant changes to these provisions. The provisions are available on the Reporting Organization (RO) Server also. Please refer to the provisions for complete information. - The word "fresh" is removed from the title of the policy since plums marketed for uses other than fresh packed are covered. - Section 1 changes the definition of harvest to remove the term "machine." - Section 2(e)(3)(ii) adds optional units by varietal group to be consistent with other policies that offer insurance by crop variety. - Section 3(a) specifies that the insured may select only one price election for all the plums in the county insured under this policy, unless the Special Provisions provide different price elections by varietal group, in which case the insured may select one price election for each varietal group. The price election the insured selects must have the same percentage relationship to the maximum price offered. This helps to protect against adverse selection and simplifies administration of the program. - Section 3(b) specifies that an insured must report damage, removal of trees, and any change in practice that may reduce yields. For the first year of insurance for acreage interplanted with another perennial crop and anytime the planting pattern of such acreage is changed, the insured must report the age and varietal group, if applicable, of any interplanted perennial crop, its planting pattern, and any other information needed to establish the approved yield. If the insured fails to notify the insurer of factors that may reduce yields from previous levels, the insurer will reduce the production guarantee at any time the insurer becomes aware of such factors. This allows the insurance provider to limit liability, if necessary, because of changes affecting the acreage. - Section 6 removes the provision that restricts crop insurance coverage if plums are harvested directly by the public. - Section 6(d) specifies that at least 200 lugs per acre must have been produced in at least 1 of the 3 most recent actual production history crop years. Previous regulations required a minimum of 200 lugs per acre of fresh market production in the previous crop year unless the acreage is inspected by FCIC and approved for coverage. - Section 6(f) allows insurance for plums produced on scions that have not reached the fifth growing season after being grafted to established rootstock if all other requirements for insurability have been met. - Section 7 allows insurance for plums interplanted with another perennial crop in order to make insurance available on more acreage and reduce the reliance on the noninsured crop disaster assistance program (NAP) for protection against crop losses. - Section 8(a)(1) specifies that the insurance period begins on February 1 of each crop year, except for the year of application. If the application is received after January 22 but prior to February 1, insurance will attach on the tenth day after the application is received in the insurance provider's local office unless the acreage is inspected during the 10-day period and does not meet insurability requirements. - Section 8(b) clarifies the procedures when an insurable share is acquired or relinquished on or before the acreage reporting date. - Section 9(a)(6) clarifies that wildlife is an insured cause of loss unless control measures have not been taken. - Section 9(c)(1) clarifies that disease and insect infestation are excluded causes of loss unless adverse weather prevents the proper application of control measures, causes control measures to be ineffective when properly applied, or causes disease or insect infestation for which no effective control mechanism is available. - Section 10(a) specifies the notice requirements if the orchard has suffered a loss and the crop will not be harvested. The notice permits timely appraisal of damaged unharvested acreage. - Section 10(b) requires the producer to give notice at least 15 days prior to harvest so a preharvest inspection can be made if the insured intends to engage in direct marketing to consumers. - Section 10(c) requires the producer to give at least 15 days notice prior to the beginning of harvest or immediately if damage is discovered during harvest to permit the insurance provider to make a timely inspection. - Section 10(d) prohibits the insured from destroying any damaged production until consent is given by the insurance provider. - Sections 11(c)(2)(ii) specifies the adjustment of the production to count for harvested production that is packed and sold as fresh fruit but does not meet California Marketing Order grade requirements. - Sections 11(c)(2)(iii) specifies the adjustment of the production to count for harvested production that is or could be marketed for any use other than fresh packed plums. - Section 12 adds provisions for providing insurance covered by written agreement. FCIC has a long standing policy of permitting certain modifications of the insurance contracts 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 application for and duration of written agreements. Attachment ***********