July 25, 1997
     
     
INFORMATIONAL MEMORANDUM: R&D-97-057
     
TO:       All Reinsured Companies
          All Risk Management Field Offices
       
FROM:     Tim B. Witt              /s/ R. E. Waggoner (for)
          Deputy Administrator
 
SUBJECT:  Macadamia Tree Crop Insurance Provisions   
     
Attached is a copy of the Macadamia Tree 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 also available on the Reporting Organization (RO) Server. 
Please refer to the provisions for complete information.
     
- The contract term between the producer and the insurance provider is
  amended to provide continuous coverage.  The current policy is not a
  continuous contract.  This change removes the requirement of annually
  filing an application.
     
- Section 1 adds definitions for the terms "days," "good farming
  practices," "interplanted," "irrigated practice," "non-contiguous,"
  "rootstock," and "written agreement" for clarification. The definition
  of  "planting pattern" is deleted.  This is a commonly understood term
  that is not defined in other crop policies.
     
- Section 2 describes the guidelines under which basic units may be
  divided into optional units consistent with other perennial crops
  offering optional units.  These provisions also incorporate the
  requirement that each optional unit must contain at least 80 acres of
  insurable macadamia trees or be located on non-contiguous land.
     
- Section 3(a)(1) specifies that the insured may select only one dollar
  amount of insurance for all the macadamia trees in the county in each
  age group contained in the actuarial table that are insured under the
  policy to standardize these provisions with other perennial crops. 
  The dollar amount of insurance chosen by the insured for each age
  group must have the same percentage relationship to the maximum dollar
  amount offered by the insurance provider for each age group. 
     
- Section 3(a)(3) specifies the reporting requirements when any
  circumstance occurs that may be expected to cause a reduction in the
  dollar amount of insurance and when the insured crop is interplanted
  with another perennial crop.  This ensures that the amount of
  insurance accurately reflects the value of the trees and maximizes the
  number of acres which are insurable.
     
- Section 4 establishes August 31 as the contract change date. 
  Previously, the policy contained no contract change date since it was
  not a continuous policy.
     
- Section 5 establishes December 31 as the cancellation date. 
  Previously, the policy contained no cancellation date since it was not
  a continuous policy.
     
- Section 7 allows insurance for macadamia trees interplanted with
  another perennial crop in order to increase the number of acres that
  are insurable without adversely affecting the actuarial soundness of
  the program.
     
- Section 8(a) specifies that if the application is received after
  December 22 but prior to January 1, insurance will attach on the tenth
  day after the insured's properly completed application is received in
  the insurance provider's local office unless the acreage is inspected
  during the 10-day period, and it is determined that requirements of
  the insurance contract are not met. 
     
- Section 8(b) adds provisions to clarify the procedure for insuring
  acreage when an insurable share is acquired or relinquished on or
  before the acreage reporting date. 
    
- Section 9 adds adverse weather conditions, earthquake, failure of
  irrigation water supply, and wildlife, unless proper control measures
  to control wildlife have not been taken, as insurable causes of loss.
  Wind is deleted because it is encompassed by the term adverse weather. 
  Disease and insect infestation are also excluded as 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 12 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.
     
Attachment