INFORMATIONAL MEMORANDUM: R&D-97-072 TO: All Reinsured Companies All Risk Management Field Offices FROM: Tim B. Witt /S/ TIM B. WITT 09/29/97 Deputy Administrator SUBJECT: Modifications to Perennial Crop APH Procedures in the States Serviced by the Sacramento Regional Service Office BACKGROUND: Reinsured companies requested modifications to the perennial crop Actual Production History (APH) procedure in the states serviced by the Sacramento Risk Management Agency (RMA) Regional Service Office (RSO). The purpose of the modifications requested is to simplify calculation of approved APH yields by reducing the number of situations that require the use of Block Production and Unit Summary Worksheets. For these situations, companies currently hand-calculate weighted APH yields using Block Production Worksheets and Unit Summaries and then transfer the weighted APH yields to APH forms. Block production worksheets/unit summaries are designed to calculate equitable APH yields when producers have units that contain two or more blocks of insurable acreage with different yield potential. RMA has reviewed the request and agrees that APH procedures relating to Block Production and Unit Summary Worksheets may be simplified, because of the following determinations: 1 The Sacramento RSO indicates that tree/vine age is not a significant factor affecting yield potential for the crops in this region for which modifications are requested. They state that such crops produce within 90-95 percent of full production when the minimum age requirements of the respective policy are met. 2 A single Transitional Yield ("T" Yield) has been published by the Sacramento RSO for each crop (varieties for grapes and table grapes) that reflects the same productivity across insurable tree/vine ages. 3 Reducing the number of situations for added land and added insurable acreage that require the use of Block Production and Unit Summary Worksheets and eliminating tree/vine age categories will simplify procedures as requested and not significantly affect approved APH yields. ACTION: Beginning with the 1998 crop year, use the following APH modifications relating to crop/age categories, cups/caps, added land, and "added insurable acreage" for the following perennial crops; almonds, AZ-CA citrus (effective for the 1999 crop year), figs, plums, grapes, macadamia nuts, prunes, stonefruit, table grapes and walnuts. These modifications apply ONLY in Arizona, California, Hawaii, Nevada, and Utah (states serviced by the Sacramento RSO). Insurance Providers must continue to use the 1998 FCIC 18010, Crop Insurance Handbook (CIH) for other perennial crop APH procedures such as record requirements, variable "T" Yield instructions, and other situations not covered in this memorandum. 1 CROP/AGE CATEGORIES - Because separate "T" Yields were not issued for the different insurable age categories as indicated in Section 7, Par I (1) of the 1998 CIH, RMA will waive (for the listed crops and states) separate Block Production and Unit Summary Worksheet requirements if blocks of different insurable ages are contained within the same unit. 2 CUPS/CAPS - If the previous year's approved APH yield was calculated using block production worksheets and a unit summary (a weighted average yield) and use of the block production/unit summary worksheets is discontinued for the current crop year, procedures for calculating cups or caps do not apply for the current crop year. 3 ADDED LAND - Added land for perennial crops is a block of insurable acreage of the insured crop that is purchased or leased for the first time for the current crop year. When adding land with insurable acreage to an existing unit and acceptable production reports/supporting records for the added land's insurable acreage are: A NOT provided, refer to the CIH for APH yield calculation instructions. B Provided for 1-3 crop years, calculate a weighted average yield. Block Production Worksheets and a Unit Summary Worksheet are required. Refer to the CIH for reporting and APH yield calculation instructions. If "added insurable acreage" is also applicable, refer to Par. 4. It may be necessary to use Block Production Worksheets and a Unit Summary Worksheet. Note: In a subsequent crop year when the added land block contains 4 years of actual/assigned yields, acres and production are combined with the other block (Block Production/Unit Summary Worksheets are discontinued). C Provided for 4 or more crop years, a simple average yield is calculated. The acreage and production from the added land are combined with the existing unit. Block Production Worksheets and a Unit Summary Worksheet are NOT required. Note: If "added insurable acreage" is also applicable, follow the instructions in Paragraph 4. It may be necessary to use Block Production Worksheets and a Unit Summary Worksheet. 4 ADDED INSURABLE ACREAGE - "Added insurable acreage" is acreage within a unit that meets minimum insurability requirements for the first time for the current crop year. When "added insurable acreage" is added to previously insured acreage (an existing unit that had an approved APH yield the previous crop year), use the following instructions. A When separate acceptable supporting production records are provided for "added insurable acreage" and the percentage (1/) of the added insurable acreage is: (1) Less than 70 percent of the existing unit's acreage, a simple average yield is calculated on the APH Form (Block Production and Unit Summary Worksheets are not required). (a) Acres and production from the previously uninsurable acreage must be documented on a block production worksheet; however, a unit summary is not used to calculate the APH yield. Note: A qualifying actual yield (and acres) from a previous crop year must be used if minimum production is required by the policy. For crops with minimum age requirements ONLY, the previous year's production (and acres) may be used. When a year with actual yields are used, both the acreage and production must be entered on the APH form. Refer to Sec. 7, Par. H(1)(c) and K(1)(a) 2& 3 of the CIH for reporting requirements. (b) The total acreage to which the approved yield is applicable must be indicated along with the approved yield (e.g., 11.2 tons for 55.2 acres) in the approved APH yield block. (2) Seventy percent or greater than the existing unit's acreage, a weighted average yield is calculated. (a) Block Production Worksheets and a Unit Summary Worksheet are required. See the CIH for instructions. (b) In a subsequent crop year when the "added insurable acreage" block contains 4 years of actual/assigned yields, acres and production are combined with the other block (Block Production Worksheets/Unit Summary Worksheets are discontinued). B If separate acceptable supporting production records are NOT provided for the "added insurable acreage" [see Par. 4A(1)(a)], the approved APH yield is calculated using a simple average of the total acreage and production (insurable and uninsurable) for all years that production was not separated. See the CIH for instructions. 1/ "Added insurable acreage" divided by previously insurable acreage in the same unit.