October 29, 1997
     
INFORMATIONAL MEMORANDUM: R&D-97-078
     
TO:      All Reinsured Companies
         All Risk Management Field Offices
     
FROM:    Tim B. Witt            /s/ TIM B. WITT
         Deputy Administrator
     
SUBJECT: 1998 Prune Crop Insurance Provisions
     
Attached is a copy of the Prune Crop Insurance Provisions effective for
the 1998 and succeeding crop years.  A brief description of the
significant changes to these provisions follows.  The provisions are
also available on the Reporting Organization (RO) Server.  Please refer
to the provisions for complete information.
     
- Section 1 - Add definitions for the terms "days," "direct marketing,"
  "FSA," "good farming practices," "interplanted," "irrigated practice,"
  "non-contiguous land," "production guarantee," "ton," "written
  agreement," and change the definition of "prune" for clarification.
     
- Section 2(a) - Change provisions to allow a basic unit as defined in
  section 1 of the Basic Provisions, to be divided into optional units
  if, for each optional unit,  all the conditions of section 2 are met.  
     
- Section 2(c) - Specify that failure to comply with the provisions in
  section 2 will result in combining all optional units that are not in
  compliance with these provisions into the basic unit from which they
  were formed.  Optional units may be combined at any time it is
  discovered that the insured failed to comply with these provisions.
     
- Section 2(d) - Specify that all optional units established for a crop
  year must be identified on the acreage report for that crop year.
     
- Section 2(e) - Specify that each optional unit must meet the following
  requirements: (1) The insured must provide records by the production
  reporting date of acreage and production for each optional unit for at
  least the last crop year used to determine the production guarantee;
  (2) For each crop year, the insured must have records of marketed
  production from each optional unit maintained in a manner that permits
  verification of the production from each optional unit.  In addition,
  each optional unit must meet one of the following criteria: 
  (1) Optional units may be established if each optional unit is located
  on a separate legally identified section, section equivalent or Farm
  Serial Number; or (2) Optional units may be established if each
  optional unit is located on non-contiguous land. 

- Section 3(a) - Specify that the insured may select only one price
  election for all the prunes 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 designate in the Special Provisions. 
     
- Section 3(b) - Specify that the insured must report by the production
  reporting date, any damage, removal of trees, change in practices or
  any other circumstance that may reduce yields.  The insured must also
  report, for the first year of insurance for acreage interplanted with
  another perennial crop and anytime the planting pattern of such
  acreage is changed, the age and varietal group of the interplanted
  crop, its planting pattern and any other information that the insurer
  requests in order to establish the yield upon which the production
  guarantee is based.  If the insured fails to notify the insurer of any
  circumstance that may reduce yields from previous levels, the insurer
  will reduce the production guarantee at any time the insurer becomes
  aware of the circumstance.  Current regulations provide that
  production guarantees will be reduced when the number of bearing trees
  has been reduced by more than 10 percent from the preceding year. 
  This change will standardize these provisions with provisions
  contained in other perennial crop policies.
     
- Section 6(c) - Clarify that the insured crop must be grown on prune
  tree varieties that were commercially available when the trees were
  set out and on rootstock that is adapted to the area.
     
- Section 7 - Add provisions to make interplanted prunes insurable if
  planted with another perennial crop unless the insurance provider
  inspects the acreage and determines it does not qualify to be accepted
  for insurance coverage.  This provision was added to provide insurance
  coverage to the maximum extent to all prune producers, and to reduce
  the number of acres that would require coverage under the Non-insured
  Assistance Program (NAP).
     
- Section 8 - Add provisions to clarify the procedure when an insurable
  share is acquired or relinquished on or before the acreage reporting
  date.
       
- Section 9(a) - Remove direct Mediterranean Fruit Fly damage as an
  insured cause of loss. Effective control measures are now available,
  therefore, damage due to Mediterranean Fruit Fly is no longer needed
  as an insured cause of loss.  
     
- Section 9(a)(6) - Clarify that failure of the irrigation water supply
  is an insured cause of loss, if such failure is due to a cause
  specified in section 9(a)(1) through (5) that occurs during the
  insurance period.
     
- Section 9(b)(1) - Add disease and insect infestation to the excluded
  causes of loss, unless adverse weather prevents the proper application
  of control measures, causes control measures to be ineffective when
  properly applied, or no effective control mechanism is available for
  such disease or insect infestation.  These exclusions need to be added
  for clarification so insurance coverage is not provided for causes of
  loss that could be prevented.
     
- Section 9(b)(2) - Clarify that insurance is not provided against
  damage or loss of production due to the inability to market the prunes
  for any reason other than actual physical damage to the prunes from an
  insurable cause.
     
- Section 10(a) - Require that the insured give notice of loss within 3
  days of the date harvest should have started if the crop is not to be
  harvested.  Previous regulations required written notice if during the
  period before harvest, any prunes would not be harvested or further
  cared for.  This change will standardize the notice of loss
  requirements utilized in other perennial crops.
     
- Section 10(b) - Require notice of loss to be provided at least 15 days
  before any production will be sold by direct marketing or sold as
  fresh fruit.  This change will assure that a timely notice of loss is
  provided so that a pre-harvest inspection can be made to determine the
  total amount of production to count when the prunes will be harvested
  for direct marketing or fresh fruit. 
     
- Section 10(c) - Change the notice of loss requirements when the
  insured intends to claim an indemnity.  Require that notice of loss be
  provided at least 15 days prior to the beginning of harvest or
  immediately if damage is discovered during harvest.  Previous prune
  regulations required notice of loss not later than 10 days after
  harvest or the end of the insurance period. This change will
  incorporate and standardize the notice of loss requirements utilized
  for other perennial crops.
     
- Section 10(d) - Specify that the insured cannot destroy the damaged
  crop until we have given written consent to do so.  However, the
  insured may sell or dispose of the damaged crop if there is a market
  for it.  Previous regulations required written consent before the
  insured destroyed any of the prunes which were not to be harvested. 
  This change conforms with the requirements contained in other crop
  policies.
     
- Section 11(a) - Clarify indemnity calculations by providing a
  settlement of claim example.  This change incorporates provisions
  contained in other crop policies.
     
- Section 11(c)(1)(i)(B) - Specify that production to count will not be
  less than the production guarantee per acre for any acreage that is
  marketed directly to consumers or sold as fresh fruit if the producer
  fails to meet the notification requirements contained in section 10.
     
- Section 11(c)(1)(iv) - Require the insured to continue to provide
  sufficient care for the insured crop 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 11(d) - Clarify that the total harvested production to count
  will include prune production harvested for fresh fruit.  Such fresh
  fruit production will be converted to a dried prune weight basis by
  dividing the total amount of fresh fruit production by 3.0.  This
  change is consistent with other perennial crops.
     
- Section 12 - Add 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.
     
- Remove the date for submitting an acreage report.  In accordance with
  the Common Crop Insurance Policy, Basic Provisions, the acreage
  reporting date will be contained in the Special Provisions.  This
  change is consistent with other crop policies.
     
If you have any questions, please contact David Clauser of the Product
Development Division at (816) 927-7730.

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