December 1, 1998

INFORMATIONAL MEMORANDUM: R&D-98-068

TO:      All Reinsured Companies
         All Risk Management Agency Field Offices

FROM:    Tim B. Witt   /s/ Tim B. Witt
         Deputy Administrator

SUBJECT: Loss Adjustment Advisory for Malting Barley Insured Under the Terms of the
         Malting Barley Price and Quality Endorsement or the Income Protection Malting
         Barley Price and Quality Endorsement

BACKGROUND:

Adverse weather conditions have resulted in greater than normal amounts of malting barley
being rejected under the terms of contracts between producers and buyers, and not meeting the
quality standards contained in the provisions of the malting barley endorsements.  In some cases
such barley has been purchased for malting purposes.  In other cases it is in storage and may later
be purchased for malting use.  Provisions of the malting barley endorsements require that all
production used for malting purposes be included as production or value to count, and that no
claim be settled until at least May 31 following the insured crop year when damaged barley
grading U.S. No. 3 or better is being held by an insured.  Questions have come up regarding the
length of time, if any, that an insurance provider may delay settlement of a claim when a
producer continues to hold damaged malting barley production beyond the May 31 date.

ACTION:

In accordance with the provisions of the malting barley endorsements, claims involving
production not meeting the quality criteria contained in the endorsements but that does grade
U.S. No. 3 or higher may not be settled prior to the earlier of:

(a) The date the production is sold, fed, donated or otherwise utilized; or
(b) May 31 of the calendar year immediately following the calendar year in which the
    malting barley is normally harvested.

This provision does not require insurance providers to settle claims on May 31.  If disposition of
the production will occur soon after May 31, the insurance provider may wait to settle the claim
until final use of the barley is known.  If disposition will not occur soon after May 31, insurance
providers may complete the claim but will have the insured sign the following certification:

INFORMATIONAL MEMORANDUM: R&D-98-068                                2

    I certify that barley insured under the Malting Barley Price and Quality Endorsement or
    the Income Protection Malting Barley Price and Quality Endorsement that has not been
    included as production or value to count against my insurance guarantee or unit amount
    of protection, will not be sold for use as malting barley.  If after signing this certification
    such production is sold for use as malting barley, I agree to promptly notify (Insurance
    Provider's Name) and agree that my claim will be recalculated in accordance with all
    applicable policy terms.

DISPOSAL:

The expiration date for this Informational Memorandum is July 31, 1999.