Macadamia Nut Crop Insurance Regulations; and Common Crop Insurance Regulations, Macadamia Nut Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 455 and 457

Macadamia Nut Crop Insurance Regulations; and Common Crop

Insurance Regulations, Macadamia Nut Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes

specific crop provisions for the insurance of macadamia nuts. The

provisions will be used in conjunction with the Common Crop Insurance

Policy Basic Provisions, which contain standard terms and conditions

common to most crops. The intended effect of this action is to provide

policy changes to better meet the needs of the insured, include the

current macadamia nut crop insurance regulations with the Common Crop

Insurance Policy for ease of use and consistency of terms, and to

restrict the effect of the current macadamia nut crop insurance

regulations to the 1997 and prior crop years.

DATES: Written comments, data, and opinions on this proposed rule will

be accepted until close of business May 19, 1997 and will be considered

when the rule is to be made final.

ADDRESSES: Interested persons are invited to submit written comments to

the Director, Product Development Division, Federal Crop Insurance

Corporation, United States Department of Agriculture, 9435 Holmes Road,

Kansas City, MO 64131.

FOR FURTHER INFORMATION CONTACT: Stephen Hoy, Insurance Management

Specialist, Research and Development, Product Development Division,

Federal Crop Insurance Corporation, at the Kansas City, MO, address

listed above, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order No. 12866

The Office of Management and Budget (OMB) has determined this rule

to be exempt for the purposes of Executive Order No. 12866, and,

therefore, has not been reviewed by OMB.

Paperwork Reduction Act of 1995

The information collection requirements contained in these

regulations were previously approved by OMB pursuant to the Paperwork

Reduction Act of 1995 (44 U.S.C. chapter 35) under OMB control number

0563-0003 through September 30, 1998.

Section 7 of the 1999 Macadamia Nut Crop Provisions adds

interplanting as an insurable farming practice for macadamia nuts

interplanted with another perennial crop as long as the crop would not

be adversely affected. This practice was not insurable under the

previous Macadamia Nut Crop Insurance Policy. Consequently,

interplanting information will need to be collected using the FCI-12-P

Pre-Acceptance Perennial Crop Inspection Report form for approximately

0.5 percent of the 46 insureds who interplant their macadamia nut crop.

Standard interplanting language has been added to most perennial crops.

Offering insurance for this practice benefits agriculture because now

more perennial crop producers will be able to purchase increased

coverage than was otherwise available under the noninsured crop

disaster assistance program (NAP).

The amendments set forth in this proposed rule do not contain

additional information collections that require clearance by OMB under

the provisions of 44 U.S.C. chapter 35.

The title of this information collection is ``Catastrophic Risk

Protection Plan and Related Requirements including, Common Crop

Insurance Regulations; Macadamia Nut Crop Insurance Provisions.'' The

information to be collected includes a crop insurance application and

an acreage report. Information collected from the application and

acreage report is electronically submitted to FCIC by the reinsured

companies. Potential respondents to this information collection are

producers of macadamia nuts that are eligible for Federal crop

insurance.

The information requested is necessary for the reinsured companies

and FCIC to provide insurance and reinsurance, determine eligibility,

determine the correct parties to the agreement or contract, determine

and collect premiums or other monetary amounts, and pay benefits.

All information is reported annually. The reporting burden for this

collection of information is estimated to average 16.9 minutes per

response for each of the 3.6 responses from approximately 1,755,015

respondents. The total annual burden on the public for this information

collection is 2,676,932 hours.

FCIC is requesting comments on the following: (a) Whether the

proposed collection of information is necessary for the proper

performance of the functions of the agency, including whether the

information shall have practical utility; (b) the accuracy of the

agency's estimate of the burden of the proposed collection of

information; (c) ways to enhance the quality, utility, and clarity of

the information to be collected; and (d) ways to minimize the burden of

the collection of information on respondents, including through the use

of automated collection techniques or other forms of information

gathering technology.

Comments regarding paperwork reduction should be submitted to the

Desk Officer for Agriculture, Office of Information and Regulatory

Affairs, Office of Management and Budget, Washington, D.C. 20503.

OMB is required to make a decision concerning the collections of

information contained in these proposed regulations between 30 and 60

days after submission to OMB. Therefore, a comment to OMB is best

assured of having full effect if OMB receives it within 30 days of

publication. This does not affect the deadline for the public to

comment on the proposed regulation.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on state, local, and tribal

governments and the private sector. This rule contains no Federal

mandates (under the regulatory provisions of title II of the UMRA) for

[[Page 19064]]

state, local, and tribal governments or the private sector. Thus, this

rule is not subject to the requirements of sections 202 and 205 of the

UMRA.

Executive Order No. 12612

It has been determined under section 6(a) of Executive Order No.

12612, Federalism, that this rule does not have sufficient federalism

implications to warrant the preparation of a Federalism Assessment. The

provisions contained in this rule will not have a substantial direct

effect on states or their political subdivisions, or on the

distribution of power and responsibilities among the various levels of

government.

Regulatory Flexibility Act

This regulation will not have a significant impact on a substantial

number of small entities. The new provisions included in this rule will

not impact small entities to a greater extent than large entities.

Under the current regulations, a producer is required to complete an

application and acreage report. If the crop is damaged or destroyed,

the insured is required to give notice of loss and provide the

necessary information to complete a claim for indemnity. The producer

must also annually certify to the previous years production if adequate

records are available to support the certification. The producer must

maintain the production records to support the certified information

for at least three years. This regulation does not alter those

requirements.

The amount of work required of the insurance companies delivering

and servicing these policies will not increase significantly from the

amount of work currently required. This rule does not have any greater

or lesser impact on the producer. Therefore, this action is determined

to be exempt from the provisions of the Regulatory Flexibility Act (5

U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order No. 12372

This program is not subject to the provisions of Executive Order

No. 12372, which require intergovernmental consultation with state and

local officials. See the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115, June 24, 1983.

Executive Order No. 12988

The provisions of this rule will not have a retroactive effect

prior to the effective date. The provisions of this rule will preempt

state and local laws to the extent such state and local laws are

inconsistent herewith. The administrative appeal provisions published

at 7 CFR part 11 must be exhausted before any action for judicial

review may be brought.

Environmental Evaluation

This action is not expected to have a significant impact on the

quality of the human environment, health, and safety. Therefore,

neither an Environmental Assessment nor an Environmental Impact

Statement is needed.

National Performance Review

This regulatory action is being taken as part of the National

Performance Review Initiative to eliminate unnecessary or duplicative

regulations and improve those that remain in force.

Background

FCIC proposes to add to the Common Crop Insurance Regulations (7

CFR part 457), a new section, 7 CFR 457.131, Macadamia Nut Crop

Insurance Provisions. The new provisions will be effective for the 1999

and succeeding crop years. These provisions will replace and supersede

the current provisions for insuring macadamia nuts found at 7 CFR part

455 (Macadamia Nut Crop Insurance Regulations). FCIC also proposes to

amend 7 CFR part 455 to limit its effect to the 1997 and prior crop

years. FCIC will later publish a regulation to remove and reserve part

455.

This rule makes minor editorial and format changes to improve the

Macadamia Nut Crop Insurance Regulations' compatibility with the Common

Crop Insurance Policy. In addition, FCIC is proposing substantive

changes in the provisions for insuring macadamia nuts as follows:

1. Amend the contract term between the producer and the insurance

provider to provide continuous coverage. The current policy is not a

continuous contract. This change standardizes the Macadamia Nut Crop

Insurance Policy with other crop insurance policies and removes the

requirement of annually filing an application.

2. Section 1--Add definitions for the terms ``age,'' ``days,''

``direct marketing,'' ``good farming practices,'' ``graft,''

``interplanted,'' ``irrigated practice,'' ``non-contiguous,''

``pound,'' ``production guarantee (per acre),'' ``rootstock,'' and

``written agreement'' for clarification. Clarify that the crop year is

designated by the calendar year in which the insurance period ends.

3. Section 2--Describe 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

bearing macadamia trees and be located on non-contiguous land. These

optional unit guidelines standardize macadamia nuts with other

perennial crops.

4. Section 3(a)--Specify that the insured may select only one price

election for all the macadamia nuts in the county insured under the

policy, unless the Special Provisions provide different price elections

by type, in which case the insured may select one price election for

each macadamia nut type designated in the Special Provisions to

standardize these provisions with other crops that allow insurance

prices by type.

5. Section 3(b)--Specify the reporting requirements when any

circumstance occurs that may reduce the expected yields and when the

insured crop is interplanted with another perennial crop to ensure that

the guarantee accurately reflects the production capabilities of the

acreage and to maximize the number of acres which are insurable so that

such acreage need no longer be covered by NAP.

6. Section 4--Establish August 31 as the contract change date.

Previously, the policy contained no contract change date since it was

not a continuous policy.

7. Section 5--Establish December 31 as the cancellation date.

Previously, the policy contained no cancellation date since it was not

a continuous policy.

8. Section 6(d)--Allow insurance coverage for macadamia nuts

produced on trees that have not reached the fifth growing season,

provided they have produced at least 200 pounds (wet, in-shell) per

acre in a previous crop year, and the insurance provider agrees in

writing to provide such coverage in order to increase the number of

acres that are insurable without adversely affecting the actuarial

soundness of the program.

9. Section 6(e)--Specify that the crop insured will be macadamia

nuts that are produced from blooms that normally occur during the

calendar year in which insurance attaches and that are harvested prior

to the end of the insurance period.

10. Section 7--Allow insurance for macadamia nuts interplanted with

another perennial crop in order to conform with other perennial crops

and increase the number of acres available for insurance coverage.

[[Page 19065]]

11. Section 8--Change the calendar date for the end of the

insurance period from December 31 to the second June 30th of the crop

year. The date insurance attaches remains January 1 of each crop year.

Macadamia trees bloom intermittently throughout the entire calendar

year; however, the primary bloom periods usually occur between January

and July of each calendar year. The nuts are harvested approximately

seven to eight months after the bloom period. The macadamia nut

industry's crop production year extends from July 1 of each calendar

year through June 30 of the next calendar year. The insurance period in

the current policy covers the primary bloom periods but ends on

December 31, midway through the industry's crop production year;

therefore, it is not conducive to maintaining Actual Production History

(APH) records or establishing effective loss adjustment procedures. The

proposed insurance period will provide coverage against insured causes

of loss that occur during the bloom periods, subsequently affecting

macadamia nut production during the macadamia nut crop production year.

The first revised insurance period will begin January 1, 1998, and end

June 30, 1999.

12. Section 8(a)--Specify that if the application is received after

December 22 but prior to January 1, insurance will attach on the 10th

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 insurability

requirements are not met. These provisions were modified so they will

not be interpreted as allowing late-filed applications and a thirty day

period in this situation is not reasonable. Ten days is sufficient to

prevent adverse selection and avoid unnecessary exposure to uninsured

losses during the waiting period.

13. Section 8(b)--Add provisions to clarify the procedure for

insuring acreage when an insurable share is acquired or relinquished on

or before the acreage reporting date.

14. Section 9--Clarify that wildlife is an insurable cause of loss,

unless proper measures to control wildlife have not been taken. 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 to be consistent with other crop provisions.

15. Section 10(a)--Specify the notice requirements if the orchard

has suffered a loss and the crop will not be harvested in order to

permit a timely appraisal of any loss and accurately determine

production to count.

16. Section 10(b)--Require 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 in order to

permit a timely appraisal and determine production to count.

17. Section 10(c)--Require the producer to give at least 15 days

notice prior to the beginning of harvest or immediately if damage is

discovered during harvest so damaged production may be inspected.

18. 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.

List of Subjects in 7 CFR Parts 455 and 457

Crop insurance, Macadamia nut.

Proposed Rule

Accordingly, for the reasons set forth in the preamble, the Federal

Crop Insurance Corporation hereby proposes to amend 7 CFR parts 455 and

457, as follows:

PART 455--MACADAMIA NUT CROP INSURANCE REGULATIONS

1. The authority citation for 7 CFR part 455 is amended to read as

follows:

Authority: 7 U.S.C. 1506(l), 1506(p).

2. The subpart heading preceding Section 455.1 is revised to read

as follows:

Subpart--Regulations for the 1988 Through 1997 Crop Years

3. Sec. 455.7 is amended by revising the introductory text of

paragraph (d) to read as follows:

Sec. 455.7 The application and policy.

* * * * *

(d) The application for the 1988 through 1997 crop years is found

at subpart D of part 400, General Administrative Regulations (7 CFR

400.37, 400.38). The provisions of the Macadamia Nut Crop Insurance

Policy for the 1988 through 1997 crop years are as follows:

* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS; REGULATIONS FOR THE

1994 AND SUBSEQUENT CONTRACT YEAR

4. The authority citation for 7 CFR part 457 continues to read as

follows:

Authority: 7 U.S.C. 1506(l), 1506(p).

5. Sec. 457.131 is added to read as follows:

Sec. 457.131 Macadamia Nut Crop insurance provisions.

The Macadamia Nut Crop Insurance Provisions for the 1999 and

succeeding crop years are as follows:

FCIC policies:

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

Reinsured policies:

(Appropriate title for insurance provider)

Both FCIC and reinsured policies:

Macadamia Nut Crop Provisions

If a conflict exists among the Basic Provisions (Sec. 457.8),

these Crop Provisions, and the Special Provisions; the Special

Provisions will control these Crop Provisions and the Basic

Provisions; and these Crop Provisions will control the Basic

Provisions.

1. Definitions

Age--The number of complete 12-month periods that have elapsed

since the month the trees were set out or were grafted, whichever is

later. An age determination will be made for each unit, or portion

thereof, as of January 1 of each crop year.

Crop year--A period beginning with the date insurance attaches

to the macadamia nut crop and extending through the normal harvest

time. It is designated by the calendar year in which the insurance

period ends.

Days--Calendar days.

Direct marketing--Sale of the insured crop directly to consumers

without the intervention of an intermediary such as a wholesaler,

retailer, packer, processor, shipper or buyer. Examples of direct

marketing include selling through an on-farm or roadside stand,

farmer's market, and permitting the general public to enter the

field for the purpose of picking all or a portion of the crop.

Good farming practices--The cultural practices generally in use

in the county for the crop to make normal progress toward maturity

and produce at least the yield used to determine the production

guarantee, and are those recognized by the Cooperative State

Research, Education, and Extension Service as compatible with

agronomic and weather conditions in the county.

Graft--The uniting of a macadamia shoot to an established

macadamia tree rootstock for future production of macadamia nuts.

Harvest--Picking of mature macadamia nuts from the ground.

[[Page 19066]]

Interplanted--Acreage on which two or more crops are planted in

any form of alternating or mixed pattern.

Irrigated practice--A method of producing a crop by which water

is artificially applied during the growing season by appropriate

systems and at the proper times, with the intention of providing the

quantity of water needed to produce at least the yield used to

establish the irrigated production guarantee on the irrigated

acreage planted to the insured crop.

Non-contiguous--Any two or more tracts of land whose boundaries

do not touch at any point, except that land separated only by a

public or private right-of-way, waterway, or irrigation canal will

be considered as contiguous.

Pound--A unit of weight equal to 16 ounces avoirdupois.

Production guarantee (per acre)--The number of wet, in-shell

pounds determined by multiplying the approved APH yield per acre by

the coverage level percentage you elect.

Rootstock--The root and stem portion of a macadamia tree to

which a macadamia shoot can be grafted.

Wet, in-shell--The weight of the macadamia nuts as they are

removed from the orchard with the nut meats in the shells after

removal of the husk but prior to being dried.

Written agreement--A written document that alters designated

terms of this policy in accordance with section 12.

2. Unit Division

(a) Unless limited by the Special Provisions, a unit as defined

in section 1 (Definitions) of the Basic Provisions (Sec. 457.8),

(basic unit) may be divided into optional units if, for each

optional unit you meet all the conditions of this section or if a

written agreement to such division exists.

(b) Basic units may not be divided into optional units on any

basis other than as described in this section.

(c) If you do not comply fully with these provisions, we will

combine all optional units that are not in compliance with these

provisions into the basic unit from which they were formed. We will

combine the optional units at any time we discover that you have

failed to comply with these provisions. If failure to comply with

these provisions is determined to be inadvertent, and the optional

units are combined into a basic unit, that portion of the additional

premium paid for the optional units that have been combined will be

refunded to you for the units combined.

(d) All units you selected for the crop year must be identified

on the acreage report for that crop year.

(e) The following requirements must be met for each optional

unit:

(1) You must have records, which can be independently verified,

of acreage and production for each optional unit for at least the

last crop year used to determine your production guarantee;

(2) You must have records of marketed production or measurement

of stored production from each optional unit maintained in such a

manner that permits us to verify the production from each optional

unit, or the production from each unit must be kept separate until

loss adjustment is completed by us;

(3) Each optional unit must contain at least 80 acres of bearing

macadamia trees; and

(4) Each optional unit must be located on non-contiguous land.

3. Insurance Guarantees, Coverage Levels, and Prices for Determining

Indemnities

In addition to the requirements of section 3 (Insurance

Guarantees, Coverage Levels, and Prices for Determining Indemnities)

of the Basic Provisions (Sec. 457.8):

(a) You may select only one price election for all the macadamia

nuts in the county insured under this policy unless the Special

Provisions provide different price elections by type, in which case

you may select one price election for each macadamia nut type

designated in the Special Provisions. The price elections you choose

for each type must have the same percentage relationship to the

maximum price offered by us for each type. For example, if you

choose 100 percent of the maximum price election for one type, you

must also choose 100 percent of the maximum price election for all

other types.

(b) You must report, by the production reporting date designated

in section 3 (Insurance Guarantees, Coverage Levels, and Prices for

Determining Indemnities) of the Basic Provisions (Sec. 457.8), by

type if applicable:

(1) Any damage, removal of trees, change in practices, or any

other circumstance that may reduce the expected yield below the

yield upon which the insurance guarantee is based and the number of

affected acres;

(2) The number of bearing trees on insurable and uninsurable

acreage;

(3) The age of the trees and the planting pattern; and

(4) For the first year of insurance for acreage interplanted

with another perennial crop, and anytime the planting pattern of

such acreage is changed:

(i) The age of the interplanted crop, and type if applicable;

(ii) The planting pattern; and

(iii) Any other information that we request in order to

establish your approved yield.

We will reduce the yield used to establish your production

guarantee as necessary, based on our estimate of the effect of the

following: interplanted perennial crop; removal of trees; damage;

change in practices and any other circumstance on the yield

potential of the insured crop. If you fail to notify us of any

circumstance that may reduce your yields from previous levels, we

will reduce your production guarantee as necessary at any time we

become aware of the circumstance.

4. Contract Changes

In accordance with section 4 (Contract Changes) of the Basic

Provisions (Sec. 457.8), the contract change date is August 31

preceding the cancellation date.

5. Cancellation and Termination Dates

In accordance with section 2 (Life of Policy, Cancellation, and

Termination) of the Basic Provisions (Sec. 457.8), the cancellation

and termination dates are December 31.

6. Insured Crop

In accordance with section 8 (Insured Crop) of the Basic

Provisions (Sec. 457.8), the crop insured will be all macadamia nuts

in the county for which a premium rate is provided by the actuarial

table:

(a) In which you have a share;

(b) That are grown on tree varieties that:

(1) Were commercially available when the trees were set out;

(2) Are adapted to the area; and

(3) Are grown on a rootstock that is adapted to the area.

(c) That are grown in an orchard that, if inspected, is

considered acceptable by us;

(d) That have reached at least the fifth growing season after

being set out or grafted. However, we may agree in writing to insure

acreage that has not reached this age if it has produced at least

200 pounds of (wet, in-shell) macadamia nuts per acre in a previous

crop year; and

(e) That are produced from blooms that normally occur during the

calendar year in which insurance attaches and that are normally

harvested prior to the end of the insurance period.

7. Insurable Acreage

In lieu of the provisions in section 9 (Insurable Acreage) of

the Basic Provisions (Sec. 457.8), that prohibit insurance attaching

to a crop planted with another crop, macadamia nuts interplanted

with another perennial crop are insurable unless we inspect the

acreage and determine that it does not meet the requirements

contained in your policy.

8. Insurance Period

(a) In accordance with the provisions of section 11 (Insurance

Period) of the Basic Provisions (Sec. 457.8):

(1) Coverage begins on January 1 of each crop year, except that

for the year of application, if your application is received after

December 22 but prior to January 1, insurance will attach on the

10th day after your properly completed application is received in

our local office, unless we inspect the acreage during the 10 day

period and determine that it does not meet insurability

requirements. You must provide any information that we require for

the crop or to determine the condition of the orchard.

(2) The calendar date for the end of the insurance period for

each crop year is the second June 30th of the crop year.

(b) In addition to the provisions of section 11 (Insurance

Period) of the Basic Provisions (Sec. 457.8):

(1) If you acquire an insurable share in any insurable acreage

after coverage begins but on or before the acreage reporting date

for the crop year, and after an inspection we consider the acreage

acceptable, insurance will be considered to have attached to such

acreage on the calendar date for the beginning of the insurance

period.

(2) If you relinquish your insurable share on any insurable

acreage of macadamia nuts on or before the acreage reporting date

for the crop year, insurance will not be considered to have attached

to, and no premium or indemnity will be due for such acreage for

that crop year unless:

(i) A transfer of coverage and right to an indemnity, or a

similar form approved by us,

[[Page 19067]]

is completed by all affected parties; (ii) We are notified by you or

the transferee in writing of such transfer on or before the acreage

reporting date; and

(iii) The transferee is eligible for crop insurance.

9. Causes of Loss

(a) In accordance with the provisions of section 12 (Causes of

Loss) of the Basic Provisions (Sec. 457.8), insurance is provided

only against the following causes of loss that occur during the

insurance period:

(1) Adverse weather conditions;

(2) Fire, unless weeds and other forms of undergrowth have not

been controlled or pruning debris has not been removed from the

orchard;

(3) Earthquake;

(4) Volcanic eruption;

(5) Wildlife, unless proper measures to control wildlife have

not been taken; or

(6) Failure of irrigation water supply, if caused by an insured

peril that occurs during the insurance period.

(b) In addition to the causes of loss excluded in section 12

(Causes of Loss) of the Basic Provisions (Sec. 457.8), we will not

insure against damage or loss of production due to:

(1) Disease or insect infestation, unless adverse weather:

(i) Prevents the proper application of control measures or

causes properly applied control measures to be ineffective; or

(ii) Causes disease or insect infestation for which no effective

control mechanism is available; or

(2) Inability to market the macadamia nuts for any reason other

than actual physical damage from an insurable cause specified in

this section. For example, we will not pay you an indemnity if you

are unable to market due to quarantine, boycott, or refusal of any

person to accept production.

10. Duties in the Event of Damage or Loss

In addition to the requirements of section 14 (Duties in the

Event of Damage or Loss) of the Basic Provisions (Sec. 457.8), the

following will apply:

(a) You must notify us within 3 days of the date harvest should

have started if the crop will not be harvested.

(b) You must notify us at least 15 days before any production

from any unit will be sold by direct marketing. We will conduct an

appraisal that will be used to determine your production to count

for production that is sold by direct marketing. If damage occurs

after this appraisal, we will conduct an additional appraisal. These

appraisals, and any acceptable records provided by you, will be used

to determine your production to count. Failure to give timely notice

that production will be sold by direct marketing will result in an

appraised amount of production to count of not less than the

production guarantee per acre if such failure results in our

inability to make the required appraisal.

(c) If you intend to claim an indemnity on any unit, you must

notify us at least 15 days prior to the beginning of harvest or

immediately if damage is discovered during harvest, so that we may

inspect the damaged production. If you fail to notify us and such

failure results in our inability to inspect the damaged production,

we may consider all such production to be undamaged and include it

as production to count.

11. Settlement of Claim

(a) We will determine your loss on a unit basis. In the event

you are unable to provide separate, acceptable production records:

(1) For any optional units, we will combine all optional units

for which such production records were not provided; or

(2) For any basic units, we will allocate any commingled

production to such units in proportion to our liability on the

harvested acreage for the units.

(b) In the event of loss or damage covered by this policy, we

will settle your claim by:

(1) Multiplying the insured acreage for each type, if

applicable, by its respective production guarantee;

(2) Multiplying each result in section 11(b)(1) by the

respective price election for each type, if applicable;

(3) Totaling the results in section 11(b)(2);

(4) Multiplying the total production to be counted of each type,

if applicable, (see section 11(c)) by the respective price election;

(5) Totaling the results in section 11(b)(4);

(6) Subtracting the total in section 11(b)(5) from the total in

section 11(b)(3); and

(7) Multiplying the result in section 11(b)(6) by your share.

(c) The total production to count (wet, in-shell pounds) from

all insurable acreage on the unit will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee per acre for acreage:

(A) That is abandoned;

(B) That is sold by direct marketing if you fail to meet the

requirements contained in section 10;

(C) That is damaged solely by uninsured causes; or

(D) For which you fail to provide acceptable production records;

(ii) Production lost due to uninsured causes;

(iii) Unharvested production; and

(iv) Potential production on insured acreage that you intend to

abandon or no longer care for, if you and we agree on the appraised

amount of production. Upon such agreement, the insurance period for

that acreage will end. If you do not agree with our appraisal, we

may defer the claim only if you agree to continue to care for the

crop. We will then make another appraisal when you notify us of

further damage or that harvest is general in the area unless you

harvested the crop, in which case we will use the harvested

production. If you do not continue to care for the crop, our

appraisal made prior to deferring the claim will be used to

determine the production to count; and

(2) All harvested production from the insurable acreage.

12. Written Agreements

Designated terms of this policy may be altered by written

agreement in accordance with the following:

(a) You must apply in writing for each written agreement no

later than the sales closing date, except as provided in section

12(e);

(b) The application for a written agreement must contain all

variable terms of the contract between you and us that will be in

effect if the written agreement is not approved;

(c) If approved, the written agreement will include all variable

terms of the contract, including, but not limited to, crop type or

variety, the guarantee, premium rate, and price election;

(d) Each written agreement will only be valid for one year (If

the written agreement is not specifically renewed the following

year, insurance coverage for subsequent crop years will be in

accordance with the printed policy); and

(e) An application for a written agreement submitted after the

sales closing date may be approved if, after a physical inspection

of the acreage, it is determined that no loss has occurred and the

crop is insurable in accordance with the policy and written

agreement provisions.

Signed in Washington D.C., on April 10, 1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

[FR Doc. 97-10042 Filed 4-17-97; 8:45 am]

BILLING CODE 3410-FA-P