Popcorn Crop Insurance Regulations; and Common Crop Insurance Regulations, Popcorn Crop Insurance Provisions

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 447 and 457

RIN 0563-AB48

Popcorn Crop Insurance Regulations; and Common Crop Insurance

Regulations, Popcorn Crop Insurance Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes

specific crop provisions for the insurance of popcorn. 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

popcorn 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 popcorn crop insurance regulations to the 1998

and prior crop years.

EFFECTIVE DATE: July 22, 1998.

FOR FURTHER INFORMATION CONTACT: Linda Williams, Insurance Management

Specialist, Research and Development, Product Development Division,

Federal Crop Insurance Corporation, United States Department of

Agriculture, 9435 Holmes Road, Kansas City, MO 64131, telephone (816)

926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be exempt for the purposes of

Executive Order 12866 and, therefore, has not been reviewed by the

Office of Management and Budget (OMB).

Paperwork Reduction Act of 1995

Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter

35), the collections of information have been approved by the Office of

Management and Budget (OMB) under control number 0563-0053 through

October 31, 2000.

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

State, local, and tribal governments or the private sector. Therefore,

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

the UMRA.

Executive Order 12612

It has been determined under section 6(a) of Executive Order 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 economic impact on a

substantial number of small entities. The amount of work required of

the insurance companies will not increase because the information used

to determine eligibility is already maintained at their office and the

other information now required is already being gathered as a result of

the present policy. No additional actions are required as a result of

this action on the part of either the insured or the insurance

companies. Additionally, this regulation does not require any greater

action on the part of small entities than is required on the part of

large entities. 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 12372

This program is not subject to the provisions of Executive Order

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 12988

This rule has been reviewed in accordance with Executive Order

12988 on civil justice reform. The provisions of this rule will not

have a retroactive effect. 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 of any determination made by FCIC 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

On Wednesday, April 9, 1997, FCIC published a notice of proposed

rulemaking in the Federal Register at 62 FR 17103 to add to the Common

Crop Insurance Regulations (7 CFR part 457), a new section, 7 CFR

457.126, Popcorn 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 popcorn found

at 7 CFR part 447 (Popcorn Crop Insurance Regulations). FCIC also

amends 7 CFR part 447 to limit its effect to the 1998 and prior crop

years.

Following publication of the proposed rule, the public was afforded

30 days to

[[Page 33836]]

submit written comments and opinions. A total of 31 comments were

received from an insurance service organization and reinsured

companies. The comments received and FCIC's responses are as follows:

Comment: An insurance service organization and two reinsured

companies asked whether, under the definition of ``good farming

practices,'' there may exist acceptable cultural practices that are not

necessarily recognized (or possibly not known) by the Cooperative State

Research, Education, and Extension Service. The commenters recommended

changing the term ``county'' in the definition of ``good farming

practices'' to ``area.'' The insurance service organization also

recommended adding the word ``generally'' before ``recognized by the

Cooperative State Research, Education, and Extension Service * * *''

Response: The Cooperative State Research, Education, and Extension

Service (CSREES) recognizes farming practices that are considered

acceptable for producing popcorn. If a producer is following practices

currently not recognized as acceptable by the CSREES, such recognition

can be sought by interested parties. Use of the term ``generally'' will

only make the definition ambiguous and more difficult to administer.

Although the cultural practices recognized by the CSREES may only

pertain to specific areas within a county, the actuarial documents are

on a county basis. However, the definition of ``good farming

practices'' has been moved to the Basic Provisions.

Comment: A reinsured company expressed concern about the definition

of ``final planting date'' because it infers that coverage is provided

after the final planting date; however, there are no provisions for

``late planting.''

Response: The definition of ``late planting'' as well as provisions

for late and prevented planting coverages common to most crops have

been moved to the Basic Provisions. FCIC has added late planting

provisions, section 14, and prevented planting provisions, section 15,

to these popcorn crop provisions.

Comment: A reinsured company recommended adding the words ``and

quality'' after the word ``quantity'' in the definition of ``irrigated

practice.''

Response: There are no clear criteria regarding the quality of

water necessary to produce a crop. The highly variable factors involved

would make such criteria difficult to develop and administer. The

provisions regarding good farming practices can be applied in

situations in which the insured person failed to exercise due care and

diligence. The definition of ``irrigated practice'' has been moved to

the Basic Provisions.

Comment: An insurance service organization and a reinsured company

stated the definition of ``replanting'' is confusing and awkward. One

of the commenters recommended revising the definition to specify ``* *

* growing a successful popcorn crop.''

Response: The definition of ``replanting'' clearly describes the

steps required to replant the crop. The producer must first perform the

cultural practices needed to replant the seed before replanting the

seed. FCIC has revised the definition to specify that the crop be

replanted with the expectation of producing at least the guarantee. The

definition of ``replanting'' has been moved to the Basic Provisions.

Comment: A reinsured company recommended that the reference

contained in the definition of ``written agreement'' should be section

14 rather than section 15.

Response: The provisions for written agreements have been moved to

the Basic Provisions with reference to the correct section.

Comment: An insurance service organization and a reinsured company

recommended amending section 2 of the proposed rule to clarify whether

optional units may be established if the processor contract stipulates

the number of contracted acres, or only if the contract does not

specify an amount of production.

Response: FCIC has amended section 2 to specify that processor

contracts that stipulate a specific amount of production to be

delivered, the basic unit will consist of all the acreage planted to

the insured crop in the county that will be used to fulfill contracts

with each processor, and optional units will not be established for

such production-based processor contracts. The language in section 2

has also been revised and reformatted to clearly state the requirements

for both the acreage-based and production-based processor contracts. In

addition, language in this section that is common with other Crop

Provisions has been moved to the Basic Provisions.

Comment: An insurance service organization recommended removal of

the opening phrase in section 2(b)(5)(iv)(B) that states ``In addition

to, or instead of establishing optional units by section, section

equivalent, or FSA Farm Serial Number, * * * ``since section

2(b)(5)(iv) specifies that ``Each optional unit must meet one or more

of the following criteria* * *.''

Response: FCIC has revised the language accordingly. However, the

optional unit provisions common to most crops have been moved to the

Basic Provisions.

Comment: An insurance service organization stated that the language

in section 3(a) which provides guidelines for selection of price

elections should be moved to the Basic Provisions.

Response: The requirement that the price election (for each type,

varietal group, etc.) have the same percentage relationship to the

maximum prices does not apply to all crop policies. However, this

clause applies to a sufficient number of policies so as to make it an

item for consideration whenever 7 CFR part 457 is amended. This

recommendation will be considered at that time, and no change has been

made to these popcorn provisions.

Comment: An insurance service organization expressed concern that

the November 30 contract change date is not early enough for counties

with a January 15 sales closing date.

Response: The January 15 cancellation and termination dates are

applicable only to counties in the most southern part of Texas. The

commenter did not provide specific details as to why the November 30

contract change date is not sufficient. FCIC believes that the 45 days

between the contract change date and the cancellation date allows an

ample period of time for the insured to make a decision regarding

subsequent crop year coverages considering the small number of policies

and areas involved. Therefore, no change has been made.

Comment: An insurance service organization stated that section 6

which requires the producer to provide a copy of the processor contract

no later than the acreage reporting date, could provide a loophole by

allowing producers to wait until acreage reporting time to decide if

they want coverage.

Response: There is no evidence that allowing the producer to

provide a copy of the processor contract as late as the acreage

reporting date has resulted in producers waiting to decide until the

acreage reporting date if they want coverage. Popcorn producers will

have processor contracts much sooner to ensure that they have a market

before expending the costs to plant the crop. The requirement to

provide a copy of the processor contract with the acreage report is

also most convenient for the producer. Language in section 6 has been

revised to clarify that a copy of all processor contracts must be

provided on or before the acreage reporting date.

[[Page 33837]]

Comment: An insurance service organization recommended changing the

word ``before'' in section 7(a)(3) to ``by'' or ``on or before'' the

acreage reporting date. This would allow for the processor contract to

be established that day.

Response: FCIC has amended the provision accordingly.

Comment: An insurance service organization questioned whether any

processor contract would allow interplanted popcorn or popcorn planted

into an established grass or legume. The commenter further indicted

that consideration should be given to inserting the language in section

7(a)(4) into the Basic Provisions.

Response: Popcorn has seldom, if ever, been interplanted with

another crop or planted into an established grass or legume. However,

production practices are constantly evolving. FCIC chooses to retain

the provisions of section 7(a)(4) to accommodate such developments if

they should occur. In addition, interplanting provisions are not the

same among the crop policies and, therefore, will be retained in the

Crop Provisions.

Comment: An insurance service organization indicated that the

provisions contained in section 7(b) are confusing and seem to indicate

that only a landlord would have a share in the insured crop and that a

tenant cannot have a share since that person does not retain possession

of the acreage. The commenter questioned whether the provision in

section 7(b) is already covered in sections 7(a) (1) and (3).

Response: The language in section 7(b) was intended to cover

producers who have a crop share agreement, rent, or owns acreage. The

word ``possession'' has been changed to ``control'' for clarification

and FCIC has added that the insured must have a risk of loss. Section

7(a) specifies requirements for insurance coverage on the crop, while

section 7(b) specifies requirements for an insurable share in the crop.

Therefore, both provisions are necessary.

Comment: Two comments from an insurance service organization and

one from a reinsured company questioned whether the provisions in

section 9(b), which state that the insurance period ceases on the date

sufficient production is harvested to fulfill the producer's processor

contract, conflicts with the provisions in section 13(a), that states

``We will determine your loss on a unit basis.'' The commenters

questioned how the insured will know enough production has been

harvested before acceptance by the processor. One commenter stated that

the insured may not be aware of discounts and production modifications

(e.g., shrinkage, foreign material, etc.) that may be imposed by the

processor. The insured may believe the contracted amount of production

has been harvested and later learn that the amount harvested is short

of the production guarantee. The insurance service organization asked

if any production in excess of the contracted amount will be considered

as production to count for APH purposes, or is the production only

counted when there is a processor settlement sheet? The insurance

service organization recommended the language in section 9(b) be made

similar to the language contained in the sugar beet policy, such as,

``* * * the insurance period ends when the production delivered to the

processor equals the amount of production stated in the popcorn

processor contract.'' The insurance service organization also

questioned whether ``delivered to'' is the same as ``accepted by'' the

processor and suggested adding wording to include ``whether delivered

or not.''

Response: Section 9(b) does not conflict with section 13(a). For

processor contracts based on a stated amount of production, FCIC is

only insuring the contracted amount, and the producer can only

establish one basic unit per processor contract. Therefore, once the

contracted amount is fulfilled, insurance ceases on the unit and there

is no payable loss. If the contract is not fulfilled and there still is

unharvested production, any insurable cause of loss is covered up to

the contracted amount, assuming it has not been abandoned. With respect

to the issue of when the producer would know when the processor

contract was fulfilled, records are kept as production is delivered to

the processor. As a result, both the producer and processor are aware

of the amount of production that has been delivered. All production

from the unit, including any in excess of the amount stated in the

contract, will be considered as production to count when determining

the producer's approved yield. The claim settlement provisions have

been clarified to state that, for the purposes of loss adjustment, the

amount shown on the settlement sheet, plus any appraised or harvested

production lost due to uninsured causes that rendered the production

unacceptable to the processor, will be included as production to count.

FCIC has also revised section 9(b) to clarify that the insurance period

ceases when the production accepted by the processor equals the

contracted amount of production if the processor contract stipulates a

specific amount of production to be delivered. However, rejected

production will be considered as production to count unless it was

damaged by an insurable cause of loss occurring during the insurance

period.

Comment: An insurance service organization questioned a discrepancy

between section 9(b), which states that insurance ceases on ``The date

you harvested sufficient production to fulfill your processor

contract,'' and section 10(b)(3) of the proposed rule, which states

that loss of production will not be insured due to ``damage that occurs

to unharvested production after you deliver the production required by

the processor contract.'' The commenter indicated that this provision

is not necessary since any damage occurring after delivery would be

outside the insurance period as indicated in section 9(b).

Response: FCIC has deleted the provision contained in section

10(b)(3) accordingly.

Comment: An insurance service organization stated that some crop

policies allow the entire replanting payment to be paid to the person

incurring the entire expense (usually the tenant) when landlord and

tenant are insured by the same company. However, the commenter

questioned why this language is not contained in section 11 of the

proposed Popcorn Crop Provisions.

Response: It is true that a few crop provisions allow the entire

replanting payment to be paid to the person incurring the entire

expense (usually the tenant) when the landlord and tenant are insured

with the same company. However, due to comments received on other

regulations, FCIC reevaluated this provision and has concluded it is

not equitable to all insureds. Specifically, if a landlord and tenant

are insured with one company, the provisions apply, but if the landlord

and tenant are insured with different companies, the provisions do not

apply. Any Crop Provisions containing these terms will be amended to

eliminate them. Therefore, no change has been made.

Comment: An insurance service organization suggested that language

contained in section 11(b) should include 20 acres as a minimum

qualifier in addition to the others.

Response: The commenter misunderstood the provisions contained in

section 11(b). Section 13 of the Basic Provisions contains the 20 acre

or 20 percent rule referenced by the commenter which is applicable to

this policy. Section 11(b) of the Popcorn Crop Provisions establishes

the

[[Page 33838]]

maximum amount of the replanting payment (20 percent of the production

guarantee or 150 pounds, multiplied by the price election, multiplied

by the share). Therefore, no change has been made.

Comment: An insurance service organization stated the indemnity

calculation contained in section 13(b) was wordy, difficult to follow,

and should be simplified for crops without separate prices by type.

Response: Since some of the calculations involved are not performed

in sequential order, it is necessary to refer to specific section

numbers. Removal of the section reference would make the provisions

less clear. However, an example has been added to clarify section 13.

Comment: An insurance service organization stated that section

13(c)(1)(iv) should not allow the insured to defer settlement and wait

for a later, generally lower appraisal, especially on crops that have a

short ``shelf life.''

Response: This provision allows deferment of a claim only if the

insurance provider agrees that representative samples should be left or

if the insured elects to continue to care for the entire crop in order

to obtain a more accurate determination of the production to count for

the unit. In either case, if the insured does not provide sufficient

care for the crop or crop samples, the original appraisal will be used.

Therefore, no change has been made.

Comment: An insurance service organization and two reinsured

companies recommended removal of the requirement contained in section

15 that a written agreement be renewed each year if there are no

significant changes to the farming operation. Two of the commenters

stated a written agreement should be continuous and the effective

period should be specified in the written agreement.

Response: Written agreements are intended to supplement policy

terms or permit insurance in unusual situations that require

modification of the otherwise standard insurance provisions. If such

practices continue year to year, they should be incorporated into the

policy or Special Provisions. It is important to minimize written

agreement exceptions to ensure that the insured is well aware of the

specific terms of the policy. The written agreement provisions have

been moved to the Basic Provisions since they apply to most crops.

Comment: An insurance service organization and two reinsured

companies stated the proposed rule did not contain provisions for late

planting and prevented planting coverages. The commenters questioned

whether popcorn was intended to have late and prevented planting

coverages?

Response: Provisions for late and prevented planting coverages are

now contained in the Basic Provisions which are applicable to popcorn.

FCIC has added to the Popcorn Crop Provisions, a new section 14, which

specifies that late planting provisions are applicable to popcorn if

written approval is obtained from the processor by the acreage

reporting date. FCIC has also added a new section 15, providing the

available prevented planting coverage.

In addition to the changes described above, FCIC has made minor

editorial changes and has amended the following Popcorn Crop

Provisions:

1. Amended and clarified the paragraph preceding section 1 to

include the Catastrophic Risk Protection Endorsement.

2. Section 1--Amended the definition of ``planted acreage'' to add

a requirement that popcorn must be planted in rows far enough apart to

permit mechanical cultivation, unless otherwise excepted. Amended the

definition of ``practical to replant'' to clarify that it will not be

considered practical to replant unless production from the replanted

acreage can be delivered under the terms of the processor contract, or

the processor agrees in writing that it will accept the production from

the replanted acreage. Clarified the definition of ``processor

contract'' to specify that multiple contracts with the same processor,

each of which stipulates a specific amount of production to be

delivered under the terms of the specified contract, will be considered

as a single processor contract. Removed the definitions of ``approved

yield,'' ``days,'' ``FSA,'' ``interplanted,'' ``production guarantee

(per acre),'' and ``timely planted'' because these definitions now

appear in the Basic Provisions.

3. Section 2--Moved all the provisions common to most crops to the

Basic Provisions.

4. Section 7(a)--Revised ``actuarial table'' to ``actuarial

documents'' to be consistent with language in other crop provisions.

5. Section 7(c)(2)--Amended and clarified that the Board of

Directors or officers of the processor must, prior to the sales closing

date, execute and adopt a resolution that contains the same terms as an

acceptable processor contract.

6. Section 14--Revised provisions to address only late planted

acreage.

7. Section 15--Deleted provisions for written agreements and added

provisions for prevented planting coverage.

List of Subjects in 7 CFR Parts 447 and 457

Crop insurance, Popcorn.

Final Rule

Accordingly, as set forth in the preamble, the Federal Crop

Insurance Corporation hereby amends the Popcorn Crop Insurance

Regulations (7 CFR part 447) and the Common Crop Insurance Regulations

(7 CFR part 457) as follows:

PART 447--POPCORN CROP INSURANCE REGULATIONS FOR THE 1987 THROUGH

THE 1998 CROP YEARS

1. The authority citation for 7 CFR part 447 is revised to read as

follows:

Authority: 7 U.S.C. 1506(1), 1506(p).

Part Heading [Revised]

2. The part heading is revised as set forth above.

Subpart Heading [Removed]

3. The part heading ``Subpart--Regulations for the 1987 and

Succeeding Crop Years is removed.

4. Section 447.7 is amended by revising the introductory text of

paragraph (d) to read as follows:

Sec. 447.7 The application and policy.

* * * * *

(d) The application is found at subpart D of part 400, General

Administrative Regulations (7 CFR 400.37, 400.38). The provisions of

the Popcorn Insurance Policy for the 1987 through 1998 crop years are

as follows:

* * * * *

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

1994 AND SUBSEQUENT CROP YEARS

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

follows:

Authority: 7 U.S.C. 1506(1), 1506(p).

6. Section 457.126 is added to read as follows:

Sec. 457.126 Popcorn Crop Insurance Provisions.

The Popcorn Crop Insurance Provisions for the 1999 and succeeding

crop years are as follows:

FCIC policies:

United States Department of Agriculture

Federal Crop Insurance Corporation

Reinsured policies:

[[Page 33839]]

(Appropriate title for insurance provider)

Both FCIC and reinsured policies:

Popcorn Crop Insurance Provisions

If a conflict exists among the policy provisions, the order of

priority is as follows: (1) The Catastrophic Risk Protection

Endorsement, if applicable; (2) the Special Provisions; (3) these

Crop Provisions; and (4) the Basic Provisions with (1) controlling

(2), etc.

1. Definitions

Base contract price. The price stipulated on the contract

executed between you and the processor before any adjustments for

quality.

Harvest. Removing the grain or ear from the stalk either by hand

or by machine.

Merchantable popcorn. Popcorn that meets the provisions of the

processor contract.

Planted acreage. In addition to the definition contained in the

Basic Provisions, popcorn must initially be planted in rows far

enough apart to permit mechanical cultivation, unless otherwise

provided by the Special Provisions, actuarial documents, or by

written agreement.

Pound. Sixteen (16) ounces avoirdupois.

Practical to replant. In addition to the definition contained in

the Basic Provisions, it will not be considered practical to replant

unless production from the replanted acreage can be delivered under

the terms of the popcorn processor contract, or the processor agrees

in writing that it will accept the production from the replanted

acreage.

Processor. Any business enterprise regularly engaged in

processing popcorn that possesses all licenses, permits or approved

inspections for processing popcorn required by the state in which it

operates, and that possesses facilities, or has contractual access

to such facilities, with enough equipment to accept and process the

contracted popcorn within a reasonable amount of time after harvest.

Processor contract. A written agreement between the producer and

a processor, containing at a minimum:

(a) The producer's commitment to plant and grow popcorn, and to

deliver the popcorn production to the processor;

(b) The processor's commitment to purchase all the production

stated in the processor contract;

(c) A date, if specified on the processor's contract, by which

the crop must be harvested to be accepted; and

(d) A base contract price.

Multiple contracts with the same processor, each of which stipulates

a specific amount of production to be delivered under the terms of

the processor contact, will be considered as a single processor

contract.

2. Unit Division

(a) For processor contracts that stipulate the amount of

production to be delivered:

(1) In lieu of the definition contained in the Basic Provisions,

a basic unit will consist of all the acreage planted to the insured

crop in the county that will be used to fulfill contracts with each

processor;

(i) There will be no more than one basic unit for all production

contracted with each processor contract;

(ii) In accordance with section 13 of these Crop Provisions, all

production from any basic unit in excess of the amount under

contract will be included as production to count if such production

is applied to any other basic unit for which the contracted amount

has not been fulfilled; and

(2) Provisions in the Basic Provisions that allow optional units

by section, section equivalent, or FSA farm serial number and by

irrigated and non-irrigated practices are not applicable.

(b) For any processor contract that stipulates only the number

of acres to be planted, the provisions contained in section 34 of

the Basic Provisions will apply.

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

Indemnities

In addition to the requirements of section 3 of the Basic

Provisions, you may select only one price election for all the

popcorn 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 popcorn 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.

4. Contract Changes

In accordance with section 4 of the Basic Provisions, the

contract change date is November 30 preceding the cancellation date.

5. Cancellation and Termination Dates

In accordance with section 2 of the Basic Provisions, the

cancellation and termination dates are:

------------------------------------------------------------------------

Cancellation and termination

State and county dates

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Val Verde, Edwards, Kerr, Kendall, Bexar, January 15.

Wilson, Karnes, Goliad, Victoria, and

Jackson counties Texas, and all Texas

counties lying south thereof.

All other Texas counties and all other March 15.

states.

------------------------------------------------------------------------

6. Report of Acreage

In addition to the provisions of section 6 of the Basic

Provisions, you must provide a copy of all processor contracts to us

on or before the acreage reporting date.

7. Insured Crop

(a) In accordance with section 8 of the Basic Provisions, the

crop insured will be all the popcorn in the county for which a

premium rate is provided by the actuarial documents:

(1) In which you have a share;

(2) That is planted for harvest as popcorn;

(3) That is grown under, and in accordance with the requirements

of, a processor contract executed on or before the acreage reporting

date and is not excluded from the processor contract at any time

during the crop year; and

(4) That is not (unless allowed by the Special Provisions or by

written agreement):

(i) Interplanted with another crop; or

(ii) Planted into an established grass or legume.

(b) You will be considered to have a share in the insured crop

if, under the processor contract, you retain control of the acreage

on which the popcorn is grown, you have a risk of loss, and the

processor contract provides for delivery of popcorn under specified

conditions and at a stipulated base contract price.

(c) A popcorn producer who is also a processor may be able to

establish an insurable interest if the following requirements are

met:

(1) The producer must comply with these Crop Provisions;

(2) The Board of Directors or officers of the processor must,

prior to the sales closing date, execute and adopt a resolution that

contains the same terms as an acceptable processor contract. Such

resolution will be considered a processor contract under this

policy; and

(3) Our inspection reveals that the processing facilities comply

with the definition of a processor contained in these Crop

Provisions.

8. Insurable Acreage

In addition to the provisions of section 9 of the Basic

Provisions, any acreage of the insured crop damaged before the final

planting date, to the extent that the majority of producers in the

area would normally not further care for the crop, must be replanted

unless we agree that it is not practical to replant.

9. Insurance Period

In lieu of the provisions contained in section 11 of the Basic

Provisions, regarding the end of the insurance period, insurance

ceases on each unit or part of a unit at the earliest of:

(a) The date the popcorn:

(1) Was destroyed;

(2) Should have been harvested but was not harvested;

(3) Was abandoned; or

(4) Was harvested;

(b) When the processor contract stipulates a specific amount of

production to be delivered, the date the production accepted by the

processor equals the contracted amount of production;

(c) Final adjustment of a loss; or

(d) December 10 immediately following planting.

10. Causes of Loss

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

Provisions, insurance is provided only against the following causes

of loss that occur during the insurance period:

(1) Adverse weather conditions;

(2) Fire;

(3) Insects, but not damage due to insufficient or improper

application of pest control measures;

(4) Plant disease, but not damage due to insufficient or

improper application of disease control measures;

[[Page 33840]]

(5) Wildlife;

(6) Earthquake;

(7) Volcanic eruption; or

(8) Failure of the irrigation water supply, if caused by a cause

of loss specified in sections 10(a)(1) through (7) that occurs

during the insurance period.

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

the Basic Provisions, we do not insure against any loss of

production due to:

(1) Damage resulting from frost or freeze after the date

designated in the Special Provisions; or

(2) Failure to follow the requirements contained in the

processor contract.

11. Replanting Payment

(a) In accordance with section 13 of the Basic Provisions, a

replanting payment is allowed if the crop is damaged by an insurable

cause of loss to the extent that the remaining stand will not

produce at least 90 percent of the production guarantee for the

acreage and it is practical to replant.

(b) The maximum amount of the replanting payment per acre will

be the lesser of 20 percent of the production guarantee or 150

pounds, multiplied by your price election, multiplied by your

insured share.

(c) When popcorn is replanted using a practice that is

uninsurable as an original planting, our liability for the unit will

be reduced by the amount of the replanting payment. The premium

amount will not be reduced.

12. Duties in the Event of Damage or Loss

In accordance with the requirements of section 14 of the Basic

Provisions, the representative samples of the unharvested crop must

be at least 10 feet wide and extend the entire length of each field

in the unit. The samples must not be destroyed until the earlier of

our inspection or 15 days after harvest of the balance of the unit

is completed.

13. Settlement of Claim

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

you are unable to provide acceptable production records:

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

for which such production records were not provided; or

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

production to such units in proportion to our liability on the

harvested acreage for each unit.

(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 the result of section 13(b)(1) by the respective

price election for each type, if applicable;

(3) Totaling the results of section 13(b)(2) if there is more

than one type;

(4) Multiplying the total production to count (see section

13(c)), of each type if applicable, by its respective price

election;

(5) Totaling the results of section 13(b)(4) if there is more

than one type;

(6) Subtracting the result of section 13(b)(4) from the result

in section 13(b)(2) if there is only one type or subtracting the

result of section 13(b)(5) from the result of section 13(b)(3) if

there is more than one type; and

(7) Multiplying the result of section 13(b)(6) by your share.

For example:

You have a 100 percent share in 100 acres of Type A popcorn in the unit,

with a guarantee of 2,500 pounds per acre and a price election of $.12

per pound. You are only able to harvest 150,000 pounds. Your indemnity

would be calculated as follows:

1.................... 100 acres x 2,500 pounds = 250,000 pound

guarantee;

2.................... 250,00 pounds x $.12 price election = $30,000

value of guarantee;

4.................... 150,000 pounds production to count x $.12 price

election = $18,000 value of production to count;

6.................... $30,000-$18,000 = $12,000 loss; and

7.................... $12,000 x 100 percent share = $12,000 indemnity

payment.

You also have a 100 percent share in 150 acres of type B popcorn in the

same unit, with a guarantee of 2,250 pounds per acre and a price

election of $.10 per pound. You are only able to harvest 70,000 pounds.

Your total indemnity for both popcorn types A and B would be calculated

as follows:

1.................... 100 acres x 2,500 pounds = 250,000 guarantee

for type A and 150 acres x 2,250 pounds =

337,500 pound guarantee for type B;

2.................... 250,000 pound guarantee x $.12 price election =

$30,000 value of guarantee for type A and

337,500 pound guarantee x $.10 price election

= $33,750 value guarantee for type B;

3.................... $30,000 + $33,750 = $63,750 total value

guarantee;

4.................... 150,000 pounds x $.12 price election = $18,000

value of production to count for type A and

70,000 pounds x $.10 price election = $7,000

value of production to count for type B;

5.................... $18,000 + $7,000 = $25,000 total value of

production to count;

6.................... $63,750-$25,000 = $38,750 loss; and

7.................... $38,750 x 100 percent = $38,750 indemnity

payment.

(c) The total production to count (in pounds) from all insurable

acreage on the unit will include:

(1) All appraised production as follows:

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

(A) That is abandoned;

(B) Put to another use without our consent;

(C) Damaged solely by uninsured causes; or

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

(ii) Unharvested production (mature unharvested production may

be adjusted for quality deficiencies and excess moisture in

accordance with section 13(d));

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

put to another use or abandon, if you and we agree on the appraised

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

that acreage will end when you put the acreage to another use or

abandon the crop. If agreement on the appraised amount of production

is not reached:

(A) If you do not elect to continue to care for the crop, we may

give you consent to put the acreage to another use if you agree to

leave intact, and provide sufficient care for, representative

samples of the crop in locations acceptable to us (The amount of

production to count for such acreage will be based on the harvested

production or appraisals from the samples at the time harvest should

have occurred. If you do not leave the required samples intact, or

fail to provide sufficient care for the samples, our appraisal made

prior to giving you consent to put the acreage to another use will

be used to determine the amount of production to count); or

(B) If you elect to continue to care for the crop, the amount of

production to count for the acreage will be the harvested

production, or our reappraisal if additional damage occurs and the

crop is not harvested;

(2) All harvested production from the insurable acreage in the

unit;

(3) All harvested and appraised production lost or damaged by

uninsured causes; and

(4) For processor contracts that stipulate the amount of

production to be delivered, all harvested popcorn production from

any other insurable unit that has been used to fulfill your

processor contract applicable to this unit.

(5) Any production from yellow or white dent corn will be

counted as popcorn on a weight basis and any production harvested

from plants growing in the insured crop may be counted as popcorn

production on a weight basis.

(6) Any ear production for which we cannot determine a shelling

factor will be considered to have an 80 percent shelling factor.

(d) Mature popcorn may be adjusted for excess moisture and

quality deficiencies. If moisture adjustment is applicable, it will

be made prior to any adjustment for quality.

(1) Production will be reduced by 0.12 percent for each 0.1

percentage point for moisture in excess of 15 percent. We may obtain

samples of the production to determine the moisture content.

(2) Popcorn production will be eligible for quality adjustment

if, due to an insurable cause of loss that occurs within the

insurance period, it is not merchantable popcorn and is rejected by

the processor. The production will be adjusted by:

[[Page 33841]]

(i) Dividing the value per pound of the damaged popcorn by the

base contract price per pound for undamaged popcorn; and

(ii) Multiplying the result by the number of pounds of such

popcorn.

14. Late Planting

Late planting provisions in the Basic Provisions are applicable

for popcorn if you provide written approval from the processor by

the acreage reporting date that it will accept the production from

the late planted acres when it is expected to be ready for harvest.

15. Prevented Planting

Your prevented planting coverage will be 60 percent of your

production guarantee for timely planted acreage. If you have limited

or additional levels of coverage, as specified in 7 CFR part 400,

subpart T, and pay an additional premium, you may increase your

prevented planting coverage to a level specified in the actuarial

documents.

Signed in Washington, D.C., on June 11, 1998.

Robert Prchal,

Acting Manager, Federal Crop Insurance Corporation.

[FR Doc. 98-16147 Filed 6-19-98; 8:45 am]

BILLING CODE 3410-08-P