# REVENUE ASSURANCE

**OPTIONAL ENDORSEMENT**

**REVENUE ASSURANCE**

#  MALTING BARLEY PRICE AND QUALITY ENDORSEMENT

In return for your payment of premium for the coverage contained herein,
this endorsement will be attached to and made part of the Revenue
Assurance Policy (Basic Provisions) and Revenue Assurance-Feed Barley
Crop Provisions, subject to the terms and conditions described herein.

1\. Definitions:

> \(a\) **Additional price** - a premium price available for malting
> barley above a feed barley price as determined by a malting barley
> contract or price agreement or the actuarial documents.
>
> \(b\) **APH** - Actual production history as determined in accordance
> with 7 CFR part 400, subpart G.
>
> \(c\) **Approved malting variety** - A variety of barley specified as
> such in the Special Provisions.
>
> \(d\) **Brewery** - A facility where malt beverages are commercially
> produced for human consumption.
>
> \(e\) **Contracted production** - A quantity of barley you agree to
> grow and deliver, and the buyer agrees to accept, under the terms of
> the malting barley contract or malting barley price agreement.
>
> \(f\) **Licensed grain grader** - A person authorized by the U.S.
> Department of Agriculture to inspect and grade barley under the U.S.
> Standards for malt barley.
>
> \(g\) **Malting barley contract** - An agreement in writing between a
> producer and a brewery or a business enterprise that produces or sells
> malt or processed mash to a brewery, or a business enterprise owned by
> such brewery or business, that specifies the amount of contracted
> production, the purchase price, or a method to determine such price,
> and other such terms that establish the obligations of each party to
> the agreement.
>
> \(h\) **Malting barley price agreement** - An agreement that meets all
> conditions required for a malting barley contract except that it is
> executed with a business enterprise other than as described in the
> definition of a malting barley contract. However, such business
> enterprise must normally contract to purchase malting barley
> production and must have facilities appropriate to handle and store
> malting barley production.
>
> \(i\) **Net malting barley acres** - the number of insurable acres in
> the unit planted to approved varieties of malting barley, multiplied
> by your respective share.
>
> \(j\) **Objective test** - A determination made by a qualified person
> using standardized equipment that is widely used in the malting
> industry, and following a procedure approved by the American Society
> of Brewing Chemists when determining percent germination or protein
> content; grading performed by following a procedure approved by the
> Federal Grain Inspection Service when determining quality factors
> other than percent germination or protein content; or by the Food and
> Drug Administration when determining concentrations of mycotoxins or
> other substances or conditions that are identified as being injurious
> to human or animal health.
>
> \(k\) **Subjective test** - A determination made by a person using
> olfactory, visual, touch or feel, masticatory, or other senses unless
> performed by a licensed grain grader; or that uses non-standardized
> equipment; or that does not follow a procedure approved by the
> American Society of Brewing Chemists, the Federal Grain Inspection
> Service, or the Food and Drug Administration.

2\. This endorsement provides coverage for malting barley losses at a
price per bushel greater than that offered under the Revenue
Assurance-Feed Barley Crop Provisions.

3\. You must have the Revenue Assurance-Feed Barley Crop Insurance
Provisions in force to elect to insure malting barley under this
endorsement.

4\. You must select either Option A or Option B on or before the initial
sales closing date for the crop year for which your choice is effective.
Failure to select either Option A or Option B, or if you elect Option B
but fail to have a malting barley contract in effect by the acreage
reporting date, will result in no coverage under this endorsement for
the applicable crop year. If you elect coverage under Option A, and
subsequently enter into a malting barley contract, your coverage will
continue under the terms of Option A. Your selection (Option A or B)
will continue from year to year unless you cancel or change your
selection on or before the appropriate sales closing date.

5\. The additional premium amount for this coverage will be determined
by multiplying your production amount (determined in accordance with
Option A or B, whichever is applicable) by the additional price per
bushel (determined in accordance with Option A or B), multiplied by the
net acres planted to approved malting barley varieties, multiplied by
the malting barley premium rate in the actuarial documents for the
Option you elected, multiplied by any premium adjustment percentage that
may apply.

6\. In addition to the reporting requirements contained in section 7 of
the Basic Provisions, you must provide the information required by the
Option you select. Your shares in the malting barley acreage to be
insured under this endorsement must be designated on the acreage report.

7\. In lieu of the provisions regarding units and unit division
contained in the Basic Provisions and the Revenue Assurance-Feed Barley
Crop Provisions, all barley acreage in the county that is planted to
malting varieties that is insurable under your selected Option will be
considered as one unit regardless of whether such acreage is owned,
rented for cash, or rented for a share of the crop. The producer's
shares in the malting barley acreage to be insured under this
endorsement must be designated on the acreage report.

8\. In accordance with the Basic Provisions, if all insured production
meets the quality criteria specified or grades U.S. No. 4 or worse in
accordance with the grades and grade requirements for the subclasses
six-rowed and two-rowed barley, or for the class barley in accordance
with the Official United States Standards for Grain, and is not accepted
by a buyer for malting purposes, the claim will be settled within 30
days. Whenever any production fails one or more of the quality criteria
specified in section 13 of this endorsement and grades U.S. No. 3 or
better, we will not agree upon the amount of loss until the earlier of:

> \(a\) The date you sell, feed, donate, or otherwise utilize such
> production for any purpose; or
>
> \(b\) May 31 of the calendar year immediately following the calendar
> year in which the insured malting barley is normally harvested. If
> disposition of the crop does not occur by May 31, we may complete your
> claim in accordance with this endorsement provided you certify, in
> writing, that the production will not be sold for use as malting
> barley. If you do not provide such certification, we will complete
> your claim; however, no adjustment for quality deficiencies will be
> made and all remaining unsold insured production will be considered to
> have met the quality standards specified in this endorsement. If you
> later sell the production for malting barley, you must report all sold
> production and if it would result in a lower indemnity, your claim
> will be adjusted.

9\. Prevented planting coverage is limited to the amount specified in
the Revenue Assurance Basic Provisions and Revenue Assurance Feed Barley
Crop Provisions.

10\. Production from all acreage insured under this endorsement and any
production of feed barley varieties must not be commingled prior to our
making all determinations necessary for the purposes of this insurance.
Failure to keep production separate will result in denial of your claim
for indemnity.

11\. Your malting barley revenue guarantee is determined by:

> \(a\) Multiplying the insured net acreage planted to approved malting
> barley varieties by its respective malting barley approved yield. The
> malting barley approved yield is determined in accordance with Option
> A or B, whichever is applicable;
>
> \(b\) Multiplying each result in section 11(a) by the respective
> additional price election (determined in accordance with Option A or
> B, whichever is applicable);
>
> \(c\) Totaling the results of section 11(b).

12\. In the event of loss or damage covered by this endorsement, we will
settle your claim by:

> \(a\) Multiplying the total production to count as determined in
> section 13 by the additional price election. If more than one
> additional price election is applicable, the highest election will be
> used until the number of bushels covered at the highest price election
> is reached. For example, if 1000 bushels are grown under a malting
> barley contract or malting barley price agreement that has an
> additional price election of \$0.68 per bushel, only the first 1000
> bushels of production to count would be multiplied by the higher
> additional price election and the remainder of the bushels are covered
> at a lower election. The remainder of production to count will be
> valued at the lower election. The higher price election will be
> applied only if the production is a variety that is acceptable under
> the terms of the malting barley contract or price agreement;
>
> \(b\) Totaling the results of 12(a);
>
> \(c\) Subtracting the result of section 12(b) from the malting barley
> revenue guarantee determined in section 11.
>
> If the result of section 12(c) is greater than zero, an indemnity will
> be paid to you. If the result of section 12(c) is zero or less, no
> indemnity will be due.

13\. The total production to count will be determined as follows:

> \(a\) Total production to count from all insurable acreage planted to
> approved malting varieties will include your share of:
>
> \(1\) Appraised production determined in accordance with sections
> 11(c)(1)(i) and (ii) of the Revenue Assurance-Feed Barley Crop
> Provisions;
>
> \(2\) Harvested production and potential unharvested production that
> meets, or would meet if properly handled, either (i) the minimum
> acceptable standard contained in any applicable malting barley
> contract or malting barley price agreement for protein, plump kernels,
> thin kernels, germination, blight damage, mold injury or damage,
> sprout damage, frost injury or damage, and mycotoxin or other
> substances or conditions identified by the Food and Drug
> Administration or other public health organization of the United
> States as being injurious to human health; or (ii) the following
> applicable quality standards, whichever is less stringent:

Six-rowed Two-rowed

[Malting Barley]{.underline} [Malting Barley]{.underline}

## Minimum Percentages

> Plump kernels 65.0% 75.0%
>
> Germination 95.0% 95.0%

## Maximum Percentages

> Protein (dry basis) 14.0% 14.0%
>
> Thin kernels 10.0% 10.0%
>
> Blight damaged 4.0% 4.0%
>
> Injured by mold 5.0% 5.0%
>
> Mold damaged 0.4% 0.4%
>
> Sprout damaged 1.0% 1.0%
>
> Injured by frost 5.0% 5.0%
>
> Frost damaged 0.4% 0.4%
>
> Mycotoxins 2.0 ppm 2.0ppm
>
> \(3\) Harvested production that does not meet the quality standards
> contained in section 13(a)(2), but is accepted by any buyer for
> malting purposes. For such production, the production to count may be
> reduced in accordance with sections 13(b) and (c).
>
> \(b\) The quantity of production that initially fails any quality
> standard contained in section 13(a)(2), but is sold as malting barley
> (except production included in section 13(c)), may be reduced as
> described in this section, provided the failure of such production to
> meet these standards is due to insurable causes. The production to
> count of production sold under section 13(a)(3) (except production
> included in section 13(c)) will be determined as follows:
>
> \(1\) Determine the price per bushel received for the damaged
> production;
>
> \(2\) Add the projected harvest price under the Revenue Assurance-Feed
> Barley Crop Provisions and the applicable additional price. Use the
> weighted average of the additional prices, if you have more than one
> additional price (the weighted average is determined by dividing the
> result of section 11(c) by the total malting barley production amount
> in section 11(a));
>
> \(3\) Divide the result of paragraph (1) by the result of paragraph
> (2); and
>
> \(4\) Multiply the result of paragraph (3) (not to exceed 1.00) by the
> number of bushels of damaged production.
>
> \(c\) The quantity of production that initially fails any quality
> standard listed in section 13(a)(2), but is conditioned and then sold
> as malting barley, will be reduced by the cost incurred for any
> conditioning required to improve the quality of production so that it
> is marketable as malting barley, provided the failure of such
> production to meet these standards is due to insurable causes. The
> production to count of production sold under this section will be
> determined as follows:
>
> \(1\) Subtract the average cost per bushel for conditioning the
> production (not to exceed the discount you would have received had you
> sold the barley without conditioning) from the price per bushel
> received for the conditioned production;
>
> \(2\) Add the projected harvest price under the Revenue Assurance-Feed
> Barley Crop Provisions and the applicable additional price. Use the
> weighted average of the additional prices, if you have more than one
> additional price (the weighted average is determined by dividing the
> result of section 11(c) by the total malting barley production amount
> in section 11(a));
>
> \(3\) Divide the result of paragraph (1) by the result of paragraph
> (2); and
>
> \(4\) Multiplying the result of paragraph (3) (not to exceed 1.00) by
> the number of bushels of conditioned production.
>
> \(d\) No reduction in the malting barley production to count will be
> allowed for moisture content; damage due to uninsured causes; costs or
> reduced value associated with drying, handling, processing, or quality
> factors other than those listed in section 13(a)(2); or any other
> costs associated with normal handling and marketing of malting barley.
>
> \(e\) All grade and quality determinations must be based on the
> results of objective tests. No indemnity will be paid for any loss
> established by subjective tests. We may obtain one or more samples of
> the insured crop and have tests performed at an official grain
> inspection location established under the U.S. Grain Standards Act or
> laboratory of our choice to verify the results of any test. In the
> event of a conflict in the test results, our results will determine
> the amount of production to count.

**OPTION A**

**(FOR MALTING BARLEY PRODUCTION, REGARDLESS OF WHETHER GROWN UNDER A
MALTING BARLEY CONTRACT OR PRICE AGREEMENT.)**

1\. To be eligible for coverage under this option, you must provide us
acceptable records of your sales of malting barley and the number of
acres planted to malting varieties for at least the last four crop years
in your APH database prior to the crop year immediately preceding the
current crop year (including years in which an approved malting variety
was grown but zero production was sold for malting purposes). For
example, to determine your production amount for the 2001 crop year,
records must be provided for the 1996 through the 1999 crop years, if
malting barley varieties were planted in each of those crop years.
Failure to provide acceptable records or reports as required herein will
make you ineligible for coverage under this endorsement. You must
provide these records to us no later than the production reporting date
specified in the Basic Provisions. If you produce malting barley under a
malting barley contract or malting barley price agreement you must
provide us a copy of your current crop year contract or agreement on or
before the acreage reporting date. All terms and conditions of the
contract or agreement, including the contract price or future contract
premium price, must be specified in the contract or agreement and be
effective on or before the acreage reporting date. If you fail to timely
provide the contract or agreement, or any terms are omitted, we will
elect to determine the relevant information necessary for insurance
under Option A, or deny liability and no indemnity will be due under
this endorsement.

2\. Your malting barley approved yield will be the lesser of:

> \(a\) The approved yield for feed barley for acreage planted to
> approved malting varieties calculated in accordance with the Revenue
> Assurance-Feed Barley Crop Provisions and APH regulations; or
>
> \(b\) The approved yield calculated in accordance with the Revenue
> Assurance-Feed Barley Crop Provisions and APH procedures using the
> malting barley sales and acreage records for at least the last four
> crop years provided by you.

3\. The additional price per bushel for this Option will be determined
as follows:

> \(a\) For production grown under a malting barley contract or a
> malting barley price agreement, the additional price per bushel will
> be the lesser of, as applicable:
>
> \(1\) The guaranteed sale price per bushel established in the malting
> barley contract or malting barley price agreement (not including
> discounts or incentives that may apply) minus the projected harvest
> price under the Revenue Assurance-Feed Barley Crop Provisions; or
>
> \(2\) The premium price per bushel for malting barley (not including
> discounts or incentives that may apply) above a feed barley price
> based on a futures market price or a future reference price for feed
> barley to be determined at a later date, that is acceptable to us and
> specified in the malting barley contract or malting barley price
> agreement; or
>
> \(3\) If your malting barley contract or malting barley price
> agreement has a variable premium price option, you must select a price
> by the acreage reporting date that will be treated as the guaranteed
> sale price, and your additional price per bushel will be calculated
> under section 3(a)(1) of this Option.

(b) For production not grown under a malting barley contract or malting
    barley price agreement executed by the acreage reporting date, the
    additional price election per bushel is designated in the actuarial
    documents.

> \(c\) Under no circumstances will the additional price election exceed
> \$1.25 per bushel.

4\. The number of acres eligible for coverage using an additional price
determination from section 3(a) will be the lesser of the number of
acres planted to an approved malting barley variety or the amount
determined by dividing the number of bushels specified in the malting
barley contract or malting barley price agreement by the bushel per acre
yield used in determining your applicable malting barley approved yield.
However, under no circumstances will the number of eligible acres exceed
125.0 percent of the greatest number of acres that you certified for
malting barley APH purposes in any crop year contained in your malting
barley APH data base. Any acreage in excess of this amount will be
insured using the additional price designated in the Special Provisions.

5\. Loss example:

> \(a\) Assume the following:
>
> \(1\) A producer has:

\(i\) 400 acres of barley under the Revenue Assurance-Feed Barley Crop
Provisions, of which 200 acres are planted to feed barley and 200 acres
are planted to an approved malting barley variety;

> \(ii\) 100 percent share;

\(iii\) A feed barley approved yield of 52 bushels per acre;

> \(iv\) A malting barley approved yield, based on sales records, of 54
> bushels per acre;
>
> \(v\) Selected the 75 percent coverage level;
>
> \(vi\) A malting barley price agreement for the sale of 5,720 bushels
> at \$2.72 per bushel;
>
> \(2\) The projected harvest price for feed barley is \$1.92 per
> bushel;
>
> \(3\) The additional price per bushel from the Special Provisions is
> \$0.40;
>
> \(4\) The additional price per bushel for production grown under the
> malting barley price agreement is \$0.80 (\$2.72 malting barley price
> agreement price - \$1.92 projected harvest price);

\(5\) The total production from the 200 acres of feed barley is 10,800
bushels, all of which meet the grade requirements for U.S. #2 barley;
and

> \(6\) The total production from the 200 acres of malting barley is
> 7,250 bushels, all of which fails to meet the quality standards
> specified in the malting barley price agreement (4,750 bushels sold
> for malting purposes at \$2.31 per bushel and after conditioning, an
> additional 2,500 bushels are sold for malting purposes at \$2.20 per
> bushel, conditioning cost is \$0.05 per bushel);
>
> \(b\) The production revenue guarantee is determined as follows:
>
> \(1\) 110 insured net acres under contract (5,720 contracted bushels ÷
> 52 bushels per acre) x 52 bushels (lesser of 52 or 54) x .75 coverage
> level = 4,290 bushels;
>
> 90 insured net acres in excess of contract (200 acres planted - 110
> acres under contract) x 52 bushels x .75 coverage level = 3,510
> bushels;
>
> \(2\) 4,290 bushels x \$0.80 = \$3,432
>
> 3,510 bushels x \$0.40 = \$1,404; and
>
> \(3\) \$3,432 + \$1,404 = \$4,836 malting barley revenue guarantee.
>
> \(c\) Total production to count is determined as follows:
>
> \(1\) Damaged production sold as malting barley:
>
> \(i\) \$2.31 price per bushel received for damaged production;
>
> \(ii\) \$2.31 ÷ \$2.72 = .8493; and
>
> \(iii\) 4,750 bushels sold x .8493 = 4,034 bushels as production to
> count;
>
> \(2\) Reconditioned malting barley:
>
> \(i\) \$2.20 price received - \$0.05 reconditioning cost = \$2.15;
>
> \(ii\) \$2.15 ÷ \$2.72 = .7904; and
>
> \(iv\) 2,500 bushels x .7904 = 1,976 bushels as production to count;
>
> \(3\) 4,034 bushels + 1,976 bushels = 6,010 bushels total production
> to count.
>
> \(d\) The amount of loss is determined by:
>
> \(1\) 4,290 bushels (amount grown under contract) x \$0.80 = \$3,432
>
> 1,720 bushels (6,010 bushels production to count - 4,290 bushels under
> contract) x 0.40 = \$688;
>
> \(2\) \$3,432 + \$688 = \$4,120 value of production to count; and
>
> \(3\) \$4,836 revenue guarantee - \$4,120 value of production to count
> = \$716 indemnity will be paid.

### OPTION B

**(FOR PRODUCTION GROWN UNDER MALTING BARLEY CONTRACTS ONLY.)**

1\. If you elect this option you must provide us a copy of your current
crop year malting barley contract on or before the acreage reporting
date. All terms and conditions of the contract, including the contract
price or futures contract premium price, must be specified in the
contract and be effective on or before the acreage reporting date. If
you fail to timely provide the contract, or any terms are omitted, we
will elect to determine the relevant information necessary for insurance
under Option B, or deny liability and no indemnity will be due under
this endorsement. Only contracted production or acreage of production
grown under malting barley contracts is covered by Option B.

2\. The malting barley approved yield will be the lesser of:

> \(a\) The approved yield for feed barley for acreage planted to
> approved malting barley varieties calculated in accordance with the
> Revenue Assurance-Feed Barley Crop Provisions and APH regulations; or
>
> \(b\) The number of bushels obtained by:
>
> \(1\) Dividing the number of bushels of contracted malting barley
> production by the number of acres planted to approved malting
> varieties in the current crop year; and
>
> \(2\) Multiplying the result by the percentage for the coverage level
> you elected under the Revenue Assurance-Feed Barley Crop Provisions.

3\. The additional price per bushel will be the lesser of:

> \(a\) The guaranteed sale price per bushel established in the malting
> barley contract (not including discounts or incentives that may apply)
> minus the projected harvest price under the Revenue Assurance-Feed
> Barley Crop Provisions;
>
> \(b\) The premium price per bushel for malting barley (not including
> discounts or incentives) above a feed barley price based on a futures
> market price or a future reference price for feed barley to be
> determined at a later date, that is acceptable to us and specified in
> the malting barley contract; or
>
> \(c\) If your malting barley contract or malting barley price
> agreement has a variable premium price option, you must select a price
> by the acreage reporting date that will be treated as the guaranteed
> sale price, and your additional price per bushel will be calculated
> under section 3(a)(1) of this Option.
>
> Under no circumstances will the additional price election per bushel
> exceed \$2.00 per bushel.

4\. Loss example:

> \(a\) Assume the following:

\(1\) A producer has:

> \(i\) 400 acres of barley under the Revenue Assurance-Feed Barley Crop
> Provisions, of which 200 acres are planted to feed barley and 200
> acres are planted to an approved malting barley variety;
>
> \(ii\) 100 percent share;
>
> \(iii\) A feed barley approved yield of 53.0 bushels per acre;
>
> \(iv\) Selected the 75 percent coverage level; and
>
> \(v\) A malting barley contract for the sale of 10,000 bushels of
> malting barley at \$2.60 per bushel;
>
> \(2\) The projected harvest price for feed barley is \$1.92 per
> bushel;
>
> \(3\) The additional price per bushel for production grown under the
> malting barley contract is \$0.68 (\$2.60 malting barley contract
> price - \$1.92 projected harvest price);
>
> \(4\) The production amount for feed barley in accordance with the
> Revenue Assurance - Barley Crop Provisions and APH regulations is 40
> bushels (53 x .75 coverage level);
>
> \(5\) The total production from the 200 acres of feed barley is 10,800
> bushels, all of which meet the requirements for U.S. #2 barley; and
>
> \(6\) The total production from the 200 acres of malting barley is
> 7,250 bushels, all of which fails to meet the quality standards
> specified in the malting barley contract (4,750 bushels are sold for
> malting purposes at \$2.31 per bushel and after conditioning, an
> additional 2,500 bushels are sold for malting purposes at \$2.20 per
> bushel, conditioning cost is \$0.05 per bushel).
>
> \(b\) The malting barley revenue guarantee is determined as follows:
>
> \(1\) The lesser of the 40 bushels production amount for feed barley
> per acre, or 37.5 bushels ((10,000 bushels contracted ÷ 200 acres
> planted) x .75), which is 37.5 bushels;
>
> \(2\) 37.5 bushels per acre x \$0.68 additional price per acre =
> \$25.50 revenue guarantee per acre; and
>
> \(3\) \$25.50 revenue guarantee per acre x 200 acres of malting barley
> = \$5,100 malting barley revenue guarantee.
>
> \(c\) Total production to count is determined as follows:
>
> \(1\) Damaged production sold as malting barley:
>
> \(i\) \$2.31 price per bushel received for damaged production;
>
> \(ii\) \$2.31 ÷ \$2.60 = .8885;
>
> \(iii\) 4,750 bushels sold x .8885 = 4,220 bushels as production to
> count;
>
> \(2\) Reconditioned malting barley:
>
> \(i\) \$2.20 price received - \$0.05 reconditioning cost = \$2.15;
>
> \(ii\) \$2.15 ÷ \$2.60 = .8269;
>
> \(iii\) 2,500 bushels x .8269 = 2,067 bushels as production to count;
>
> \(3\) 4,220 bushels + 2,067 bushels = 6,287 bushels total production
> to count.
>
> \(d\) The amount of loss is determined by:
>
> \(1\) 6,287 bushels x \$0.68 additional price = \$4,275 value of
> production of count; and
>
> \(2\) \$5,100 revenue guarantee - \$4,275 value of production to count
> = \$825 indemnity will be paid.