October 20, 1995

BULLETIN NO.:  MGR-95-041

TO:       All Reinsured Companies
          CFSA Headquarters, Program Delivery and Field Operations
          All Risk Management Field Offices

FROM:     Kenneth D. Ackerman
          Deputy Administrator for Risk Management

SUBJECT:  Loss Adjustment Procedures for Potato Late Blight and Potato Decay

BACKGROUND

Several areas of the country are again experiencing varying degrees of damage 
to the potato crop due to conditions favorable to late blight infection and 
decay.  Exceptionally hard hit are parts of the Pacific Northwest.  For each 
of the past 3 years, the Federal Crop Insurance Corporation has issued loss 
adjustment procedures to handle late blight and decay.  These procedures 
required insurance providers to inspect fields and obtain representative 
samples prior to harvest, except in heavily infested areas where the tubers 
are left in the field.  

Insurance providers may not be able to make inspections or properly identify 
late blight and decay prior to harvest, because:  (1) a large number of 
inspections are expected; (2) tubers may not show physical symptoms of late 
blight infection, and university pathologists indicate there is currently no 
laboratory analysis that can positively identify late blight on symptomless 
tubers; (3) most infected potato vines have been killed by freeze or chemical 
applications, thus restricting or precluding visual identification of areas 
from which tuber samples should be obtained; and (4) digging potato samples 
too soon after vine-kill may spread the late blight fungus from the sample 
vines to the tubers which could result in contaminated samples with inflated 
infection percentages. 

ACTION

Insurance providers are to handle claims as follows whenever the conditions 
described above exist in a production region.  Throughout these instructions, 
when assessing the percentage of potatoes infected by late blight or decay, 
the percentage of each is to be treated separately (not combined).

1.   Notifications Required from Insurance Providers

     Insurance providers must advise all insureds to: (1) notify the provider 
     of any potato fields that are suspected of being infected with late 
     blight or decay, and (2) use Extension Service (ES) or local university 
     recommendations for controlling the potato late blight and potato 
     decay.

2.   Notification Required from Insureds

     Insureds must notify insurance providers prior to harvest of any fields 
     that are suspected of being infected with late blight or decay.  This is 
     particularly critical if it is anticipated that there will be 5 percent 
     or more of either late blight infection or decay of the tubers.  

     Failure to provide such notification may result in appraisals for 
     uninsured causes of loss if it jeopardizes the ability of insurance 
     providers to: (1) determine the percentage of infection, (2) ensure that 
     heavily infested areas have been properly handled separately, or 
     (3) determine that other recognized good potato farming practices have 
     been followed to minimize the loss.

3.   Field Inspections

     A    Insurance providers must inspect the fields prior to harvest to 
          detect whether potato late blight and/or potato decay is in the 
          field and to document the results of this inspection in the 
          policyholder's file.  However, if a heavy workload prevents the 
          insurance provider from making a timely inspection prior to 
          harvest, the inspection can be made during or immediately after 
          harvest and representative samples can be obtained at that time.  
          (See paragraph 4 D below, for documentation instructions.) 

          (1)  If it is possible to determine during the inspections that 
               there are heavily infested areas, these areas should be marked 
               off and handled separately from the rest of the field. If the 
               insured intends to harvest these areas separately from the 
               rest of the field, insurance providers are to inform the 
               insured to keep the production from infested areas separate 
               from production from non-infested areas.

          (2)  If resources and conditions permit, the adjuster is to dig 
               representative samples as indicated in B below.  However, if 
               vine kill prevents visual detection of vine infection and/or 
               it has been recommended not to dig samples at this time to 
               avoid spreading late blight fungus to the tubers, insurance 
               providers are to use any practical means to verify the 
               infestation (e.g., obtaining or verifying copies of chemical 
               receipts and spraying records to substantiate efforts taken to 
               control the fungus, etc.).  
          
          (3)  If, at the time of the inspection, harvest has not occurred 
               and no samples have been taken (or tubers from samples do not 
               show physical symptoms of late blight infection), instruct the 
               insured to notify the insurance provider of the date potatoes 
               are harvested.

     B    Representative Samples

          If symptoms are evident in the tubers, loss adjusters are to take  
          representative samples from heavily-infested areas in which the 
          potatoes are left in the field (or storage facility if this is an 
          inspection of stored potatoes) to determine the percentage of late 
          blight infection and/or decay in the tubers.

          (1)  If 5 percent or more of the sampled tubers are infected by 
               either late blight or decay, the production from the sampled 
               area may be considered zero.

          (2)  If less than 5 percent of the sampled tubers are infected by 
               late blight or decay, a tuber-by-tuber appraisal must be made 
               as outlined in approved potato loss adjustment procedure using 
               non-decayed, non-infected tuber weights to determine production 
               to count.

          (3)  If the tubers show no symptoms at the time of inspection, 
               document this fact and inform the insured to notify the 
               insurance provider immediately if symptoms of late blight or 
               decay are subsequently discovered.  Instruct the insured to 
               notify the insurance provider immediately if symptoms become
               evident in stored potatoes within 60 days of harvest.  Upon the 
               insured's notification, the loss adjuster is to immediately 
               obtain representative samples from infected lots of stored 
               potatoes to verify and document the percentages of late blight 
               and decay.

     C    Loss adjusters are to make every effort to complete the final 
          inspection no later than 60 days after harvest.  If tubers show no 
          symptoms at that time and the potatoes are determined not to have 5 
          percent or more late blight or decay, adjusters are to finalize the 
          claim as instructed by their insurance provider.

4.   Other Loss Adjustment Considerations

     A    Waiver of Production Assessed for Early Digging

          Some Special Provisions state that appraisals will be made for any 
          reduction in production that resulted from harvesting prior to the 
          date specified in the Special Provisions.  Where this is the case, 
          no additional production appraisal will be assessed on potatoes 
          having 5 percent or greater incidence of late blight or decay that 
          have been harvested before the date shown on the Special 
          Provisions, provided the insured killed the vines (for late blight 
          infected potatoes) and harvested early in order to minimize the 
          effects of late blight or decay. 

     B    Time Frame Allowed for Policyholders to Make Disposition of Stored 
          Potatoes

          If an insured elects to harvest tubers from areas with a 5 percent 
          or greater incidence of late blight or decay, or where loss 
          adjusters have documented that late blight fungus was in the 
          field/unit prior to harvest, a period of 60 days from the time the 
          potatoes are harvested may be authorized for the insured to make
          disposition of the affected tubers.  At the end of the 60-day period, 
          the insured must agree to either: (1) destroy such potatoes to 
          qualify for zero production to count, or (2) accept the 
          tuber-by-tuber appraisal that was made prior to harvest or completed 
          at the time symptoms became apparent.  Any harvested production that
          is disposed of through selling or processing will be counted as 
          production.

     C    Insured's Awareness of Late Blight Problem in Previous Year

          When preparing claims involving damage resulting from disease 
          (e.g., late blight), loss adjustment procedure considers first year 
          damage from disease to be unavoidable if the insured was unaware of 
          the conditions at planting time.  However, if it is determined that 
          the insured was aware of the late blight problem in the preceding 
          crop year but did not follow recognized good farming practices for 
          the current crop year, some or all of the loss will be considered 
          an uninsured loss.  For example, failing to follow recognized good 
          farming practices might include the following: (1) failure to 
          adequately dispose of infected cull potatoes from the prior year's 
          production in accordance with methods recommended by university or 
          ES representatives, or (2) failure to apply appropriate fungicides.

          NOTE:  Insurance providers should promote an awareness of 
          recommended production practices (including the use and application 
          of appropriate fungicides) for the control of late blight and decay 
          in potatoes by providing materials from the ES and/or local 
          universities to their personnel.

     D    Documentation

          Document, at the time of field inspections, phone contacts, and 
          storage facility inspections:

          (1)  Date of each inspection or phone contact;

          (2)  Producer's management practices;
     
          (3)  Fields/units where late blight or decay was present;

          (4)  Extent of late blight and decay discovered (indicate the 
               percentages of infection in any samples taken);

          (5)  Date of harvest;

          (6)  Date of storage; and               
               
          (7)  Any other pertinent information.