```

[Federal Register Volume 77, Number 73 (Monday, April 16, 2012)]
[Rules and Regulations]
[Pages 22467-22472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8902]

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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 457

[Docket No. FCIC-11-0006]
RIN 0563-AC32

Common Crop Insurance Regulations; Fresh Market Tomato (Dollar 
Plan) Crop Provisions

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the 
Common Crop Insurance Regulations, Fresh Market Tomato (Dollar Plan) 
Crop Provisions. The intended effect of this action is to provide 
policy changes and clarify existing policy provisions to better meet 
the needs of insured producers, and to reduce vulnerability to program 
fraud, waste, and abuse. The changes will apply for the 2013 and 
succeeding crop years.

DATES: This rule is effective April 16, 2012.

FOR FURTHER INFORMATION CONTACT: Tim Hoffmann, Director, Product 
Administration and Standards Division, Risk Management Agency, United 
States Department of Agriculture, Beacon Facility, Stop 0812, Room 421, 
P.O. Box 419205, Kansas City, MO 64141-6205, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be non-significant for the 
purposes of Executive Order 12866 and, therefore, it has not been 
reviewed by the Office of Management and Budget.

Paperwork Reduction Act of 1995

    Pursuant to the provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35), the collections of information in this rule 
have been approved by OMB under control number 0563-0053.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

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

Executive Order 13132

    It has been determined under section 1(a) of Executive Order 13132, 
Federalism, that this rule does not have sufficient implications to 
warrant consultation with the States. The provisions contained in this 
rule will not have a substantial direct effect on States, or on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. The review reveals that this regulation will not have 
substantial and direct effects on Tribal governments and will not have 
significant Tribal implications.

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. For 
instance, all producers are required to submit an application and 
acreage report to establish their insurance guarantees and compute 
premium amounts, and all producers are required to submit a notice of 
loss and production information to determine the amount of an indemnity 
payment in the event of an insured cause of crop loss. Whether a 
producer has 10 acres or 1000 acres, there is no difference in the kind 
of information collected. To ensure crop insurance is available to 
small entities, the Federal Crop Insurance Act authorizes FCIC to waive 
collection of administrative fees from limited resource farmers. FCIC 
believes this waiver helps to ensure that small entities are given the 
same opportunities as large entities to manage their risks through the 
use of crop insurance. A Regulatory Flexibility Analysis has not been 
prepared since this regulation does not have an impact on small 
entities, and, therefore, this regulation is exempt from the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 605).

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 final 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. With respect to any direct action taken by FCIC 
or action by FCIC directing the insurance provider to take specific 
action under the terms of the crop insurance policy, the administrative 
appeal provisions published at 7 CFR part 11, or 7 CFR part 400, 
subpart J for the informal administrative review process of good 
farming practices as applicable, must be exhausted before any action 
against FCIC for judicial review may be brought.

[[Page 22468]]

Environmental Evaluation

    This action is not expected to have a significant economic impact 
on the quality of the human environment, health, or safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    This rule finalizes changes to the Common Crop Insurance 
Regulations (7 CFR part 457), Fresh Market Tomato (Dollar Plan) Crop 
Provisions that were published by FCIC on November 17, 2011, as a 
notice of proposed rulemaking in the Federal Register at 76 FR 71271-
71276. The public was afforded 30 days to submit comments after the 
regulation was published in the Federal Register.
    A total of 136 comments were received from 14 commenters. The 
commenters were farmers, trade associations, an insurance agent, an 
insurance company, and other interested parties.
    The public comments received regarding the proposed rule and FCIC's 
responses to the comments are as follows:

Section 1--Definitions

    Comment: In regard to the definition of ``acre'' commenters asked 
for additional information regarding how unplanted acreage (e.g., field 
irrigation canals and furrows, or field roads for spraying and handling 
harvested tomatoes) should be deducted when reporting planted acres.
    Response: It would not be possible to include this information in 
this rule because of the complexities involved. However, FCIC provides 
several sources of information and examples to be used by the insurance 
providers, agents and their producers for determining planted acreage 
for fresh market tomatoes. The Risk Management Agency (RMA) published 
Manager's Bulletin MGR-09-010 on November 18, 2009, which provided 
appropriate methods for determining ``planted acreage.'' The clarifying 
information and additional examples in this bulletin were incorporated 
into the 2010 Loss Adjustment and Standards Handbook (LASH) and is 
available for the insurance providers, their agents and producers to 
use in calculating and reporting their planted acreage.
    Comment: In regard to the new ``fresh market tomatoes'' definition, 
a few commenters recommended that other types or varieties of tomatoes 
should be insured under this policy (greenhouse, hydroponic, heirlooms, 
etc.).
    Response: FCIC disagrees with these recommendations to insure these 
other types of tomatoes. FCIC added the new definition of ``fresh 
market tomatoes'' to clarify the Fresh Market Tomato (Dollar Plan) Crop 
Provisions is primarily designed to insure ``field grown mature green 
or ripe fresh market tomatoes.'' These are the traditional large 
``round'' or ``globe'' field grown tomatoes that account for 
approximately 90 percent of the fresh market tomato production. In 
addition, there must be standards for determining the fresh market 
tomatoes and the U.S. Standards for Grades of Fresh Tomatoes, and the 
AMS Federal Marketing Order (FMO 966) are the primary federal 
regulations that govern these traditional ``round or globe'' field 
grown fresh market tomatoes. These other tomatoes are not field grown 
and there are no such established standards for these other types or 
varieties of tomatoes. No change has been made.
    Comment: In regard to the definitions of ``harvest'' and 
``penhookers'', some commenters recommended tomatoes that are field 
packed as ``ripe'' tomatoes, and tomatoes salvaged by penhookers should 
be considered a harvest.
    Response: Field packed ``ripe'' tomatoes meet the definition of 
``fresh market tomatoes'' so they qualify as harvested. FCIC considers 
all ``penhooked'' tomatoes as salvage value, since the penhookers pay 
the producer directly and should be treated separately from harvested 
fresh market tomatoes because they usually have less value. However, 
the revenue received from the penhookers must still be reported in 
their total dollar value of production to count. No change has been 
made.

Section 8--Insured Crop

    Comment: Commenters recommended that field grown cherry, grape, 
plum or roma types of fresh market tomatoes be insured under this 
policy by including these types in the Special Provisions.
    Response: FCIC agrees and proposed to include the cherry, grape, 
plum or roma types of tomatoes via the Special Provisions. This 
provision was left unchanged in this final rule.

Section 10--Insurance Period

    Comment: Commenters recommended the calendar date for the end of 
the insurance period be increased to 140 days after transplanting. 
Under the current policy the end of the insurance period is 125 days 
after transplanting.
    Response: No changes were proposed to section 10(f) regarding the 
end of the insurance period for transplanted or replanted tomatoes. 
FCIC only proposed to remove the provisions regarding direct seeded 
tomatoes. Since the public was not provided an opportunity to comment 
on the extension of the end of the insurance period to 145 days and the 
recommendation does not address a conflict or vulnerability in the crop 
provisions, FCIC cannot consider the recommended change. No change has 
been made to the final rule.

Section 12--Replanting Payments

    Comment: Commenters recommended raising the current replanting 
payments from $600 to $900 per acre.
    Response: No changes were proposed to sections 12(a), 12(b), and 
12(c). Since the public was not provided an opportunity to comment on 
an increase of replanting payments and the recommendation does not 
address a conflict or vulnerability in the provisions, FCIC cannot 
consider the recommended change. No change has been made.

Section 14--Settlement of Claim

    Comment: Commenters recommended under ``Section 14(c)(2)(i) that 
appraised potential production, as currently in the policy, allows up 
to 30 cartons that do not count against the grower if tomatoes have 
been picked 3 times.''
    Response: FCIC disagrees with this recommendation. There is no 
language in the current policy that indicates there should be a 30 
carton reduction in the grower's production to count if tomatoes are 
harvested more than three times. FCIC is revising the language in 
section 14(c)(2)(i) to clarify and state potential production on any 
fresh market tomato acreage that has not been harvested the required 
number of times as specified in the Special Provisions will be included 
in the total appraised production. This will allow flexibility for 
future harvest requirements for specialty tomatoes such as cherry, 
grape, plum or roma tomatoes.
    Comment: Commenters asked for clarification on new policy wording 
in section 14(c)(3).
    Response: FCIC is not sure what needs clarifying. Section 14(c)(3) 
provides the method for valuing sold harvested production and is the 
same type of calculation used for the Summary of Harvested Production 
Worksheet in the current LASH to determine the total dollar value per 
load. Therefore, this calculation should already be familiar to 
producers, agents and insurance providers.
    Comment: Under Section 14(c)(4) commenters recommended unsold 
harvested production should not be counted as production to count if 
these tomatoes are ``inspected and dumped'' due to quality defects.

[[Page 22469]]

    Response: The Proposed Rule makes it clear that harvested 
production that is damaged due to insurable causes such that it is 
unmarketable or unsold is not counted as production to count. This 
would include tomatoes that are dumped due to quality defects resulting 
from insured causes that render the tomato unmarketable. It is only 
unsold harvested production that is not damaged by an insured cause of 
loss is considered as production to count. No change has been made.
    Comment: Under Section 14(c)(5) commenters recommended field 
packed/penhooked tomatoes or salvage value count as value received, for 
there is no picking cost involved.
    Response: FCIC considers field packed tomatoes as production to 
count under sections 14(c)(3) and 14(c)(4) because producers do incur 
harvesting costs. Section 14(c)(5) clarifies penhooked tomatoes are a 
salvage operation and any salvage value paid to the producer by 
penhookers will be added to the total dollar value of production to 
count. Since no harvest costs are incurred for penhooked tomatoes, they 
do not reduce their value for the purposes of establishing the total 
dollar value of the production to count. No change has been made.

Section 16--Minimum Value Option

    Comment: Commenters recommended that both Minimum Value Options 
(MVO I) and (MVO II) remain in the policy.
    Response: As stated in the Proposed Rule, FCIC is removing the 
Minimum Value Option II (MVO II) provision because allowing the MVO II 
price to go down to zero has resulted in unfavorable loss experience 
and program abuse. Under the current policy there are two Minimum Value 
Option choices (MVO I) and (MVO II). The producer can purchase either 
Minimum Value Option and pay additional premium. The current 2012 MVO I 
reduces the Minimum Value price to $4.75 per carton while the current 
2012 MVO II reduces the Minimum Value price to $1.00 per carton, from 
the current Minimum Value price of $6.95. Historically, producers chose 
MVO II and it has resulted in excessive losses because tomatoes 
slightly damaged due to rain are valued at the MVO II price of $1.00 
per carton for claims settlement; however, producers are often able to 
salvage or market such production in excess of $1.00 per carton. These 
excess loss payments unnecessarily increase premium rates for all 
producers leading to overall increased program costs. Additionally, 
having two options adds unnecessary complexity to the program.
    Therefore, this final rule eliminates the current MVO II and will 
offer one MVO price as specified in the Special Provisions. The Risk 
Management Agency will be diligent in establishing and maintaining a 
fair and equitable MVO price in future crop years. No change has been 
made.
    In addition to the changes described above, FCIC has made minor 
editorial changes.
    Good cause is shown to make this rule effective less than 30 days 
after publication in the Federal Register. Good cause to make a rule 
effective less than 30 days after publication in the Federal Register 
exists when the 30 day delay in the effective date is impractical, 
unnecessary, or contrary to the public interest.
    With respect to the provisions of this final rule, it would be 
contrary to public interest to delay implementation because public 
interest is served by improving the insurance product as follows: (1) 
Increasing insurance flexibility by providing coverage for specific 
types of tomatoes via the Special Provisions instead of by written 
agreement; (2) providing simplification and clarity to the Fresh Market 
Tomato (Dollar Plan) crop insurance program so it is easier for 
producers and agents to understand; and (3) only offering one Minimum 
Value Option that more accurately reflects the salvage value of 
slightly damaged tomatoes for claim purposes which addressed concerns 
raised about the Fresh Market Tomato claims process.
    If FCIC is required to delay implementation of this rule after the 
date it is published, the provisions of this rule could not be 
implemented until the 2014 crop year. This would mean the affected 
producers would be without the benefits described above for an 
additional year.
    For reasons stated above, good cause exists to make these policy 
changes effective less than 30 days after publication in the Federal 
Register.

List of Subjects in 7 CFR Part 457

    Crop insurance, Fresh market tomato (dollar plan), Reporting and 
recordkeeping requirements.

Final Rule

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR part 457 effective for the 2013 and 
succeeding crop years as follows:

PART 457--COMMON CROP INSURANCE REGULATIONS

0
1. The authority citation for 7 CFR Part 457 continues to read as 
follows:

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

0
2. Amend Sec.  457.139 as follows:
0
a. Revise the introductory text;
0
b. Remove the paragraph immediately preceding section 1;
0
c. Amend section 1 by:
0
i. Adding definitions for ``allowable cost'', ``amount of insurance per 
acre'', ``fresh market tomatoes'', ``minimum value'', ``penhookers'', 
``price received'', and ``registered handler'';
0
ii. Removing the definitions of ``planted acreage'' and ``practical to 
replant'';
0
iii. Revising the definitions of ``acre'', ``direct marketing'', 
``harvest'', ``plant stand'', and ``potential production''; and
0
iv. Amending the definition of ``crop year'' by removing the phrase 
``of `crop year' contained in section 1 (Definitions) of the Basic 
Provisions (Sec.  457.8)'' and adding the phrase ``contained in the 
Basic Provisions (Sec.  457.8)'' in its place.
0
d. Amend section 3 by:
0
i. Removing the phrases ``(Insurance Guarantees, Coverage Levels, and 
Prices for Determining Indemnities)'' and ``(Sec.  457.8)'' in 
paragraphs (a) and (c);
0
ii. Remove the comma following ``Basic Provisions'' in paragraphs (a) 
and (c);
0
iii. Revising the table in paragraph (d); and
0
iv. Revising paragraph (e).
0
e. Amend section 4 by removing the phrases ``(Contract Changes)'' and 
``(Sec.  457.8)''.
0
f. Amend section 5 by removing the phrases ``(Life of Policy, 
Cancellation, and Termination)'' and ``(Sec.  457.8)''.
0
g. Amend section 6 introductory text by removing the phrases ``(Report 
of Acreage)'' and ``(Sec.  457.8)''.
0
h. Amend section 7 by:
0
i. Removing the phrases ``(Annual Premium)'' and ``(Sec.  457.8)''; and
0
ii. Removing the phrase ``(e.g., fall direct-seeded irrigated)'' and 
adding the phrase ``(e.g., fall transplanted irrigated)'' in its place.
0
i. Amend section 8 by:
0
i. Revising the introductory text; and
0
ii. Revising paragraph (c)(4).
0
j. Amend section 9 by:
0
i. Removing the phrases ``(Insurable Acreage)'' and ``(Sec.  457.8)'' 
in paragraphs (a) and (b);
0
ii. Removing the phrase ``or 60 days of direct seeding'' in paragraph 
(b)(1)(iii);
0
iii. Removing the word ``satisfied'' and adding the word ``met'' in its 
place in paragraph (b)(2) introductory text; and

[[Page 22470]]

0
iv. Revising paragraph (b)(3).
0
k. Amend section 10 by:
0
i. Revising the introductory text;
0
ii. Revising paragraph (e); and
0
iii. Revising paragraph (f).
0
l. Amend section 11 by:
0
i. Removing the phrases ``(Causes of Loss)'' and ``(Sec.  457.8)'' in 
paragraphs (a) introductory text and (b); and
0
ii. Revising paragraph (b)(2).
0
m. Amend section 12(a) and 12(c) by removing the phrases ``(Replanting 
Payment)'' and ``(Sec.  457.8)''.
0
n. Amend section 13 introductory text by removing the phrases ``(Duties 
in the Event of Damage or Loss)'' and ``(Sec.  457.8)''.
0
o. Amend section 14 by:
0
i. Revising paragraph (b)(4)(ii);
0
ii. Adding an example following paragraph (b)(5);
0
iii. Revising paragraph (c)(2)(i);
0
iv. Revising paragraph (c)(3);
0
v. Adding a new paragraph (c)(4); and
0
vi. Adding a new paragraph (c)(5).
0
p. Revise section 16.
0
q. Add an example following paragraph 16(c).
    The revised and added text reads as follows:

Sec.  457.139  Fresh market tomato (dollar plan) crop insurance 
provisions.

    The fresh market tomato (dollar plan) crop insurance provisions for 
the 2013 and succeeding crop years are as follows:
* * * * *
    1. Definitions.
    Acre. 43,560 square feet of planted acreage when row widths do not 
exceed six feet. If row widths exceed six feet, the land area on which 
at least 7,260 linear feet of rows are planted.
    Allowable cost. The dollar amount per carton for harvesting, 
packing, and handling as stated in the Special Provisions.
    Amount of insurance per acre. The dollar amount of insurance per 
acre obtained by multiplying the reference maximum dollar amount shown 
in the actuarial documents by the coverage level percentage you elect.
* * * * *
    Direct marketing. The sale of the insured crop directly to 
consumers without the intervention of an intermediary such as a 
registered handler, 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.
* * * * *
    Fresh market tomatoes. Field grown mature green or ripe fresh 
market tomatoes that meet the Agricultural Marketing Service United 
States Standards for Grades of Fresh Tomatoes; and the applicable 
Federal Marketing Order and Florida Tomato Committee Regulations, or 
their successors.
    Harvest. The picking of fresh market tomatoes from the plants, 
excluding tomatoes salvaged by penhookers.
* * * * *
    Minimum value. The dollar amount per carton shown in the Special 
Provisions we will use to value appraised and unsold harvested 
production to count.
    Penhookers. Individuals who purchase the right to salvage tomatoes 
remaining in the field after commercial harvests are completed.
    Plant stand. The number of live plants per acre prior to the 
occurrence of an insured cause of loss.
* * * * *
    Potential production. The number of cartons of field grown mature 
green or ripe fresh market tomatoes that the tomato plants will or 
would have produced per acre assuming normal growing conditions and 
practices by the end of the insurance period.
    Price received. The gross dollar amount per carton received by the 
producer before deductions of allowable costs.
    Registered handler. A person or entity officially certified by the 
Florida Tomato Committee, or successor entity, to inspect and enforce 
all the handling regulations for fresh market tomatoes, and report the 
required packout data to the Florida Tomato Committee.
* * * * *
    3. Amounts of Insurance and Production Stages.
* * * * *
    (d) * * *

----------------------------------------------------------------------------------------------------------------
                                                        Percent of the
                                                          amount of
                        Stage                           insurance per         Length of time if transplanted
                                                        acre that you
                                                           selected
----------------------------------------------------------------------------------------------------------------
1...................................................                 50  From planting through the 29th day
                                                                          after planting.
2...................................................                 75  From the 30th day after planting until
                                                                          the beginning of stage 3.
3...................................................                 90  From the 60th day after planting until
                                                                          the beginning of the final stage.
Final...............................................                100  Begins the earlier of 75 days after
                                                                          planting, or the beginning of harvest.
----------------------------------------------------------------------------------------------------------------

     (e) Any acreage of fresh market tomatoes damaged in the first, 
second, or third stage to the extent that the majority of producers in 
the area would not normally further care for the crop, the indemnity 
payable for such acreage will be based on the stage the plants had 
achieved when the insured damage occurred, even if the producer 
continues to care for the damaged tomatoes.
* * * * *
    8. Insured Crop.
    In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the field grown mature green or ripe fresh market 
tomato types in the county as specified in the Special Provisions for 
which a premium rate is provided in the actuarial documents:
* * * * *
    (c) * * *
    (4) Direct seeded fresh market tomatoes, unless insured by written 
agreement.
* * * * *
    9. Insurable Acreage.
* * * * *
    (3) We will not insure any acreage on which tomatoes (except for 
replanted tomatoes in accordance with sections 9(b)(1) and (2)), 
peppers, eggplants, strawberries or tobacco have been grown and the 
soil was not fumigated or otherwise properly treated before planting 
the insured tomatoes.
    10. Insurance Period.
    In lieu of section 11 of the Basic Provisions, coverage begins on 
each unit or part of a unit the later of the date we accept your 
application, or when the tomatoes are planted in each planting period. 
Coverage ends on each unit at the earliest of:
* * * * *
    (e) Final harvest on the unit; or
    (f) The calendar date for the end of the insurance period that is 
125 days after the date of transplanting or replanting with 
transplants.
    11. Causes of Loss.
* * * * *
    (b) * * *

[[Page 22471]]

    (2) Failure to harvest in a timely manner or failure to sell the 
tomatoes, unless such failure is due to actual physical damage caused 
by an insured cause of loss that occurs during the insurance period. 
For example, we will not pay an indemnity if you are unable to sell the 
insured crop due to quarantine, boycott, or refusal of any person to 
accept production.
* * * * *
    14. Settlement of Claim.
* * * * *
    (b) * * *
    (4) * * *
    (ii) For catastrophic risk protection coverage, the result of 
multiplying the total value of production to count determined in 
accordance with section 14(c) by the percentage contained in the 
Special Provisions.
    (5) * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
For Example: You have a 100 percent share in 10.0 acres of fresh market
 tomatoes. You select a 70% coverage level of the reference maximum
 dollar amount of $7,500 per acre. The average price received is $10.00
 per carton of tomatoes. Allowable costs are $4.25 per carton. Minimum
 value is $5.00 per carton. Your total sold production is 5,000 cartons
 (5,000 / 10.0 = 500 cartons per acre) and you have an additional 1,000
 cartons of unsold harvested production (1,000 / 10.0 = 100 cartons per
 acre). Your loss occurred in the final stage of production. Your total
 indemnity is calculated as follows:
------------------------------------------------------------------------
                               $7,500 x 70% = dollar              $5,250
                                amount of insurance
                                per acre.
    14(c)(3).................  500 cartons x $5.75 =               2,875
                                value of sold
                                production ($10
                                selling price minus
                                $4.25 allowable cost).
    14(c)(4).................  100 cartons of unsold                +500
                                harvested production x
                                $5 minimum value per
                                carton.
                               Total value of                      3,375
                                production to count.
    14(b)(5).................  Indemnity per acre =                1,875
                                ($5,250 - $3,375) x
                                100% share.
                               $1,875 x 10.0 acres =              18,750
                                $18,750 total
                                indemnity payment.
------------------------------------------------------------------------

    (c) * * *
    (2) * * *
    (i) Potential production on any fresh market tomato acreage that 
has not been harvested the required number of times as specified in the 
Special Provisions.
* * * * *
    (3) The total value of all sold harvested production from the 
insurable acreage will be the dollar amount obtained by subtracting the 
allowable cost contained in the Special Provisions from the price 
received for each carton of fresh market tomatoes in the load (this 
result may not be less than the minimum value shown in the Special 
Provisions for any carton of tomatoes), and multiplying this result by 
the number of cartons of fresh market tomatoes harvested.
    (4) The total value of all unsold harvested production will be the 
dollar amount obtained by multiplying the number of cartons of such 
tomatoes on the unit by the minimum value shown in the Special 
Provisions for the planting period. Harvested production that is 
damaged or defective due to an insured cause of loss and is not sold 
will not be counted as production to count.
    (5) Any penhooker salvage value paid to you will be added to the 
total dollar value of production to count.
* * * * *
    16. Minimum Value Option.
    (a) The provisions of this option are continuous and will be 
attached to and made a part of your insurance policy, if:
    (1) You elect the Minimum Value Option on your application, or on a 
form approved by us, on or before the sales closing date for the 
initial crop year in which you wish to insure fresh market tomatoes 
(dollar plan) under this option, and pay the additional premium 
indicated in the actuarial documents for this optional coverage; and
    (2) You have not elected coverage under the Catastrophic Risk 
Protection Endorsement.
    (b) In lieu of the provisions contained in section 14(c)(3) and 
14(c)(4) of these Crop Provisions, the total value of harvested 
production will be determined as follows:
    (1) For sold harvested production, the dollar amount obtained by 
subtracting the allowable cost contained in the Special Provisions from 
the price received for each carton of fresh market tomatoes in the load 
(this result may not be less than the minimum value option price 
contained in the Special Provisions for any carton of tomatoes sold), 
and multiplying this result by the number of cartons of fresh market 
tomatoes sold; and
    (2) For unsold harvested production, the dollar amount obtained by 
multiplying the number of cartons of such fresh market tomatoes on the 
unit by the minimum value shown in the Special Provisions for the 
planting period. Harvested production that is damaged or defective due 
to an insured cause of loss and is not sold will not be counted as 
production to count.
    (c) This option may be canceled by either you or us for any 
succeeding crop year by giving written notice on or before the 
cancellation date preceding the crop year for which the cancellation of 
this option is to be effective.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Example with Minimum Value Option: You have a 100 percent share in 10.0
 acres of fresh market tomatoes. You select a 70% coverage level of the
 reference maximum dollar amount of $7,500 per acre. The average price
 received is $6.00 per carton of tomatoes. Allowable costs are $4.25 per
 carton. Minimum value is $5.00 per carton. The Minimum Value Option
 price is $2.00 per carton. Your total sold production is 5,000 cartons
 (5,000 / 10.0 = 500 cartons per acre) and you have an additional 1,000
 cartons of unsold harvested production (1,000 / 10.0 = 100 cartons per
 acre). Your loss occurred in the final stage of production. Your total
 indemnity is calculated as follows:
------------------------------------------------------------------------
                               $7,500 x 70% = dollar              $5,250
                                amount of insurance
                                per acre.
    16(b)(1).................  500 cartons x $2 =                  1,000
                                value of sold
                                production ($6 price
                                received minus $4.25
                                allowable costs =
                                $1.75. $2.00 minimum
                                value option price is
                                greater than $1.75).
    16(b)(2).................  100 cartons of unsold                 500
                                harvested production x
                                $5 minimum value per
                                carton.
                               Total value of                      1,500
                                production to count.
    16(b)....................  Indemnity per acre =                3,750
                                $5,250 - $1,500 =
                                $3,750 x 100% share.
                               $3,750 x 10.0 acres =              37,500
                                $37,500 total
                                indemnity payment.
------------------------------------------------------------------------

[[Page 22472]]

    Signed in Washington, DC, on April 5, 2012.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2012-8902 Filed 4-13-12; 8:45 am]
BILLING CODE 3410-08-P
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