Source: https://www.federalregister.gov/documents/2006/01/25/E6-855/common-crop-insurance-regulations-peanut-crop-insurance-provisions
Timestamp: 2017-11-22 13:15:57
Document Index: 115932904

Matched Legal Cases: ['art 11', 'art 400', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457', '§\u2009457']

Federal Register :: Common Crop Insurance Regulations, Peanut Crop Insurance Provisions
Common Crop Insurance Regulations, Peanut Crop Insurance Provisions
A Proposed Rule by the Federal Crop Insurance Corporation on 01/25/2006
Written comments and opinions on this proposed rule will be accepted until close of business March 27, 2006 and will be considered when the rule is to be made final. Comments on information collection under the Paperwork Reduction Act of 1995 must be received on or before March 27, 2006.
0563-AB97
https://www.federalregister.gov/d/E6-855 https://www.federalregister.gov/d/E6-855
The Federal Crop Insurance Corporation (FCIC) proposes to amend the Common Crop Insurance Regulations, Peanut Crop Insurance Provisions to remove all references to quota and non-quota peanuts and add provisions that will allow coverage for peanuts whether or not they are under contract with a sheller to better meet the needs of insured producers. The changes will apply for the 2007 and succeeding crop years.
Interested persons are invited to submit written comments to the Director, Product Development Division, Risk Management Agency, United States Department of Agriculture, 6501 Beacon Drive, Stop 0812, Room 421, Kansas City, MO 64133-4676. Comments titled “Peanut Crop Provisions” may be sent via the Internet to DirectorPDD@rm.fcic.usda.gov, or the Federal eRulemaking Portal: http://www.regulations.gov/​. Follow the online instructions for submitting comments. A copy of each response will be available for public inspection and copying from 7 a.m. to 4:30 p.m., c.s.t., Monday through Friday, except holidays, at the above address.
This rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, it has been reviewed by the Office of Management and Budget (OMB).
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. Start Printed Page 4057Whether 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).
This proposed 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 to require 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 and 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.
FCIC proposes to amend the Common Crop Insurance Regulations; Peanut Crop Insurance Provisions to remove all references to quota and non-quota peanuts because the Farm Security and Rural Investment Act of 2002 eliminated the peanut quota program as administered by the Farm Service Agency (FSA). FCIC anticipated that quotas could be eliminated years ago and previously included provisions that permitted guarantees to be based on the actual production history of the producer. This has allowed the program to operate since 2002. However, reference to quotas in the pricing methodology and other provisions has caused some confusion that will be eliminated when references are removed.
Section 1—Definitions—Add definitions for “base contract price,” “handler,” “harvest,” “marketing association,” “price election,” “sheller,” and “sheller contract” since these terms are required to provide insurance under a sheller contract. To the maximum extent practicable, these definitions will be given the same meaning as similar terms in other insured contracted crops. Revise the definition of “farmers’ stock peanuts” to specifically state farmer stock peanuts have to be picked and threshed. Revise the definition of “planted acreage” to recognize peanuts are sometimes planted with two rows close together followed by a space wide enough to permit mechanical cultivation followed by two rows planted close together. This revision allows peanut producers to cultivate their peanuts in a manner recognized by agriculture experts as a good farming practice. Remove the definitions of “approved yield,” “county,” and “production guarantee (per acre)” because these definitions will now be the same as the definitions in the Basic Provisions. Remove the definitions of “average price per pound,” “average support price per pound,” “CCC,” “effective poundage marketing quota,” “inspection certificate and sales memorandum,” “non-quota peanuts,” “quota peanuts,” “segregation I, II, or III,” and “value per pound” because the elimination of the peanut quotas make these definitions no longer applicable to the Crop Provisions.
Section 2—Revise section 2 to specify that if the producer insures any peanuts in accordance with a sheller contract all of the producer's peanut acreage in the county will be considered one enterprise unit. It is possible for producers to have several sheller contracts with different prices. Requiring that all peanut acreage in the county be included in one enterprise unit prevents the producer from shifting production from a unit with a higher price to a unit with a lower price in order to create or increase an indemnity. The producer must report all applicable information separately by sheller contract on the acreage report and any claim forms. However, the information for each contract will be aggregated to obtain the total information for the unit. This requirement for reporting separately, and aggregating for the unit, is also necessary if the producer has both peanuts under a sheller contract and non-contract peanuts in the same unit.
Regardless of whether the peanuts are covered by a sheller contract, if the producer elects to insure all of the peanuts in the county using the price election provided by FCIC, the producer will be eligible for unit division (optional, basic, or enterprise) in accordance with section 34 the Basic Provisions if the requirements for such units are met.
Section 3—Remove the references to quota and non-quota peanuts, quota price elections, and the effective poundage marketing quota throughout the section. FCIC is also proposing to now cover peanuts under contract with a sheller at the contract price. Currently, there is only one price election announced by FCIC that is applicable to all peanuts but many producers claim to receive a higher price for their peanuts under contract with shellers. These provisions will permit producers to insure their peanuts at the contract prices if all other conditions in the policy are met. Producers will still have the option to insure their peanuts that are not covered by a sheller contract under the FCIC announced price election. Further, even if the peanuts are covered by a sheller contract, the producer can still elect to insure them using the price election announced by FCIC.
In section 3(a), FCIC also proposes to revise the provisions to specify that the price election percentage the producer chooses for peanuts not insured using the sheller contract price (which also includes peanuts in excess of the amount required to fulfill the producer's sheller contract) and for peanuts insured using the sheller contract price must have the same percentage relationship to the maximum price election offered by the FCIC. For example, if the producer elects a 100 percent price election percentage for peanuts insured at the contract price, the producer must also elect a 100 percent price election percent for peanuts insured using FCIC's announced price election.
FCIC is proposing to revise a new section 3(b) to specify that producers who are insuring contracted peanuts cannot insure more pounds of peanuts than the production guarantee (per acre) Start Printed Page 4058multiplied by the number of acres that will be planted to peanuts. Provisions are also added that specify that production under a sheller contract equal to or less than the production guarantee will be valued by using the price election computed from the base contract price stated in the sheller contract. If the producer did not contract for the total production guarantee, any loss more than the amount stated in the sheller contract will be valued using the price election provided by FCIC. These provisions are necessary to prevent the producer from over insuring his peanuts by producing more than are under contract and insuring all the peanuts produced at the contract price.
FCIC is proposing to remove the current section 3(c) because all producers will now be required to file an annual production report. The previous provisions states producers may be required to annually report production but since they now must report, and such reporting will be in accordance with section 3 of the Basic Provisions, there is no reason to have a separate report in these Crop Provisions. Removal of these provisions will result in a default to the requirements of section 3 of the Basic Provisions.
FCIC is proposing to add a new section 3(c) to specify that any peanuts excluded from the sheller contract at any time during the crop year will be insured at the price election announced by FCIC. Again, this provision is necessary to prevent the over insurance of the peanuts by valuing them at a contract price when they are no longer under contract.
Section 6—Remove the provisions regarding reporting the effective poundage marketing quota because it is no longer applicable and replacing them with provisions that require that a copy of all peanut sheller contracts must be provided to the insurance provider on or before the acreage reporting date if the producer wishes to insure the peanuts in accordance with the sheller contract. This will permit approved insurance providers to properly determine the production guarantees and premium owed.
Section 7—Remove and reserve this section because the elimination of the quotas will permit annual premium to be calculated in accordance with the provisions in the Basic Provisions.
Section 8—Restructure the section and add a new section 8(a)(5) to specify peanuts may be insured whether or not they are grown in accordance with a sheller contract. The policy allows insurance for both, the only issue is the value of the peanuts. The provision will specify that if the peanuts are not grown in accordance with the sheller contract, they will be valued at the price election announced by FCIC. This will prevent peanuts that do not qualify for the contract price from being insured at such price.
FCIC also proposes to add a new section 8(b) specifying when the producer will be considered to have a share in the insured crop. To be insured, the producer must have a risk of loss in the crop. However, there may be contracts where a set payment under the contract is guaranteed by the sheller and the sheller bears the entire risk of crop loss. In such circumstances, the producer would not have an insurable interest. This is consistent with other contracted crops.
FCIC also proposes to add a new section 8(c) that specifies that a peanut producer who is also a sheller or handler may establish an insurable interest if specified requirements are met. Since the sheller controls the contract price and the records of production to count, it is possible for such producers to manipulate losses. As a result, FCIC requires specific conditions to be met before producers who are shellers can insure the crop. This is consistent with other contracted crops.
Section 12—Restructure the section. FCIC also proposes to revise the provisions to make the statement in the Basic Provisions ineffective that states the replanting payment per acre will be limited to the producers actual cost for replanting and remove such references from section 12. The actual costs associated with replanting peanuts have increased over the years and seldom, if ever, would the actual cost be less than the maximum amount allowed in the Crop Provisions. However, it is very burdensome for the approved insurance providers to collect the records of the actual costs. Since such records are seldom ever used, there is no longer the need impose this burden on the approved insurance provider. This change should have little effect on the replant payment amounts. FCIC is also proposing to add a new section 12(d) to specify replanting payments will be calculated using the applicable price election and production guarantee for the crop type that is replanted and insured. A revised acreage report will also be required to reflect the replanted type, if applicable. There have been instances where producers have replanted a different insured crop type that has different yields and prices than the type originally planted. This could result in the crop being over-insured or under-insured if the production guarantee and prices were based on the crop type originally planted. Instead, FCIC has proposed to add provisions to ensure that the production guarantee and replanting payment are based on the yield and prices for the type that is replanted. A revised acreage report will be required to reflect the replanted type, as applicable.
Section 13—FCIC proposes to revise to remove those provisions that are now included in section 14 of the Basic Provisions.
Section 14—FCIC is proposing to remove section 14(b) because it pertains to marketing quotas, which have been eliminated rendering the provisions moot. FCIC also proposes to revise and restructure section 14(b) to remove all references to quotas and instead, allow a distinction to be made between peanuts insured under a sheller contract and the contract price and those that are insured at the FCIC announced price election. Further, FCIC proposes to add provisions that specify the priority given for the contract price to the production to count when there is more than one sheller contract. The production to count will be valued using the highest price election first and will continue in decreasing order to the lowest price election based on the amount or peanuts insured at each price election. These provisions are necessary to prevent the producer from over insuring their peanuts by producing more peanuts than are under contract and insuring all the peanuts produced at the contract price. FCIC also proposes to revise the computations to take into consideration the different values of peanuts depending on whether they are under contract or not. To the extent the producer is unable to fulfill the sheller contract, the value of such lost peanuts will be based on the contracted price. The value of peanuts lost over and above the contracted amount will be valued at the FCIC announced price.
Section 15—FCIC proposes to add a new provision to provide prevented planting coverage. Previously these provisions were in the Special Provisions and are being moved to the Crop Provisions to be consistent with other crops that have prevented planting provisions.
Start Part Start Printed Page 4059
2. Revise the introductory text of § 457.134 to read as follows:
3. Amend section 1 of § 457.134 by adding definitions for “base contract price,” “enterprise unit,” “handler,” “harvest,” “marketing associations,” “price election,” “sheller” and “sheller contract”, revising definitions of “farmers’ stock peanuts” and “planted acreage”, and removing definitions of “approved yield,” “average price per pound,” “average support price per pound,” “CCC,” “county,” “effective poundage marketing quota,” “inspection certificate and sales memorandum,” “non-quota peanuts,” “production guarantee (per acre),” “quota peanuts,” “segregation I, II, or III,” and “value per pound” to read as follows:
Base contract price. The price for farmers' stock peanuts stipulated in the sheller contract, without regard to discounts or incentives that may apply; not to exceed the maximum amount specified in the Special Provisions.
Enterprise unit. If you do not insure any peanuts in accordance with a sheller contract, an enterprise unit is in accordance with section 34 and the definition of “enterprise unit” in section 1 of the Basic Provisions. However, if you insure any peanuts in accordance with a sheller contract, in lieu of the definition of “enterprise unit” in section 1 of the Basic Provisions, an enterprise unit will be all insurable acreage of the peanuts in the county in which you have a share on the date coverage begins for the crop year.
Farmers' stock peanuts. Picked or threshed peanuts produced in the United States which are not shelled, crushed, cleaned, or otherwise changed (except for removal of foreign material, loose shelled kernels and excess moisture) from the condition in which peanuts are customarily marketed by producers.
Harvest. Removal of peanuts from the field.
Marketing association. A cooperative approved by the Secretary to issue payment programs for peanuts.
Planted acreage. In addition to the requirement in the definition in the Basic Provisions, peanuts must initially be planted in a row pattern which permits mechanical cultivation or in a manner that allows the peanuts to be cared for in a manner recognized by agriculture experts as a good farming practice. Acreage planted in any other manner will not be insurable unless otherwise provided by the Special Provisions or by written agreement.
Price election. In addition to the definition in the Basic Provisions, the price election for peanuts insured in accordance with a sheller contract will be the percentage you elect multiplied by the base contract price specified in the sheller contract.
Sheller. Any business enterprise regularly engaged in processing peanuts for human consumption, that possesses all licenses and permits for processing peanuts 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 contracted peanuts within a reasonable amount of time after harvest.
Sheller contract. A written agreement between the producer and a sheller, or between the producer and a handler, containing at a minimum:
4. Revise section 2 of § 457.134 to read as follows:
(a) If you insure any acreage in the county in accordance with one or more sheller contracts, you are only eligible for an enterprise unit on all insurable acreage of peanuts in the county.
(b) If you insure all acreage in the county under the price election announced by FCIC in accordance with the Basic Provisions, you may elect to insure your peanut acreage in the county as:
(1) An enterprise unit; or
(2) Any other unit structure you may qualify for under section 34 of the Basic Provisions.
5. Revise section 3 of § 457.134 to read as follows:
(b) You may insure your peanuts in accordance with a sheller contract, however, you may not insure for more pounds of peanuts than your production guarantee (per acre) multiplied by the number of acres that will be planted to peanuts.
(1) Any loss of production equal to or less than your production guarantee (per acre) will be valued by using the price election computed from the base contract price stated in your sheller contract.
(2) If you do not contract for your total production guarantee any loss above the amount stated in the contract will be valued based on the price election issued by FCIC.
(c) Any peanuts excluded from the sheller contract at any time during the crop year will be insured at the price election issued by FCIC and elected by you.
6. Revise section 6 of § 457.134 to read as follows:
In addition to the requirements of section 6 of the Basic Provisions, you must provide a copy of all sheller contracts to us on or before the acreage reporting date if you wish to insure your peanuts in accordance with your sheller contract.Start Printed Page 4060
7. Remove and reserve section 7 of § 457.134.
8. Revise section 8 of § 457.134 to read as follows:
(2) Prior to the sales closing date, the Board of Directors or officers of the sheller or the handler must execute and adopt a resolution that contains the same terms as a sheller contract. Such resolution will be considered a sheller contract under this policy; and
9. Revise section 12 of § 457.134 to read as follows:
(d) Replanting payments will be calculated using your price election and production guarantee for the crop type that is replanted and insured. A revised acreage report will be required to reflect the replanted type, if applicable.
10. Revise section 13 of § 457.134 to read as follows:
11. Amend section 14 of § 457.134 as follows:
a. Remove paragraphs (b) and (g), redesignate paragraphs (c) through (f) as subsections (b) through (e) respectively;
b. Revise paragraph (a) and newly redesignated paragraph (b);
c. Amend newly redesignated paragraph (d)(3) by removing “(f)” and adding “(e)” in its place;
d. Revise newly redesignated paragraph (e); and
e. Remove the note at the end of section 14.
(2) Basic unit, we will allocate any commingled production to such units in proportion to our liability on the harvested acreage for the unit.
(1) Multiplying the number of insured acres by the respective production guarantee (per acre) for peanuts insured under a sheller contract at the base contract price and for peanuts not insured under a sheller contract or you have elected the FCIC issued price election, as applicable;
(2) Multiplying each result of section 14(b)(1) by the applicable price election for peanuts insured at the base contract price or the price election issued by FCIC, as applicable;
(4) Multiplying the production to be counted by the respective price election (If you have one or more sheller contracts, we will value your production to count by using your highest price election first and will continue in decreasing order to your lowest price election based on the amount or peanuts insured at each price election);
Example # 1 (without a sheller contract):
You have 100 percent share in 25 acres of Valencia peanuts in the unit, with a production guarantee (per acre) of 2,000 pounds, the price election is $0.17 per pound, and your production to be counted is 43,000 pounds.
(2) 50,000 pound guarantee × $0.17 price election = $8,500.00 guarantee;
(4) 43,000 pounds of production to be counted × $0.17 price election = $7,310.00;
(5) $8,500.00 guarantee −$7,310.00 = $1,190.00; and
(6) $1,190.00 × 1.000 = $1,190.00; Indemnity = $1,190.00.
Example # 2 (with a sheller contract):
You have 100 percent share in 25 acres of Valencia peanuts in the unit, with a production guarantee (per acre) of 2,000 pounds. You have two sheller contracts, the first is for 25,000 pounds, price election (contract) is $0.23 per pound, and the second is for 10,000 pounds, price election (contract) is $0.21 per pound. The price election (non-contract) is $0.17 per pound, and your production to be counted is 43,000 pounds.
(2) 25,000 pounds contracted × $0.23 price election (contract) = $5,750.00; 10,000 pounds contracted × $0.21 price Start Printed Page 4061election (contract) = $2,100.00; 50,000 pound guarantee −25,000 pounds contracted −10,000 pounds contracted = 15,000 pounds not contracted; 15,000 pounds not contracted × $0.17 price election (non-contract) = $2,550.00;
(3) $5,750.00 + $2,100.00 + $2,550.00 = $10,400.00 guarantee;
(4) 43,000 pounds of production to be counted: 25,000 pounds contracted × $0.23 price election (contract) = $5,750.00; 10,000 pounds contracted × $0.21 price election (contract) = $2,100.00; 43,000 pounds of production to be counted −25,000 pounds contracted (at $0.23 per pound) −10,000 pounds contracted (at $0.21 per pound) = 8,000 pounds; 8,000 pounds × $0.17 price election (non-contract) = $1,360.00;
(5) $5,750.00 + $2,100.00 + $1,360.00 = $9,210.00;
(6) $10,400.00 guarantee − $9,210.00 = $1,190.00; and
(7) $1,190.00 × 1.000 = $1,190.00; Indemnity = $1,190.00.
(e) Mature peanuts may be adjusted for quality when production has been damaged by insurable causes.
(2) If you dispose of any production without giving us the opportunity to have the peanuts inspected and graded, the gross weight of such production will be used in determining total production to count unless you submit a marketing record satisfactory to us which clearly shows the number of pounds, price per pounds, and quality of such peanuts.
(3) Such production to count will be reduced if the price per pound received for damaged peanuts is less than 85 percent of the applicable price election by:
(i) Dividing the price per pound, as determined by us in accordance with section 14(e)(1), received for the insured type of peanuts by the applicable price election; and
12. Add a new section 15 of § 457.134 to read as follows:
Signed in Washington, DC, on January 17, 2006.
[FR Doc. E6-855 Filed 1-24-06; 8:45 am]