[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.
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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