BULLETIN: MGR-95-028 TO: All Reinsured Companies CFSA Headquarters, Program Delivery and Field Operations All Risk Management Field Offices FROM: Kenneth D. Ackerman Acting Deputy Administrator SUBJECT: 1995 Crop Year Prevented Planting Provisions ISSUE: On June 16, 1995, Secretary Dan Glickman announced additional changes in prevented planting provisions for the 1995 crop year. This bulletin provides clarification of those decisions. Instructions for handling situations involving acreage reports and claims processed prior to the announced changes will be issued in a future bulletin. ACTION: For all crop year 1995 policies with prevented planting provisions, including winter wheat policies, insurance providers shall make prevented planting payments to eligible producers based on the following stipulations: Changes in Guarantee Levels: 1. A producer may receive a prevented planting guarantee of 75 percent of the production guarantee, except for cotton and rice which shall be 52.5 percent and hybrid corn seed which shall be 60 percent, if no other crop is planted or if the acreage is enrolled in 0/92 or 50/92. Cover crops and crops planted for conservation purposes will be allowed provided they will not be harvested, hayed or grazed at any time. Insurance providers shall require a certification from producers that the approved cover crop will not be used for harvest, haying or grazing. 2. A producer who plants a cover crop for haying or grazing in accordance with Bulletin MGR-95-024 may receive a prevented planting guarantee of 50 percent of the production guarantee, except for cotton and rice which shall be 35 percent and hybrid corn seed which shall be 40 percent. 3. When the producer was prevented from planting the insured intended crop, a subsequent crop may be planted for harvest and the producer will receive a prevented planting guarantee of 25 percent of the production guarantee for the intended crop, except for cotton and rice which shall be 17.5 percent and hybrid corn seed which shall be 20 percent. 4. In summary, as a result of the policy changes announced by USDA, a producer who is prevented from planting an insured crop will receive a prevented planting guarantee as follows. ============================================================================= [ IF a producer is prevented [ AND the producer... [ THEN the prevented [ [ from planting and... [ [ planting guarantee [ [ [ [ will be... [ ============================================================================= [ 1. plants no other crop [ ... [ 75 % of the production [ [ [ [ guarantee except: [ [ [ [ 52.5 % for cotton [ [ [ [ and rice [ [ [ [ 60 % for hybrid seed [ [ [ [ corn [ ----------------------------------------------------------------------------- [ 2. plants an approved 0/92 [ certifies that the [ 75 % of the production [ [ cover crop (including [ cover crop will not [ guarantee except: [ [ acreage enrolled in [ be used for harvest,[ 52.5 % for cotton [ [ 0/92 or 50/92) [ haying, or grazing [ and rice [ [ [ [ 60 % for hybrid seed [ [ [ [ corn [ ----------------------------------------------------------------------------- [ 3. plants an approved 0/92 [ plans to hay or [ 50 % of the production [ [ cover crop (including [ graze the cover [ guarantee except: [ [ acreage enrolled in [ crop [ 35 % for cotton and [ [ 0/92 or 50/92) [ [ rice [ [ [ [ 40 % for hybrid seed [ [ [ [ corn [ ----------------------------------------------------------------------------- [ 4. plants a subsequent [ ... [ 25 % of the production [ [ crop for harvest (that [ [ guarantee except: [ [ is any crop except the [ [ 17.5 % for cotton [ [ crop which was prevented[ [ and rice [ [ from being planted or [ [ 20 % for hybrid seed [ [ except an approved 0/92 [ [ corn [ [ cover crop as noted in [ [ [ [ item #2 above.) [ [ [ ============================================================================= 5. MGR-95-024 stated approved small grain cover crops and small grain mixtures shall not be hayed or grazed at any time even if emergency haying and grazing is authorized. Use CFSA's definition of small grains and small grain mixtures when determining if haying and grazing is authorized. Reinsured companies should contact the appropriate Regional Service Office or industry trade organization for additional information. Eligible Prevented Planting Acreage: 6. Insurance providers are authorized to accept the producer's report of acreage as the basis for prevented acreage and forego pro-rating to eligible units and/or FSN's. Insurance providers are responsible for assuring that the prevented acreage plus acreage planted to the crop does not exceed the maximum number of eligible acres. 7. Policy provisions require that the producer request, by the sales closing date, a "written agreement" or "agreement in writing" to increase maximum eligible prevented acres. This provision is liberalized by this bulletin. A timely signed and completed acreage report may be considered as the request for increasing eligible acreage. Care must be used to determine if the insured had the means to plant the acreage reported as prevented from planting. Purchase of seed, chemicals, availability of equipment, etc. should be considered in making this determination. 8. A timely signed and completed acreage report may be considered as the basis for determining eligible acreage for new producers, new program participants, and producers with land rented or purchased for the 1995 crop year growing non-program crops. Their acreage is eligible for prevented planting coverage even though the crop does not have an acreage base, was not planted to the insured crop the previous crop year, and does not have acreage that was used to establish the yield for which coverage is based. This is to assure that these producers are not adversely affected by prevented planting policy provisions that limit eligible acreage. Care should be exercised to determine if the insured had the means to plant the acreage reported as being prevented from planting. Purchase of seed, chemicals, availability of equipment, the date the land was purchased/ rented, etc. should be considered in making this determination. 9. Acreage eligible under the prevented planting program will be limited to the maximum allowable under the Acreage Reduction Program (ARP). Eligible acres not enrolled in the ARP will be limited by policy provisions and applicable paragraphs of this bulletin. Local CFSA offices allow producers who have both a corn and grain sorghum crop acreage base (CAB) to plant any combination of those crops up to their total corn and grain sorghum acreage base. In addition if only one crop (corn or sorghum) has a CAB, the other crop can be planted. For example, if a farm has as corn CAB, that CAB can be planted to sorghum. CFSA limits the planted acreage of crops participating in ARP to the crop's CAB less any required set-a-side. In addition, producers may also plant up to 25 percent of another participating crop's program base (flex acres). The increased planting of one crop must be offset by a corresponding decrease in planting of the other crop. For example, a producer may plant to wheat an amount equal to the wheat CAB plus up to 25 percent of the corn CAB. However, the planting of corn must be decreased by a corresponding acreage. The maximum acreage (all farm serial numbers) allowed by CFSA may be used to determine eligible prevented planting acreage supported by the policyholder's planting intentions as listed on a timely signed and completed acreage report. For example, a producer with a 100-acre corn base, minus 7.5 percent set aside, a 50-acre grain sorghum base, and 5 acres of eligible wheat base may qualify for 147.5 acres of prevented planting coverage for corn or grain sorghum. Insurance providers must assure that eligible prevented planting acreage is limited to the amount of permitted acreage base. 10. Only one prevented planting payment will be allowed for each acre for the crop year. Requirement to Insure: 11. If the alternative crop is not already insured, the catastrophic level of crop insurance must be obtained on the alternative crop by the acreage reporting date if that crop is of economic significance and insurable in the county unless the producer chooses to forego most USDA program benefits. (See Section 4 Paragraph G(1)(c) of the CAT Handbook.)