On August 27, 2020, the Risk Management Agency (RMA) issued Managers Bulletin: MGR-20-025, announcing that the Federal Crop Insurance Corporation Board of Directors (Board) approved the conversion of the Pistachio Insurance Program to permanent status based on favorable pilot program experience. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/MGR-20-025. RMA also published the Pistachio Crop Provisions and Handbooks. https://www.rma.usda.gov/-/media/RMAweb/Policies/Pistachio/2021/Pistachio-Crop-Provisions-21-0470.ashx; https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Underwriting—24000/Pistachio/2021-24320-Pistachio-Insurance-Standards.ashx; https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-Adjustment-Standards—25000/Pistachio/2021-25055-Pistachio.ashx. RMA updated the Pistachio Crop Provisions on September 11, 2020. https://www.rma.usda.gov/-/media/RMA/Policies/Pistachio/2021/Pistachio-Crop-Provisions-21-0470.ashx.
RMA states that the Farm Service Agency (FSA) uses the RMA designation of pilot or permanent program in their consideration of Noninsured Crop Disaster Assistance Program (NAP) availability. NAP availability is not impacted until the subsequent year if the RMA notification of conversion to permanent status is issued less than 90 days before the next NAP application date. NAP availability will solely be determined by the FSA.
RMA states it is also implementing program improvements including:
- Added provisions to allow written agreements.
- Clarification of “Set out year,” which is the actual calendar year for acreage grafted before July 1, or the calendar year following grafting when grafting occurs after July 1.
- Clarification of how the price election and percent of price election are used to determine the amount of coverage for this two-year policy.
ANALYSIS – There are ambiguities in this announcement. The Board approved permanent status for the Pistachio program on March 5, 2020, but RMA did not announce this change until August 27, 2020. By statute, NAP is not available where crop insurance for the crop is available. Historically, NAP did not considered crop insurance pilot programs as “available” on the premise that they were test programs and it was not clear that they provided effective coverage until sufficient data could be collected. Once a pilot program is made permanent, which means it is no longer considered a test program and will eventually be codified in the Code of Federal regulations, NAP is no longer available.
However, FSA determined that NAP availability is not effected until the subsequent crop year if the pilot program is made permanent less than 90 days before the next NAP application date. RMA reiterates this edict by FSA but it is not clear whether the March 5, 2020, Board approval date or the date of issuance of MGR-20-025 will be the date used by FSA to determine availability. Further, nowhere in MGR-20-025 does it state the next NAP application date. Therefore, it is not clear whether NAP is available for Pistachios the 2021 crop year.
Further, the last sentence is ambiguous. RMA states ” The Pistachio program was determined by the Board to be permanent after the pilot testing was complete for crop year 2021.” However, a review of the Pistachio Crop Provisions shows that they are effective for the 2021 crop year and they contain the changes listed in MGR-20-025. https://www.rma.usda.gov/-/media/RMAweb/Policies/Pistachio/2021/Pistachio-Crop-Provisions-21-0470.ashx. RMA may need to clarify this discrepancy.
RMA updated the Pistachio Crop Provisions on September 11, 2020 but did not specify what changes, if any, were made to the August 28, 2020 version of the policy.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.