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    Crop Insurance News and Analysis – January 16, 2020 – Pecan Tree Policy Revisions

    February 3, 2020 By //  by Kim Arrigo

    On January 16, 2020, the Risk Management Agency issued Product Management Bulletin: PM-20-005, the Pecan Tree Crop Provisions, and the Pecan Tree National Insurance Fact Sheet that referred to revisions made to the Pecan Tree Crop Provisions. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/PM-20-005; https://www.rma.usda.gov/-/media/RMAweb/Policies/Pecan-Tree/2021/Pecan-Tree-Crop-Provisions-21-PCT.ashx; https://www.rma.usda.gov/en/Fact-Sheets/National-Fact-Sheets/Pecan-Tree-Insurance. RMA stated that the changes were effective for the 2021 and succeeding crop years. In PM-20-05, RMA stated that it was; 1) increasing the Occurrence Loss Option trigger to 10 percent, which a corresponding adjustment in rates; 2) adding additional methods to qualify for optional units when orchards on contiguous land are separated by the minimum distance in the Special Provisions; and 3) allowing different coverage levels and percentage of price election for each type.

    In the Pecan Tree Crop Provisions, RMA revised section 2(b) to add the language regarding optional units on contiguous acreage, which basically states optional units are allowed if a separate orchard is located on contiguous acreage that is separated from any other orchard on such acreage and that meets the minimum distance requirements.

    RMA also revised section 3 of the Pecan Tree Crop Provisions to allow the section a different coverage level by type. If the producer elects catastrophic risk protection (CAT) coverage, the CAT level of coverage will apply to all acrees of pecan trees in the county. RMA revised section 6 to allow revisions to the acreage report after the acreage reporting date if the information is clearly transposed, the producer provides adequate evidence that someone from USDA committed an error regarding the information on the acreage report, or it revisions are allowed by the policy. RMA revised section 15(d)(2) to revise the Occurrence Loss option trigger percentage from 2 percent (5 percent for drought) to a single 10 percent for all insured causes of loss.

    ANALYSIS – The changes to allow different prices and coverage levels by type is consistent with other policies. However the change to the unit structure is ambiguous. Section 2(b) reads: “A separate orchard located on contiguous acreage that is separated from any other orchard on such acreage and that meets the minimum distance and acreage requirements specified in the Special Provisions.” “Orchard” is defined as “Acreage of pecan trees within a common boundary (e.g., a field or adjoining fields) containing one or more blocks. Acreage separated by only a public or private right-of-way, waterway, or an irrigation canal will be considered to be contained within a common boundary.” Presumably this means that you can have two contiguous orchards but they must be separated from each other by a certain distance to be allowed as separate units. However, a review of the actuarial documents for pecan tree does not show any such distances under the “Unit Structure” tab or the “Special Provisions” tab.

    The other issue is the Pecan Tree National Insurance Fact Sheet. Fact Sheets are not part of the policy although they reference policy provisions, they only discuss coverages at a high level, which may leave producers confused as to all their rights and obligations, and they could potentially conflict with the terms of the policy. While it may seem convenient to have these one page summaries of coverage, creating a document of policy provisions that is not part of the policy creates ambiguity and can adversely affect the producer who relies upon the Fact Sheet instead of the actual documents that make up the policy.

    All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.

    Filed Under: Blog

    Previous Post: « Crop Insurance News and Analysis – January 29, 2010 – Extension of Time to Obtain Samples
    Next Post: Crop Insurance News and Analysis – January 23, 2020 – Apple Tree Policy Revisions »

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