Federal Register Extracts

Agency: "Federal Crop Insurance Corporation, U.S. Department of Agriculture (USDA)."

SUMMARY: The Federal Crop Insurance Corporation (FCIC) is amending the Common Crop Insurance Regulations, Sugar Beet Crop Insurance Provisions. This rule makes the early harvest adjustment an option, providing producers with maximum flexibility to tailor their insurance policy to meet the unique risk management needs of their operation. This rule also incorporates comments to improve the early harvest adjustment that were received on a prior final rule amending the Sugar Beet Crop Insurance Provisions, published in the Federal Register on November 29, 2019. The changes will be effective for the 2024 and succeeding crop years for counties with a contract change date on or after November 30, 2023, and for the 2025 and succeeding crop years for counties with a contract change date prior to November 30, 2023.

DATES:

Effective date: November 30, 2023.

Comment date: We will consider comments that we receive by the close of business January 16, 2024. FCIC will consider the comments received and may conduct additional rulemaking in the future based on the comments.

ADDRESSES: We invite you to submit comments on this rule. You may submit comments by going through the Federal eRulemaking Portal as follows:

* Federal eRulemaking Portal: Go to http://www.regulations.gov and search for Docket ID FCIC-23-0007. Follow the instructions for submitting comments.

All comments will be posted without change and will be publicly available on www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Francie Tolle; telephone (816) 926-7829; or email [email protected]. Persons with disabilities who require alternative means for communication should contact the USDA Target Center at (202) 720-2600 (voice) or (844) 433-2774 (toll-free nationwide).

SUPPLEMENTARY INFORMATION:

Background FCIC serves America's agricultural producers through effective, market-based risk management tools to strengthen the economic stability of agricultural producers and rural communities. FCIC is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool. Approved Insurance Providers (AIPs) sell and service Federal crop insurance policies in every state through a public-private partnership. FCIC reinsures the AIPs who share the risks associated with catastrophic losses due to major weather events. FCIC's vision is to secure the future of agriculture by providing world class risk management tools to rural America.

Federal crop insurance policies typically consist of the Basic Provisions, the Crop Provisions, the Special Provisions, the Commodity Exchange Price Provisions, if applicable, other applicable endorsements or options, the actuarial documents for the insured agricultural commodity, the Catastrophic Risk Protection Endorsement, if applicable, and the applicable regulations published in 7 CFR chapter IV. Throughout this rule, the terms "Crop Provisions," "Special Provisions," and "policy" are used as defined in the Common Crop Insurance Policy (CCIP) Basic Provisions in 7 CFR part 457.8. Additional information and definitions related to Federal crop insurance policies are in 7 CFR 457.8.

In this rule, FCIC is making the early harvest adjustment an option and making other improvements to the early harvest adjustment in response to public comments and other input from the American Sugarbeet Growers Association (ASGA) and AIPs. The FCIC has a long history of working closely with the ASGA and AIPs in tailoring this program to the unique risk management needs of sugar beet growers.

Early Harvest Adjustment Option

For the 2019 crop year, FCIC added an early harvest adjustment to the Crop Provisions in the Common Crop Insurance Regulations; Sugar Beet Crop Insurance Provisions final rule, published in the Federal Register on September 10, 2018 (83 FR 45535-45539). In response to public comments, FCIC made additional changes in the Common Crop Insurance Regulations; Sugar Beet Crop Insurance Provisions final rule published in the Federal Register on November 29, 2019 (84 FR 65627-65639). The early harvest adjustment, as amended, was created to limit the effects to producers' Approved Production History (APH) databases from processor requirements to harvest sugar beets before they reach full maturity. Sugar beets that are harvested early are smaller in size and have a lower percent of sugar than beets harvested at full maturity, resulting in a lower net weight in the producer's APH database for that year. The lower yield remains in the producer's APH database for a minimum of 10 years, reducing their future potential insurance guarantee.

Prior to this rule, the early harvest adjustment applied if the threshold in the Special Provisions was exceeded. For those acres harvested early, the producer's yield in their APH database was automatically adjusted upwards by one percent per day covering the time until the sugar beets would have reached full maturity. This adjustment was intended to protect their future guarantee.

With the publication of the 2019 final rule, concerns were raised during the public comment period by ASGA that the early harvest adjustment could affect a producer's claim or possible claim in the event of an insurable cause of loss. For example, if some acres were early harvested and the yield was adjusted upwards, but the producer subsequently had an insured cause of loss that reduced their yield, the upward early harvest adjustment could have an offsetting effect on the claim for indemnity.

ASGA requested that the early harvest adjustment be made an optional feature of the Crop Provisions. Making the early harvest adjustment optional will allow producers greater flexibility and limit the possible negative impacts to a producer's APH due to technological yield improvements.

In this rule, FCIS is making the early harvest adjustment optional, which allows producers to opt-in to the early harvest adjustment. Producers choosing this option will be required to select the option by the sales closing date. The producer will be able to choose which years from their APH database to apply the early harvest adjustment for production that was harvested early. The producer's premium will reflect the additional coverage between the adjusted yields and actual yields selected by the producer. The producer may have a higher approved yield and insurance coverage when an actual yield is adjusted in an APH database. If adjusting a yield will result in an increased approved yield, a higher insurance guarantee and greater indemnity payment could occur due to the early harvest adjustment. The producer will pay a higher premium for the increase in coverage. For example, a producer with a 65 percent coverage level may get a yield guarantee equivalent to a higher coverage level, such as 70 percent. Because of the early harvest adjustment option, the premium charged will reflect the higher effective coverage level (70 percent for this example) and higher risk of loss. If a producer elects the early harvest adjustment option, their premium will be adjusted while other producers who did not elect the option will not pay additional premium. It will be the AIP's responsibility to ensure that the approved yield is calculated correctly, which determines the appropriate premium amount.

In making the early harvest adjustment an option, all producers will be required to recertify their APH database with their AIP to remove those yields from their database from the years that the adjustment was automatically applied. This will ensure that only those producers who elect the option going forward, will be charged the additional premium associated with the adjusted yields.

To elect the early harvest adjustment option, producers must choose the option by the sales closing date and must have additional coverage (that is, not a Catastrophic Risk Protection Endorsement). The option will remain in effect for future years, unless cancelled. On or before the production reporting date, the producer can replace actual yields with early harvested adjusted yields. The adjustment will only be made if a threshold of at least 15 percent of the insured acreage in the unit is early harvested, unless the Special Provisions specify a different threshold. The adjustment will not be made if the sugar beets are damaged by an insurable cause of loss and leaving the crop in the field would reduce production.

During the decision-making process for this rule, FCIC was committed to reaching a desirable outcome for all program stakeholders. FCIC regularly communicated with ASGA, on behalf of their grower constituency, and AIPs to gain consensus on the framework of the proposed changes and overcome challenges and points of disagreement.

AIPs expressed concerns regarding additional administrative burdens on producers who will be required to recertify their APH databases. FCIC worked closely with ASGA to confirm, on behalf of their producer constituency, their support for these changes, including the requirement for producers to recertify their APH databases to implement these requested changes.

Additionally, ASGA requested to exclude the adjustments to early harvested productions on acreage with a claim. However, as identified by AIPs, due to the discretion producers have in choosing which acreage to early harvest, waiving adjustments on acreage with a claim would have introduced unwanted moral hazard in the program. FCIC believes it has landed on common, middle ground, as these choices give the producer maximum flexibility to tailor their insurance to their operation, while maintaining the actuarial soundness of the Federal crop insurance program.

Early Harvest Adjustment Cap

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule with request for comments.

CFR Part: "7 CFR Part 457"

RIN Number: "RIN 0563-AC84"

Citation: "88 FR 78226"

Document Number: "Docket ID FCIC-23-0007"

Federal Register Page Number: "78226"

"Rules and Regulations"