[Code of Federal Regulations]
[Title 7, Volume 6]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR457.134]

[Page 242-249]
 
                          TITLE 7--AGRICULTURE
 
     CHAPTER IV--FEDERAL CROP INSURANCE CORPORATION, DEPARTMENT OF 
                               AGRICULTURE
 
PART 457_COMMON CROP INSURANCE REGULATIONS--Table of Contents
 
Sec. 457.134  Peanut crop insurance provisions.

    The Peanut Crop Insurance Provisions for the 2007 and succeeding 
crop years are as follows:
    FCIC policies: United States Department of Agriculture, Federal Crop 
Insurance Corporation.
    Reinsured policies: (Appropriate title for insurance provider).
    Both FCIC and reinsured policies.
    Peanut Crop Insurance Provisions.

                             1. Definitions

    Base contract price. The price for farmers' stock peanuts stipulated 
in the sheller contract, without regard to discounts or incentives that 
may apply, not to exceed the price election times the price factor 
specified in the Special Provisions.

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    Farmers' stock peanuts. Picked or threshed peanuts produced in the 
United States, which are not shelled, crushed, cleaned, or otherwise 
changed (except for removal of foreign material, loose shelled kernels 
and excess moisture) from the condition in which peanuts are customarily 
marketed by producers.
    Green peanuts. Peanuts that are harvested and marketed prior to 
maturity without drying or removal of moisture either by natural or 
artificial means.
    Handler. A person who is a sheller, a buying point, a marketing 
association, or has a contract with a sheller or a marketing association 
to accept all of the peanuts marketed through the marketing association 
for the crop year. The handler acquires peanuts for resale, domestic 
consumption, processing, exportation, or crushing through a business 
involved in buying and selling peanuts or peanut products.
    Harvest. The completion of digging and threshing and removal of 
peanuts from the field.
    Marketing association. A cooperative approved by the Secretary of 
the United States Department of Agriculture to administer payment 
programs for peanuts.
    Planted acreage. In addition to the requirement in the definition in 
the Basic Provisions, peanuts must initially be planted in a row pattern 
which permits mechanical cultivation, or that allows the peanuts to be 
cared for in a manner recognized by agricultural experts as a good 
farming practice. Acreage planted in any other manner will not be 
insurable unless otherwise provided by the Special Provisions or by 
written agreement.
    Price election. In addition to the definition in the Basic 
Provisions, the price election for peanuts insured in accordance with a 
sheller contract will be the base contract price specified in the 
sheller contract.
    Price factor. The factor specified in the Special Provisions that 
places limits on the base contract price.
    Sheller. Any business enterprise regularly engaged in processing 
peanuts for human consumption; that possesses all licenses and permits 
for processing peanuts required by the state in which it operates; and 
that possesses facilities, or has contractual access to such facilities, 
with enough equipment to accept and process contracted peanuts within a 
reasonable amount of time after harvest.
    Sheller contract. A written agreement between the producer and a 
sheller, or the producer and a handler, containing at a minimum:
    (a) The producer's commitment to plant and grow peanuts, and to 
deliver the peanut production to the sheller or handler;
    (b) The sheller's or handler's commitment to purchase all the 
production stated in the sheller contract (an option to purchase is not 
a commitment); and
    (c) A base contract price.
    If the agreement fails to contain any of these terms, it will not be 
considered a sheller contract.

                            2. Unit Division

    In accordance with the Basic Provisions, basic and optional units 
are applicable, unless limited by the Special Provisions.

  3. Insurance Guarantees, Coverage Levels, and Prices for Determining 
                               Indemnities

    In addition to the requirements of section 3 of the Basic 
Provisions:
    (a) The price election percentage you choose for peanuts which are 
not insured in accordance with a sheller contract (may also include 
peanuts in excess of the amount required to fulfill your sheller 
contract) and for peanuts insured in accordance with a sheller contract 
must have the same percentage relationship to the maximum price election 
offered by us for peanuts not insured in accordance with a sheller 
contract. For example, if you choose 100 percent of the maximum price 
election for peanuts not insured in accordance with a sheller contract, 
you must also choose 100 percent of the applicable price election for 
peanuts insured in accordance with a sheller contract.
    (b) You may not insure more pounds of peanuts than your production 
guarantee (per acre) multiplied by the number of acres that will be 
planted to peanuts. For the purposes of determining the guarantee, 
premiums, indemnities,

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replant payments, and prevented planting payments:
    (1) Where all production of peanuts is grown under one or more 
sheller contracts, you may elect a price election to cover all insurable 
peanuts that is the base contract price contained in such sheller 
contracts or the price contained in the Special Provisions.
    (2) Where some peanuts are grown under one or more sheller contracts 
but some peanuts are not grown under a sheller contract, you may elect:
    (i) The price election contained in the Special Provisions to cover 
all insurable peanuts; or
    (ii) The price election using the base contract price for peanuts 
grown under a sheller contract and the price contained in the Special 
Provisions for peanuts not grown under a sheller contract.
    (3) Where none of the peanuts are grown under a sheller contract, 
the price election will be the price contained in the Special 
Provisions.
    (c) Any peanuts excluded from the sheller contract at any time 
during the crop year will be insured at the price election specified in 
the Special Provisions.

                           4. Contract Changes

    In accordance with section 4 of the Basic Provisions, the contract 
change date is November 30 preceding the cancellation date.

                  5. Cancellation and Termination Dates

    In accordance with section 2 of the Basic Provisions, the 
cancellation and termination dates are:

------------------------------------------------------------------------
            State and county                           Dates
------------------------------------------------------------------------
Jackson, Victoria, Golliad, Bee, Live     January 15.
 Oak, McMullen, La Salle, and Dimmit
 Counties, Texas and all Texas Counties
 lying south, thereof.
El Paso, Hudspeth, Culberson, Reeves,     February 28.
 Loving, Winkler, Ector, Upton, Reagan,
 Sterling, Coke, Tom Green, Concho,
 McCulloch, San Saba, Mills, Hamilton,
 Bosque, Johnson, Tarrant, Wise, Cooke
 Counties, Texas, and all Texas counties
 south and east thereof; and all other
 states, except New Mexico, Oklahoma,
 and Virginia.
New Mexico; Oklahoma; Virginia; and all   March 15.
 other Texas counties.
------------------------------------------------------------------------

                          6. Report of Acreage

    In addition to the requirements of section 6 of the Basic 
Provisions, you must provide a copy of all sheller contracts to us on or 
before the acreage reporting date if you wish to insure your peanuts in 
accordance with your sheller contract.

                              7. [Reserved]

                             8. Insured Crop

    (a) In accordance with section 8 of the Basic Provisions, the crop 
insured will be all the peanuts in the county for which a premium rate 
is provided by the actuarial documents:
    (1) In which you have a share;
    (2) That are planted for the purpose of marketing as farmers' stock 
peanuts;
    (3) That are a type of peanut designated in the Special Provisions 
as being insurable;
    (4) That are not (unless allowed by the Special Provisions or by 
written agreement):
    (i) Planted for the purpose of harvesting as green peanuts;
    (ii) Interplanted with another crop; or
    (iii) Planted into an established grass or legume; and
    (5) Whether or not the peanuts are grown in accordance with a 
sheller contract (if not grown in accordance with the sheller contract, 
the peanuts will be valued at the price election issued by FCIC for the 
purposes of determining the production guarantee, premium, and 
indemnity).
    (b) You will be considered to have a share in the insured crop if, 
under the sheller contract, you retain control of the acreage on which 
the peanuts are grown, you are at risk of a production loss, and the 
sheller contract provides for delivery of the peanuts to the sheller or 
handler and for a stipulated base contract price.

[[Page 245]]

    (c) A peanut producer who is also a sheller or handler may establish 
an insurable interest if the following requirements are met:
    (1) The producer must comply with these Crop Provisions;
    (2) Prior to the sales closing date, the Board of Directors or 
officers of the sheller or handler must execute and adopt a resolution 
that contains the same terms as a sheller contract. Such resolution will 
be considered a sheller contract under this policy; and
    (3) Our inspection reveals that the processing facilities comply 
with the definition of a sheller contained in these Crop Provisions.

                          9. Insurable Acreage

    In addition to the provisions of section 9 of the Basic Provisions:
    (a) Any acreage of the insured crop damaged before the final 
planting date, to the extent that the majority of producers in the area 
would normally not further care for the crop, must be replanted unless 
we agree that replanting is not practical.
    (b) We will not insure any acreage:
    (1) On which peanuts are grown using no-till or minimum tillage 
farming methods unless allowed by the Special Provisions or written 
agreement; or
    (2) Which does not meet the rotation requirements, if any, contained 
in the Special Provisions.

                          10. Insurance Period

    In accordance with the provisions of section 11 of the Basic 
Provisions, the calendar date for the end of the insurance period is the 
date immediately following planting as follows:
    (a) November 30 in all states except New Mexico, Oklahoma, and 
Texas; and
    (b) December 31 in New Mexico, Oklahoma, and Texas.

                           11. Causes of Loss

    In accordance with the provisions of section 12 of the Basic 
Provisions, insurance is provided only against the following causes of 
loss that occur during the insurance period:
    (a) Adverse weather conditions;
    (b) Fire;
    (c) Insects, but not damage due to insufficient or improper 
application of pest control measures;
    (d) Plant disease, but not damage due to insufficient or improper 
application of disease control measures;
    (e) Wildlife;
    (f) Earthquake;
    (g) Volcanic eruption; or
    (h) Failure of the irrigation water supply, if due to a cause of 
loss contained in section 11(a) through (g) that occurs during the 
insurance period.

                         12. Replanting Payments

    (a) A replanting payment is allowed as follows:
    (1) In lieu of provisions in section 13 of the Basic Provisions that 
limit the amount of a replant payment to the actual cost of replanting, 
the amount of any replanting payment will be determined in accordance 
with these Crop Provisions;
    (2) Except as specified in section 12(a)(1), you must comply with 
all requirements regarding replanting payments contained in section 13 
of the Basic Provisions; and
    (3) The insured crop must be damaged by an insurable cause of loss 
to the extent that the remaining stand will not produce at least 90 
percent of the production guarantee for the acreage and it is practical 
to replant.
    (b) The maximum amount of the replanting payment per acre will be 
the lesser of:
    (1) 20.0 percent of the production guarantee, multiplied by your 
price election, multiplied by your share; or
    (2) $80.00 multiplied by your insured share.
    (c) If there are different base contract prices or you also have 
insurable peanuts not grown under a contract:
    (1) If the sheller contracts are for different types of peanuts or 
one type of peanut is grown under a sheller contract and another is not, 
replanting payments will be valued using the price election elected by 
you for the planted acreage, as applicable (For an example, you have two 
sheller contracts and the base contract price is $0.23 per pound for 
Runner type peanuts, then $0.23 per pound will be used for the value of 
any replanted Runner type peanut acreage. If the base contract price is 
$0.21 per

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pound for Spanish type peanuts, then $0.21 per pound will be used for 
the value of any replanted Spanish type peanut acreage.
    (2) If the sheller contracts are for the same type of peanuts but 
they have different base contract prices:
    (i) If the peanuts under each sheller contract are insured in 
separate optional units, each respective price election from each 
sheller contract will apply to each respective unit; or
    (ii) If all or some of peanuts under both sheller contracts are 
insured in the same unit, then the replanted acreage will be prorated to 
each contract based on the number of acres needed to fulfill each 
contract (For example, if there are 20 acres in the unit and 10 were 
replanted, the production guarantee per acre for the unit is 2,000 
pounds per acre, and the contract for $0.23 was for 25,000 pounds and 
the contract for $0.21 was for 15,000 pounds, then the acreage under the 
$0.23 contract constitutes 62.5 percent of the acreage in the unit 
(25,000/40,000) and the other sheller contract 37.5 percent of the 
acreage (15,000/40,000). Of the 10 acres replanted, 6.25 acres (10 x 
.625) would be paid at the $0.23 price election and 3.75 acres (10 x 
.375) would be paid at the $0.21 price election).
    (3) If the peanuts are not grown under a contract, the replanting 
payments will be valued using the price election as specified in the 
Special Provisions. If the unit has peanuts grown under a sheller 
contract and peanuts not grown under a sheller contract, the replanted 
acreage must be prorated between the contract and non-contract acreage 
by determining the acreage grown under a contract and the remaining 
acreage in the unit (For example, if there are 20 acres in the unit and 
10 were replanted, the production guarantee per acre for the unit is 
2,000 pounds per acre, there is a sheller contract for $0.23 for 25,000 
pounds, the remaining peanuts are not grown under a sheller contract, 
and the price election in the Special Provisions is for $0.20. The 
peanuts under the sheller contract constitute 62.5 percent (25,000/
40,000) of the acreage in the unit and remaining peanuts constitute 37.5 
percent (40,000-25,000/40,000) of the acreage. Of the 10 acres 
replanted, 6.25 acres (10 x .625) would be paid with the liability based 
on the $0.23 price election and 3.75 acres (10 x .375) would be paid 
with the liability based on the $0.20 price election).
    (d) When the crop is replanted using a practice that is uninsurable 
for an original planting, the liability on the unit will be reduced by 
the amount of the replanting payment. The premium amount will not be 
reduced.
    (e) Replanting payments will be calculated using your price election 
and production guarantee for the crop type that is replanted and 
insured. A revised acreage report will be required to reflect the 
replanted type, if applicable.

                13. Duties in the Event of Damage or Loss

    Representative samples are required in accordance with section 14 of 
the Basic Provisions.

                         14. Settlement of Claim

    (a) We will determine your loss on a unit basis. In the event you 
are unable to provide records of production that are acceptable to us 
for any:
    (1) Optional unit, we will combine all optional units for which 
acceptable records of production were not provided; or
    (2) Basic unit, we will allocate any commingled production to such 
units in proportion to our liability for the harvested acreage for the 
unit.
    (b) In the event of loss or damage covered by this policy, we will 
settle your claim by:
    (1) Multiplying the number of insured acres by the respective 
production guarantee (per acre) for peanuts insured under a sheller 
contract or not insured under a sheller contract, as applicable;
    (2) Multiplying each result of section 14(b)(1) by the applicable 
price election for peanuts insured at the base contract price or the 
price election specified in the Special Provisions, as applicable;
    (3) Totaling the results of section 14(b)(2);
    (4) Multiplying the production to count by the respective price 
election (If you have one or more sheller contracts, we will value your 
production to count by using your highest price

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election first and will continue in decreasing order to your lowest 
price election based on the amount of peanuts insured at each price 
election);
    (5) Totaling the results of section 14(b)(4);
    (6) Subtracting the result of section 14(b)(5) from the result of 
section 14(b)(3); and
    (7) Multiplying the result in section 14(b)(6) by your share.
    Example 1 (without a sheller contract):
    You have 100 percent share in 25 acres of Valencia peanuts in the 
unit, with a production guarantee (per acre) of 2,000 pounds, the price 
election specified in the Special Provisions is $0.17 per pound, and 
your production to count is 43,000 pounds.
    (1) 25 acres x 2,000 pounds = 50,000 pound guarantee;
    (2) 50,000 pound guarantee x $0.17 price election specified in the 
Special Provisions = $8,500.00 guarantee;
    (3) 43,000 pounds of production to count x $0.17 price election 
specified in the Special Provisions = $7,310.00;
    (4) $8,500.00 guarantee-$7,310.00 = $1,190.00; and
    (5) $1,190.00 x 1.000 = $1,190.00; Indemnity = $1,190.00.
    Example 2 (with a sheller contract):
    You have 100 percent share in 25 acres of Valencia peanuts in the 
unit, with a production guarantee (per acre) of 2,000 pounds. You have 
two sheller contracts, the first is for 25,000 pounds, price election 
(contract) is $0.23 per pound, and the second is for 10,000 pounds, 
price election (contract) is $0.21 per pound. The price election (non-
contract) specified in the Special Provisions is $0.17 per pound, and 
your production to count is 43,000 pounds.
    (1) 25 acres x 2,000 pounds = 50,000 pound guarantee;
    (2) 25,000 pounds contracted x $0.23 price election (contract) = 
$5,750.00;
    10,000 pounds contracted x $0.21 price election (contract) = 
$2,100.00;
    50,000 pound guarantee-25,000 pounds contracted-10,000 pounds 
contracted = 15,000 pounds not contracted;
    15,000 pounds not contracted x $0.17 price election (non-contract) 
specified in the Special Provisions = $2,550.00;
    (3) $5,750.00 + $2,100.00 + $2,550.00 = $10,400.00 guarantee;
    (4) 43,000 pounds of production to count:
    25,000 pounds contracted x $0.23 price election (contract) = 
$5,750.00;
    10,000 pounds contracted x $0.21 price election (contract) = 
$2,100.00;
    43,000 pounds of production to count-25,000 pounds contracted (at 
$0.23 per pound)-10,000 pounds contracted (at $0.21 per pound) = 8,000 
pounds;
    8,000 pounds x $0.17 price election (non-contract) specified in the 
Special Provisions = $1,360.00;
    (5) $5,750.00 + $2,100.00 + $1,360.00 = $9,210.00;
    (6) $10,400.00 guarantee-$9,210.00 = $1,190.00; and
    (7) $1,190.00 x 1.000 = $1,190.00;
    Indemnity = $1,190.00.
    (c) The total production to count (in pounds) from all insurable 
acreage on the unit will include all appraised and harvested production.
    (d) All appraised production will include:
    (1) Not less than the production guarantee for acreage:
    (i) That is abandoned;
    (ii) Put to another use without our consent;
    (iii) Damaged solely by uninsured causes; or
    (iv) For which you fail to provide production records that are 
acceptable to us.
    (2) Production lost due to uninsured causes;
    (3) Unharvested production (mature unharvested production may be 
adjusted for quality deficiencies and excess moisture in accordance with 
section 14(e));
    (4) Potential production on insured acreage that you intend to put 
to another use or abandon, if you and we agree on the appraised amount 
of production. Upon such agreement, the insurance period for the acreage 
will end when you put the acreage to another use or abandon the crop. If 
agreement on the appraised amount of production is not reached:
    (i) If you do not elect to continue to care for the crop, we may 
give you consent to put the acreage to another use if you agree to leave 
intact, and provide sufficient care for, representative

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samples of the crop in locations acceptable to us (The amount of 
production to count for such acreage will be based on the harvested 
production or appraisals from the samples at the time harvest should 
have occurred. If you do not leave the required samples intact, or fail 
to provide sufficient care for the samples, our appraisal made prior to 
giving you consent to put the acreage to another use will be used to 
determine the amount of production to count); or
    (ii) If you elect to continue to care for the crop, the amount of 
production to count for the acreage will be the harvested production, or 
our reappraisal if additional damage occurs and the crop is not 
harvested; and
    (5) All harvested production from the insurable acreage.
    (e) Mature peanuts may be adjusted for quality when production has 
been damaged by an insured cause of loss.
    (1) To enable us to determine the number of pounds, price per pound, 
and the quality of production for any peanuts that qualify for quality 
adjustment, we must be given the opportunity to have such peanuts 
inspected and graded before you dispose of them.
    (2) If you dispose of any production without giving us the 
opportunity to have the peanuts inspected and graded, the gross weight 
of such production will be used in determining total production to count 
unless you submit a marketing record satisfactory to us which clearly 
shows the number of pounds, price per pound, and quality of such 
peanuts.
    (3) Such production to count will be reduced if the price per pound 
received for damaged peanuts is less than 85 percent of the price 
election by:
    (i) Dividing the price per pound for the damaged peanuts, as 
determined by us in accordance with section 14(e)(1), received for the 
insured type of peanuts by the applicable price election; and
    (ii) Multiplying this result by the number of pounds of such 
production.

                         15. Prevented Planting

    (a) Your prevented planting coverage will be 50 percent of your 
production guarantee for timely planted acreage. If you have additional 
levels of coverage, as specified in 7 CFR part 400, subpart T, and pay 
an additional premium, you may increase your prevented planting coverage 
to a level specified in the actuarial documents.
    (b) In addition to the provisions of section 17(i) of the Basic 
Provisions, if there are different base contract prices or you also have 
insurable peanuts not grown under a contract:
    (1) If the sheller contracts are for different types of peanuts or 
one type of peanut is grown under a sheller contract and another is not, 
the liability will be determined using the price election elected by you 
for planted acreage, as applicable (For an example, you have two sheller 
contracts and the base contract price is $0.23 per pound for Runner type 
peanuts, then $0.23 per pound will be used for the value of any 
prevented planting Runner type peanut acreage. If the base contract 
price is $0.21 per pound for Spanish type peanuts, then $0.21 per pound 
will be used for the value of any prevented planting Spanish type peanut 
acreage.
    (2) If the sheller contracts are for the same type of peanuts but 
they have different base contract prices:
    (i) If the peanuts grown under each sheller contract are insured in 
separate optional units, the liability will be determined using each 
respective price election for the prevented planting acreage in each 
respective unit; or
    (ii) If all or some of the peanuts grown under the sheller contracts 
are insured in the same unit, then the liability for each contract must 
be determined separately using the respective price election and the 
number of eligible prevented planting acres to which the liability 
applies and will be determined by prorating prevented planting acreage 
to each contract based on the number of acres needed to fulfill each 
contract (For example, if there are 20 acres in the unit and 10 were 
prevented from planting, the production guarantee per acre for the unit 
is 2,000 pounds per acre, and the contract for $0.23 was for 25,000 
pounds and the contract for $0.21 was for 15,000 pounds, then the 
acreage under the $0.23 contract constitutes 62.5 percent (25,000/
40,000) of the acreage in the unit and the other contract 37.5 percent 
(15,000/40,000) of the acreage. Of the 10 acres prevented from planting, 
6.25 acres (10

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x .625) would be paid with the liability based on the $0.23 price 
election and 3.75 acres (10 x .375) would be paid with the liability 
based on the $0.21 price election).
    (3) If the peanuts are not grown under a contract, the liability for 
such peanuts will be based on the price election as specified in the 
Special Provisions. If the unit has peanuts grown under a sheller 
contract and peanuts not grown under a sheller contract, the eligible 
prevented planting acreage must be determined by determining the acreage 
grown under a contract and the remaining acreage in the unit (For 
example, if there are 20 acres in the unit and 10 were prevented from 
planting, the production guarantee per acre for the unit is 2,000 pounds 
per acre, there is a sheller contract for $0.23 for 25,000 pounds, the 
remaining peanuts are not grown under a sheller contract, and the price 
election in the Special Provisions is for $0.20. The peanuts under the 
sheller contract constitute 62.5 percent (25,000/40,000) of the acreage 
in the unit and remaining peanuts constitute 37.5 percent (40,000-
25,000/40,000) of the acreage. Of the 10 acres prevented from planting, 
6.25 acres (10 x .625) would be paid with the liability based on the 
$0.23 price election and 3.75 acres (10 x .375) would be paid with the 
liability based on the $0.20 price election).

[71 FR 55997, Sept. 26, 2006]