FAQ About the Sugar Beet Crop Insurance Provisions02/07/2019
The Risk Management Agency (RMA) has revised the Sugar Beet Crop Insurance Provisions to incorporate changes that better reflect current agricultural practices. The Sugar Beet Crop Provisions (19-039) are effective for the 2019 and succeeding crop years in states with a November 30 contract change date and for the 2020 and succeeding crop years in all other states. The following policy modifications were made to the Sugar Beet Crop Insurance Provisions:
- Changed the basis of insurance from standardized tons of sugar beets to pounds of raw sugar.
- Removed stage guarantees.
- Added an early harvest factor to prevent a decline in the producer’s future insurable yield by increasing the yield recognized for acreage harvested early.
- Moved “end of insurance period” dates to the actuarial documents.
- Updated several definitions to align with the Common Crop Insurance Policy, Basic Provisions and terms defined in other crop policies.
Below are some of the frequently asked questions about the changes to the Sugar Beet Crop Insurance Provisions. The original version of the FAQ on Sugar Beets found on the USDA RMA website.
The sugar beet unit of measure changed from standardized tons to raw pounds of sugar. How is that calculated?
Pounds of raw sugar calculation is the insured’s net paid tons multiplied by 2,000 pounds multiplied by the insured’s average percent of sugar (determined from processor test).
Example: The insured has 100 net paid tons with a percent sugar of 18 percent.
[(100 net tons * 2,000 pounds) * 0.180 insured’s percent of sugar] = 36,000 pounds of raw sugar
What happens to the insured’s existing Actual Production History (APH)?
The insured’s existing APH must be converted from standardized tons to raw pounds of sugar. The conversion calculation for pounds of raw sugar is the insured’s actual production in standardized tons multiplied by 2,000 pounds multiplied by the county’s percent sugar factor located in the actuarial documents (AD).
Example: The insured has 100 standardized tons and the county’s percent sugar factor is 15 percent.
[(100 standardized tons * 2,000 pounds) * 0.150 county’s percent of sugar factor] = 30,000 pounds of raw sugar
What is the early harvest factor?
The early harvest factor increases the current crop year’s early harvested yield by one percent per day to a maximum of the APH database’s approved APH yield. The factor is only applied when early harvest is requested by the processor. The purpose of the early harvest factor is to accommodate processor requests for early harvest of beets and to provide a yield increase to insureds who harvest early before the crop has potentially reached its full yield capacity.
How will an insured’s production be determined if harvested early?
If the percentage of insured acreage in the unit, that is requested by the processor to be harvested early, exceeds the threshold specified in the actuarial documents, production to count from such acreage will be increased by one percent per day for each day the sugar beets were harvested prior to the date the sugar beets would have reached full maturity. The date the sugar beets would have reached full maturity is considered to be 45 days prior to the calendar date for the end of the insurance period, unless otherwise specified in the actuarial documents. This adjustment will not be made if the sugar beets are damaged by an insurable cause of loss (COL) and leaving the crop in the field would reduce production.
The policy states that the early harvest factor will not apply if the sugar beets are damaged by an insurable cause and “leaving the crop in the field would reduce production.” How will this determination be made?
The determination if there is an insurable COL will be made by the loss adjuster on a case-by-case basis. The loss adjuster should work with the sugar processor and local agricultural experts to make the case-by-case determination as to the condition of the sugar beets in the field, whether the beets will be accepted for processing, and if they should be harvested early to avoid further damage.
What if an insured wants to convert their net paid tons to raw pounds of sugar based on their average percent of sugar over each of the past individual years, if they have this information available to do so, rather than the factor from the 2018 Actuarial Documents?
The insured may recertify prior years’ APH production instead of converting standardized tons to raw pounds of sugar; however, the insured will be required to, submit acceptable production reports for prior years by the applicable production reporting date for the current year, maintain continuity of the production reports for the prior years and all production reports are subject for APH field reviews.
When an insured reports their 2018 sugar beet production, on their 2019 crop year production report, should they report tons of sugar beets or raw pounds of sugar?
The insured will report their 2018 sugar beet production in 2019 as pounds of raw sugar. Except for Imperial county in California; the policy will be in effect for the 2020 crop year and insured’s will report their 2018 production in standardized tons for the 2019 crop year.
If we had late season loss after full maturity, do we still add pounds to the production that was taken in early harvest?
Yes, section (13)(f) of the Sugar Beet Crop Provisions (CP) states that only production qualifying for the early harvest factor will be adjusted using this factor. Production harvested after full maturity will not be adjusted using this factor.
Example: There is no insurable COL BEFORE the full maturity date and the early harvest acreage exceeds the threshold for the unit.
- Production from those acres will have the early harvest factor applied (increasing PTC).
Then AFTER the full maturity date, the unharvested beets experience an insurable COL.
- Production from those acres is documented accordingly.
Unit production to count will be the total of the early harvested adjusted production and later harvested actual production.
Who will make the determination for paragraph 16(3) of the 2019 Sugar Beet Loss Adjustment Standards Handbook (LASH), which states the early harvest factor adjustment will not be made if the sugar beets are damaged by an insurable COL and leaving the crop in the field would reduce production?
Per paragraph 16(3) of the 2019 Sugar Beet LASH, “The adjuster should consult with the sugar processor and/or other agricultural experts to make this determination,” which must be made on a case-by-case basis.
Who will collect truckload records for the insured’s production for the days prior full maturity?
The insured will need to obtain and provide the truckload records to their AIP.
Will the application of the early harvest factor adjustment be considered loss adjustment and require an adjuster to do the field inspection?
The application of the early harvest factor will be considered a loss adjustment function. Field inspections are required to verify if the early harvest acreage exceeds the threshold specified in the actuarial documents. The AIP will also determine if the beets were damaged by an insurable COL that will reduce production.
If considered loss adjustment, will we need to enter this information on the Production Worksheet (PW)? If so, will there be guidelines in the 2019 Sugar Beet LASH on how to make these entries on the PW?
Yes, a new item has been added in Exhibit 4, item 56 addressing early harvest.
“For sugar beets harvested prior to full maturity, increase the amount of harvested production by 1 percent per day for each day the sugar beets were harvested prior to the date the sugar beets would have reached full maturity. Refer to paragraph 16 for more information on adjustments made to production harvested prior to full maturity, including when this type of adjustment will not be made.”
Will Notice of Loss (NOL) procedures be used?
Yes. For the early harvest factor to apply, the insured must notify their AIP that they intend to harvest acreage early at the request of the processor, prior to the beginning of early harvest
Who determines the 10-percent harvested acreage of the unit requirement is met? Is the Processor not considered a disinterested third party, can they measure the fields since they are not a company who sole purpose is a measurement service?
The threshold percentage will be specified in the actuarial documents (not necessarily 10-percent). Any time the threshold may be exceeded, and the insured is intending to have the early harvest factor applied, the AIP will need to verify that the processor requested early harvest, the amount of acreage that was requested to be harvested early, and the amount of acreage actually harvested early.
If the processor starts full harvest prior to October 1st, would the early harvest apply to units that meet the 10-percent harvested acres threshold?
Assuming the actuarial documents specify 10-percent, the early harvest factor applies to production lost due to harvest prior to full maturity, as outlined in section (13)(f) of the Sugar Beet CPs. The date the sugar beets would have reached full maturity will be considered to be 45 days prior to the calendar date for the end of the insurance period, unless otherwise specified in the Special Provisions.
What if my sugar beets are rejected by the processor?
For sugar beets damaged due to an insurable COL that are rejected by the processor, but are purchased by a salvage buyer at a reduced price, compute pounds of raw sugar using the following example:
- The insured harvested 100 tons of damaged sugar beets that were rejected by the processor.
- The salvage buyer quoted price per ton for such damaged sugar beets is $10.00.
- 100 tons x $10.00/ton. = $1,000.00 gross dollar amount for the damaged beets.
- The contract price for raw sugar is $.18* per pound.
- $1,000.00 ÷ $.18/lb. = 5,556 raw sugar equivalent.
*The contract price referenced is for example purposes only; refer to the actuarial documents for current contract price.
For sugar beets that are damaged due to an insurable COL to the extent the processor will not accept the beets and there are no salvage markets for the sugar beets, there will be no value for such beets and there will be no production to count.
Source: USDA RMA