LIVESTOCK GROSS MARGIN FOR CATTLE INSURANCE POLICY - USDA
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
22-LGM Cattle
LIVESTOCK GROSS MARGIN FOR CATTLE INSURANCE POLICY
Throughout the policy, “you” and “your” refer to the named insured shown on the summary of insurance and “we,” “us,”
and “our” refer to the insurance company providing insurance. Unless the context indicates otherwise, use of the plural
form of a word includes the singular and use of the singular form of the word includes the plural.
This policy is reinsured by the Federal Crop Insurance Corporation (FCIC) under the provisions of the Federal Crop
Insurance Act (FCIA) (7 U.S.C. 1501-1524). All provisions of the policy and rights and responsibilities of the parties
are specifically subject to the FCIA. The provisions of the policy may not be waived or varied in any way by any crop
insurance agent of the insurance company providing insurance. Neither we, our employees, contractors, FCIC, nor the
Risk Management Agency has the authority to revise, amend, or otherwise alter this policy. We will use FCIC procedures
(handbooks, manuals, memoranda and bulletins), published on RMA‘s website www.rma.usda.gov or a successor
website, in the administration of this policy, including any loss or claim submitted under this policy. In the event the
insurance company providing insurance cannot pay your loss, FCIC will become your insurer and your claim will be
settled and paid by FCIC in accordance with the provisions of this policy. No state insurance guarantee fund will be
liable to pay your loss.
Agreement to Insure: In return for the payment of the premium, and subject to all the provisions of this policy, we agree
to provide the insurance as stated in this policy. If a conflict exists among the policy provisions, the order of priority is as
follows: (1) the Special Provisions; (2) the actuarial documents;(3) Commodity Exchange Endorsement for Cattle and (4)
these Basic Provisions, with (1) controlling (2), etc.
BASIC PROVISIONS
TERMS AND CONDITIONS
1. Definitions. prices in the last three trading days prior to expiration of
Act - The Federal Crop Insurance Act (7 U.S.C. 1501 et the March CME Group corn futures contract.
seq.) Actual cost of feed - For yearling finishing operations,
Actual cattle price - For the months of February, April, the actual cost of feed for each month equals 50 bushels
June, August, October, and December, the actual cattle times the actual corn price for that month, or as stated
price is the simple average of the daily settlement prices in the Special Provisions. For calf finishing operations,
in the last three trading days prior to the contract the actual feed cost for each month equals 52 bushels
expiration date for the CME Group live cattle futures times the actual corn price for that month, or as stated
contracts. For the months of January, March, May, July, in the Special Provisions. Actual Feeder Cattle Price -
September, and November, the actual cattle price is the For months in which a CME Group feeder cattle futures
simple average of the daily settlement prices in the last contract expires, the actual feeder cattle price is the
three trading days prior to the contract that expire in the simple average of the daily settlement prices in the last
immediately surrounding months. three trading days prior to the contract expiration date,
Actual corn price - For months in which a CME Group expressed in dollars per hundredweight. For other
corn futures contract expires, the actual corn price is the months, the actual feeder cattle price is the simple
simple average of the daily settlement prices in the last average of the daily settlement prices in the last three
three trading days prior to the contract expiration date trading days prior to the contract expiration date of the
for the CME Group corn futures contract for that month feeder cattle futures contracts that expire in the
expressed in dollars per bushel. For months when there immediately surrounding months. For example, the
is no expiring CME Group corn futures contract, the actual feeder cattle price in February is the simple
actual corn price is the weighted average of the prices average of the daily settlement prices in the last three
on the nearest two contract months. The weights days prior to the contract expiration date of the feeder
depend on the time period between the month in cattle futures contracts in January and March.
question and the nearby contract months. For example, Actual gross margin per head - For yearling finishing
the actual corn price in April is the simple average of the operations, the actual gross margin equals the actual
daily settlement prices in the last three trading days prior cattle price for the month cattle are marketed times the
to the contract expiration date of the corn futures assumed weight of the cattle at marketing of 12.5
contracts that expire in March and May. For the month hundredweight, minus the actual cost of feed two
of January, the actual corn price will equal two- thirds months prior to that month, minus the actual feeder
times the simple average of the daily settlement prices cattle price five months prior to that month times the
in the last three trading days prior to expiration of the assumed weight of feeder cattle of 7.5 hundredweight.
December CME Group corn futures contract plus one- For calf finishing operations, the actual gross margin
third times the simple average of the daily settlement equals the actual cattle price for the month cattle are
marketed times the assumed weight of the cattle at
marketing of 11.5 hundredweight, minus the actual cost
(1 of 16)22-LGM Cattle
of feed four months prior to that month, minus the actual holders qualify as a beginning farmer or rancher.
feeder cattle price eight months prior to that month times Calf finishing operation - A type of farm operation
the assumed weight of feeder cattle of 5.5 that purchases 550-pound calves and feeds them until
hundredweight. For example, the actual gross margin slaughter.
per cattle for April for a yearling finishing operation is the Cancellation date - The calendar date specified in the
actual cattle price for April times 12.5 hundredweight, actuarial documents on which coverage will
minus the actual cost of feed for February, minus the automatically renew unless canceled in writing by either
actual feeder cattle price for November times 7.5 you or us or terminated in accordance with the policy
hundredweight terms.
Actual gross margin per month - The actual gross Cattle - Any species of domesticated mammal of the
margin per head of cattle for a particular month family Bovidae commonly grown for beef production.
multiplied by the target marketings for that month. Also referred to as steer or heifer or cow.
Actual marketings - The total number of slaughter- CME group - The Chicago Mercantile Exchange
ready cattle sold by you for slaughter for human or Group.
animal consumption in each month of the insurance Commodity Exchange Endorsement for Cattle - An
period and for which you have proof of sale. Actual endorsement that contains the exchange prices that is
marketings are used to verify ownership of cattle and used to set the expected and actual prices for Livestock
determine approved target marketings. Gross Margin (LGM) Cattle
Actual total gross margin - The target marketings for Company - The insurance company identified on,
each month of an insurance period multiplied by the and issuing, your summary of insurance.
actual gross margin per head for each month of that Consent - Approval in writing by us allowing you to
insurance period and totaled. take a specific action.
Actuarial documents - The information for the crop Contract change date - The calendar date contained
year which is available for public inspection in your in the actuarial documents by which changes to the
agent’s office and published on RMA’s website which policy, if any, will be made available in accordance with
shows available crop insurance policies, coverage section 21 of these Basic Provisions.
levels, information needed to determine amounts of Coverage - The insurance provided by this policy
insurance, prices, premium adjustment percentages, against insured loss of gross margin as shown on
practices, particular types of the insurable crop, and your summary of insurance.
other related information regarding crop insurance in Crop year - The twelve-month period, beginning July 1,
the state. and ending the following June 30, which is
Application - The form required to be completed by designated by the calendar year in which it ends.
you and accepted by us before insurance coverage Date coverage begins - The calendar date the
will commence. insurance provided by this policy begins.
Approved target marketings - The maximum target Days - Calendar days.
marketings allowed for the designated months of the Deductible - The portion of the expected gross margin
applicable insurance period. The producer’s target that you elect not to insure. Allowable deductible
marketings for any month may not be more than the amounts range from zero to $150 per head in $10 per
producer’s approved target marketings. Approved head increments.
target marketings will be based on the farm capacity Delinquent debt - Has the same meaning as the term
for the ten-month insurance period as determined by defined in 7 CFR part 400, subpart U.
the insurance underwriter. End of insurance period, Date of - The date upon
Assignment of indemnity - A transfer of your policy which your insurance provided by this policy ceases.
rights, made on our form, and effective when Expected cattle price - Expected cattle prices for
approved in writing by us in accordance with section months in an insurance period are determined using
14. three-day average settlement prices on CME Group
Beginning farmer or rancher - An individual who has live cattle futures contracts. Given the differences in
not actively operated and managed a farm or ranch in contract structure for CME Group live cattle futures
any state, with an insurable interest in a crop or livestock contracts, only the February, April, June, August,
as an owner-operator, landlord, tenant, or sharecropper October, and December CME Group live cattle futures
for more than five crop years, as determined in are used in LGM price calculations. For months with
accordance with FCIC procedures. Any crop year’s unexpired live cattle futures contracts, the expected
insurable interest may, at your election, be excluded if cattle price is the simple average of the daily
earned while under the age of 18, while in full-time settlement prices for the CME Group cattle futures
military service of the United States, or while in post- contract for that month during the expected price
secondary education, in accordance with FCIC measurement period for the sales period expressed in
procedures. A person other than an individual may be dollars per hundredweight. For example, for a sales
eligible for beginning farmer or rancher benefits if there period beginning on February 28, the expected cattle
is at least one individual substantial beneficial interest price for August equals the simple average of the daily
holder and all individual substantial beneficial interest settlement prices on the CME Group August live
(2 of 16)22-LGM Cattle
cattle futures contract during the expected price contract during the expected price measurement
measurement period for the sales period which is the period for the sales period which is the three trading
three trading days prior to and including February 28. days prior to and including April 28. See the LGM for
For months without a live cattle futures contract, the Cattle Commodity Exchange Endorsement for
futures prices used to calculate the expected cattle additional detail on exchange prices.
price are the weighted average of the futures prices Expected cost of feed - For yearling finishing
used to calculate the expected cattle prices for the operations, the expected cost of feed for each month
two surrounding months that have futures contracts. equals 50 bushels times the expected corn price for
The weights are based on the time difference between that month. For calf finishing operations, the expected
the cattle month and the contract months. For cost of feed for each month equals 52 bushels times
example, for a sales period beginning on February 28,, the expected corn price for that month.
the expected cattle price for November equals one- Expected feeder cattle price - Expected feeder cattle
half times the simple average of the daily settlement prices for months in an insurance period are
prices on the CME Group October live cattle futures determined using three-day average settlement prices
contract during the expected price measurement period on CME Group feeder cattle futures contracts. For
for the sales period which is the three trading days prior months with unexpired feeder cattle futures contracts,
to and including February 28, plus one-half times the the expected feeder cattle price is the simple average
simple average of the daily settlement prices on the of the daily settlement prices for the CME Group
CME Group December live cattle futures contract feeder cattle futures contract for that month during the
during the same expected price measurement period . expected price measurement period for the sales period
See the LGM for Cattle Commodity Exchange expressed in dollars per hundredweight. For example,
Endorsement for additional detail on exchange prices. for a sales period beginning on April 28, the expected
Expected corn price - Expected corn prices for months feeder cattle price for May for a yearling finishing
in an insurance period are determined using three-day operation equals the simple average of the daily
average settlement prices on CME Group corn futures settlement prices on the CME Group May feeder
contracts. For months with unexpired corn futures cattle futures contract during the expected price
contracts, the expected corn price is the simple measurement period for the sales period which is the
average of the daily settlement prices for the CME three trading days prior to and including April 28. For
Group corn futures contract for that month during the months with expired feeder cattle futures contracts,
expected price measurement period for the sales period the expected feeder cattle price is the simple average
expressed in dollars per bushel. For example, for a of daily settlement prices for the CME Group feeder
sales period beginning on April 28, the expected corn cattle futures contract for that month expressed in
price for July equals the simple average of the daily dollars per hundredweight in the last three trading days
settlement prices on the CME Group July corn futures prior to contract expiration. For example, for a sales
contract during the expected price measurement period period beginning on April 28, the expected feeder cattle
for the sales period which is the three trading days prior price for March for a calf finishing operation is the
to and including April 28. For months with expired corn simple average of the daily settlement prices on the
futures contracts, the expected corn price is the CME Group March feeder cattle futures contract over
simple average of daily settlement prices for the the last three trading days prior to contract expiration.
CME Group corn futures contract for that month For months without a feeder cattle futures contract, the
expressed in dollars per bushel in the last three trading futures prices used to calculate the expected feeder
days prior to contract expiration. For example, for a cattle price are the weighted average of the futures
sales period beginning on April 28, the expected corn prices used to calculate the expected feeder cattle
price for March is the simple average of the daily prices for the two surrounding months that have
settlement prices on the CME Group March corn futures contract. The weights are based on the time
futures contract over the last three trading days prior difference between the feeder cattle month and the
to contract expiration. For months without a corn contract months. For example, for a sales period
futures contract, the futures prices used to calculate beginning on April 28, the expected feeder cattle price
the expected corn price are the weighted average of for July for a calf finishing operation equals two-thirds
the futures prices used to calculate the expected corn times the simple average of the daily settlement prices
prices for the two surrounding months which have on the CME Group August feeder cattle futures
futures contract. The weights are based on the time contract during the expected price measurement
difference between the month and the contract months. period for the sales period which is the three trading
For example, for a sales period beginning on April 28, days prior to and including April 28 plus one-third times
the expected corn price for April equals one-half times the simple average of the daily settlement prices on
the simple average of the daily settlement prices on the CME Group May feeder cattle futures contract
the CME Group March corn futures contract over the during the same expected price measurement period.
last three trading days prior to contract expiration plus See the LGM for Cattle Commodity Exchange
one-half times the simple average of the daily Endorsement for additional detail on exchange prices.
settlement prices on the CME Group May corn futures Expected gross margin per head - For yearling
(3 of 16)22-LGM Cattle
finishing operations, expected gross margin per head futures.
is equal to the expected cattle price for the month Limited resource farmer or rancher - Has the same
cattle are marketed times the assumed weight of the meaning as the term defined by USDA at
cattle at marketing of 12.5 hundredweight, or as stated https://lrftool.sc.egov.usda.gov/LRP_Definition.aspx or
in the Special Provisions, minus the expected cost of successor website.
feed two months prior to that month, less the expected Livestock acceptance system - A computer system
feeder cattle price five months prior to that month times that accepts livestock applications and endorsements.
the assumed weight of feeder cattle of 7.5 Marketing report - A report submitted by you on our
hundredweight. For calf finishing operations, expected form showing for each month your actual marketings
gross margin per head is equal to the expected cattle of cattle insured under this policy. The marketing report
price for the month cattle are marketed times the must be accompanied by copies of packer sales
assumed weight of the cattle at marketing of 11.5 receipts that provide records of the actual marketings
hundredweight, or as stated in the Special Provisions, shown on the marketing report.
minus the expected cost of feed four months prior to Notice of probable loss - Our notice to you of a
that month, less the expected feeder cattle price eight probable loss on your insured cattle.
months prior to that month times the assumed weight Offset - The act of deducting one amount from another
of feeder cattle of 5.5 hundredweight. For example, the amount.
expected gross margin per head for April for a yearling Person - An individual, partnership, association,
finishing operation is the expected cattle price for April corporation, estate, trust, or other legal entity, and
times 12.5 hundredweight, less the expected cost of wherever applicable, a State or a political subdivision or
feed for February, less the expected feeder cattle agency of a State. “Person” does not include the United
price times 7.5 hundredweight. For a calf finishing States Government or any agency thereof.
operation, expected gross margin per head for April is Policy - The agreement between you and us
the expected cattle price for April times 11.5 consisting of these provisions, the Special Provisions,
hundredweight, less the expected cost of feed for the summary of insurance, the Commodity Exchange
December of the previous year, less the expected Endorsement, and the applicable regulations
feeder cattle price for August of the previous year published in 7 CFR Chapter IV.
times 5.5 hundredweight. Premium - The amount you owe us for this insurance
Expected gross margin per month - The expected coverage based on your target marketings in
gross margin per cattle multiplied by the target accordance with section 5.
marketings for each month of an insurance period. Premium billing date - The earliest date upon which
Expected price measurement period – For each you will be billed for insurance coverage based on your
week in which sales occur, the three trading days prior target marketing report. The premium billing date is the
to and including Thursday that is the beginning of the first business day of the month following the last month
weekly sales period. of the insurance period in which you have target
Expected total gross margin - The target marketings.
marketings times the expected gross margin per head Producer premium - The total premium minus the
for each month of an insurance period and totaled. premium subsidy paid by FCIC.
FCIC - The Federal Crop Insurance Corporation, a RMA - Risk Management Agency, an agency within
wholly owned government corporation within USDA. USDA.
Gross margin guarantee - The gross margin RMA’s website - A website hosted by RMA and located
guarantee for an insurance period is the expected at https://www.rma.usda.gov/ or a successor website.
total gross margin for an insurance period minus the Sales closing date – The last day of the sales period
deductible times the total of target marketings. by which your completed application must be received
Insurance period - The 11-month period designated in by us. Also, the last date by which you may change
the summary of insurance to which this policy is your insurance coverage for an insurance period.
applicable. Cattle are not insurable in the first month Sales period – The period that begins on Thursday of
of any insurance period. See the LGM for Cattle each week when the coverage prices and rates are
Commodity Exchange Endorsement for additional posted on RMA’s website and ends on the following
detail on insurance periods. calendar day at 9:00 AM Central Time. Sales will not be
Insured - The person shown on the summary of available for purchase if the Thursday of the sales
insurance as the insured. This term does not extend period is a federal holiday. The calendar date for
to any other person having a share or interest in the Thursday of the sales period will be shown as the
animals (for example, a partnership, landlord, or any effective date in the actuarial documents.
other person) unless also specifically indicated on the Share - The lesser of your percentage interest in the
summary of insurance as the insured. insured livestock as an owner at the time insurance
Liability - The maximum amount payable on an attaches and at the time of sale. Persons who lease
Insurance period under this policy. or hold some other interest in the livestock other than
Limit movement - The maximum price change based as an owner are not considered to have a share in
on the CME group current daily price limit for commodity the livestock.
(4 of 16)22-LGM Cattle
Special provisions - The part of the policy that whether an individual is considered a veteran farmer or
contains specific provisions of insurance for each rancher.
insured crop that may vary by geographic area. Void - When the policy is considered not to have
Substantial beneficial interest - An interest held by existed for an insurance period as a result of
any person of at least ten percent in you (e.g., there are concealment, fraud, or misrepresentation.
two partnerships that each have a 50 percent interest in Yearling finishing operation - A type of farm
you and each partnership is made up of two individuals, operation that purchases yearling steers and heifers
each with a 50 percent share in the partnership. In this and feeds them until slaughter.
case, each individual would be considered to have a 25 2. Life of Policy, Cancellation and Termination
percent interest in you, and both the partnerships and (a) The application must be completed by you and
the individuals would have a substantial beneficial received by us not later than the sales closing
interest in you. The spouses of the individuals would not date. If cancellation or termination of insurance
be considered to have a substantial beneficial interest coverage occurs for any reason, including but not
unless the spouse was one of the individuals that made limited to indebtedness, suspension, debarment,
up the partnership. However, if each partnership is disqualification, cancellation by you or us or
made up of six individuals with equal interests, then violation of the controlled substance provisions of
each would only have an 8.33 percent interest in you the Food Security Act of 1985, a new application
and although the partnership would still have a must be filed for the crop.
substantial beneficial interest in you, the individuals (b) Coverage will not be provided if you are ineligible
would not for the purposes of reporting in section 2). under the policy or under any Federal statute or
The spouse of any individual applicant or individual regulation.
insured will be presumed to have a substantial (c) Your agent does not have authority to bind
beneficial interest in the applicant or insured unless the coverage under this policy. Coverage for the
spouses can prove they are legally separated or cattle described in the application will only
otherwise legally separate under the applicable State become effective when we notify you in writing
dissolution of marriage laws. Any child of an individual that your application has been accepted and
applicant or individual insured will not be considered to approved by us, and we issue a written summary
have a substantial beneficial interest in the applicant or of insurance to you.
insured unless the child has a separate legal interest in (1) For subsequent insurance periods, coverage
such person. will only be effective if issue a written
Summary of insurance - Our statement to you, based summary of insurance to you.
upon your application, specifying the insured, the (2) This policy will be available for sale only on
cattle, the target marketings, the gross margin business days when RMA livestock
guarantee, and the premium for an insurance period. acceptance system is operational.
Target marketings - Your determination as to the (d) This is a continuous policy and will remain in
number of cattle you elect to insure in each month effect for each crop year following the acceptance
during the insurance period. You can only report the of the original application until canceled by you in
number of cattle in which you have a share. accordance with the terms of the policy or
Target marketings report - A report submitted by terminated by operation of the terms of the policy
you on our form showing for each month your target or by us. In accordance with section 20, FCIC
marketings for that month. may change the coverage provided from year to
Termination date - The calendar date upon which year.
your insurance ceases to be in effect because of (e) With respect to your application for insurance:
nonpayment of any amount due us under the policy, (1) You must include your social security number
including premium. (SSN) if you are an individual (if you are an
USDA - The United States Department of Agriculture. individual applicant operating as a business,
Veteran farmer or rancher An individual who has you may provide an employer identification
served active duty in the United States Army, Navy, number (EIN) but you must also provide your
Marine Corps, Air Force, or Coast Guard, including the SSN); or
reserve components; was discharged or released under (2) You must include your EIN if you are a person
conditions other than dishonorable; and: other than an individual;
(1) Has not operated a farm or ranch; (3) In addition to the requirements of section
(2) Has operated a farm or ranch for not more than 5 2(e)(1) or (2), you must include the following
years; or for all persons who have a substantial
(3) First obtained status as a veteran during the most beneficial interest in you:
recent 5-year period. (i) The SSN for individuals; or
A person, other than an individual, may be eligible for (ii) The EIN for persons other than
veteran farmer or rancher benefits if all substantial individuals and the SSNs for all
beneficial interest holders qualify as a veteran farmer or individuals that comprise the person with
rancher. A spouse’s veteran status does not impact
(5 of 16)22-LGM Cattle
the EIN if such individuals have a (B) You cannot prove that any error or
substantial beneficial interest in you; omission was inadvertent (Simply
(4) You must include: stating the error or omission was
(i) Your election of plan of insurance and inadvertent is not sufficient to prove
any other material information required the error or omission was
on the application to insure your cattle; inadvertent); or
and (C) Even after the correct SSN or EIN is
(ii) All information required in section provided by you, it is determined
2(e)(4)(i) or your application will not be that the incorrect or omitted SSN or
accepted and no coverage will be EIN would have allowed you to
provided; obtain disproportionate benefits
(5) Your application will not be accepted and no under the crop insurance program,
insurance will be provided for the year of the person with a substantial
application if the application does not beneficial interest in you is
contain your SSN or EIN. If your application determined to be ineligible for
contains an incorrect SSN or EIN for you, insurance, or you or the person with
your application will be considered not to a substantial beneficial interest in
have been accepted, no insurance will be you could avoid an obligation or
provided for the year of application and for requirement under any State or
any subsequent crop years, as applicable, Federal law; or
and such policies will be void if: (iii) Except as provided in sections
(i) Such number is not corrected by you; or 2(e)(6)(ii)(B) and (C), your policies will
(ii) You correct the SSN or EIN but: not be voided if you subsequently
(A) You cannot prove that any error was provide the correct SSN or EIN for
inadvertent (Simply stating the error persons with a substantial beneficial
was inadvertent is not sufficient to interest in you and the persons are
prove the error was inadvertent); or eligible for insurance;
(B) It is determined that the incorrect (7) When any of your policies are void under
number would have allowed you to sections 2(e)(5) or (6):
obtain disproportionate benefits (i) You must repay any indemnity that may
under the crop insurance program, have been paid for all applicable
you are determined to be ineligible commodities and any crop years
for insurance or you could avoid an determined by us;
obligation or requirement under any (ii) Even though the policies are void, you will
State or Federal law; still be required to pay an amount equal
(6) With respect to persons with a substantial to 20 percent of the premium that you
beneficial interest in you: would otherwise be required to pay; and
(i) The coverage for all livestock or (iii) If you previously paid premium or
livestock products included on your administrative fees, any amount in
application will be reduced excess of the amount required in section
proportionately by the percentage 2(e)(7)(ii) will be returned to you;
interest in you of persons with a (8) Notwithstanding any of the provisions in this
substantial beneficial interest in you section, if you certify to an incorrect SSN or
(presumed to be 50 percent for spouses EIN, or receive an indemnity and the SSN or
of individuals) if the SSNs or EINs of EIN was not correct, you may be subject to
such persons are included on your civil, criminal or administrative sanctions;
application, the SSNs or EINs are (9) If any of the information regarding persons
correct, and the persons with a with a substantial beneficial interest in you
substantial beneficial interest in you are changes after the cancellation date for the
ineligible for insurance; previous crop year, you must revise your
(ii) Your policies for all livestock or livestock application by the cancellation date for the
products included on your application, current crop year to reflect the correct
and for all applicable crop years, will be information. However, if such information
void if the SSN or EIN of any person with changed less than 30 days before the
a substantial beneficial interest in you is cancellation date for the current crop year,
incorrect or is not included on your you must revise your application by the
application and: cancellation date for the next crop year. If you
(A) Such number is not corrected or fail to provide the required revisions, the
provided by you, as applicable; provisions in section 2(e)(6) will apply; and
(6 of 16)22-LGM Cattle
(10) If you are, or a person with a substantial (i) A delinquent debt for any policy will make you
beneficial interest in you is, not eligible to ineligible to obtain crop insurance authorized
obtain a SSN or EIN, whichever is required, under the Act for any subsequent crop year and
you must request an assigned number for the result in termination of all policies in accordance
purposes of this policy from us: with section 2(i)(2).
(i) A number will be provided only if you can (1) With respect to ineligibility:
demonstrate you are, or a person with a (i) Ineligibility for crop insurance will be
substantial beneficial interest in you is, effective on:
eligible to receive Federal benefits; (A) The date that a policy was terminated
(ii) If a number cannot be provided for you in in accordance with section 2(i)(2) for
accordance with section 2(e)(10)(i), your the crop for which you failed to pay
application will not be accepted; or premium, an administrative fee, or
(iii) If a number cannot be provided for any any related interest owed, as
person with a substantial beneficial applicable;
interest in you in accordance with section (B) The payment due date contained in
2(e)(10)(i), the amount of coverage for all any notification of indebtedness for
crops on the application will be reduced any overpaid indemnity if you fail to
proportionately by the percentage pay the amount owed, including any
interest of such person in you. related interest owed, as applicable,
(f) After acceptance of the application, you may not by such due date; or
cancel this policy for the initial crop year. (C) The termination date for the crop year
Thereafter, the policy will continue in force for prior to the crop year in which a
each succeeding crop year unless canceled or scheduled payment is due under a
terminated as provided below. written payment agreement if you fail
(g) Either you or we may cancel this policy after the to pay the amount owed by any
initial crop year by providing written notice to the payment date in any agreement to
other on or before the cancellation date in pay the debt;
accordance with section 2(j). (ii) If you are ineligible and a policy has been
(h) Any amount owed to us for any policy authorized terminated in accordance with section
under the Act will be offset from any indemnity or 2(i)(2), you will not receive any indemnity
prevented planting payment due you for this or and such ineligibility and termination of
any other crop insured with us under the authority the policy may affect your eligibility for
of the Act. benefits under other USDA programs.
(1) Even if your claim has not yet been paid, you Any indemnity payment that may be
must still pay the premium and administrative owed for the policy before it has been
fee on or before the termination date for you terminated will remain owed to you, but
to remain eligible for insurance. may be offset in accordance with section
(2) If we offset any amount due us from an 2(h), unless your policy was terminated in
indemnity or prevented planting payment accordance with sections 2(i)(2)(i)(A),
owed to you, the date of payment for the (B), or (D).
purpose of determining whether you have a (2) With respect to termination:
delinquent debt will be the date that you (i) Termination will be effective on:
submit the claim for indemnity in accordance (A) For a policy with unpaid
with section 7(a) (Determining Indemnities). administrative fees or premiums, the
(3) For this agricultural commodity policy, your termination date immediately
premium and administrative fees will be offset subsequent to the billing date for the
from any indemnity or prevented planting crop year (For policies which the
payment due you even if it is prior to the sales closing date is prior to the
premium billing. termination date, such policies will
(4) For any other agricultural commodity policy terminate for the current crop year
insured with us and it is: even if insurance attached prior to
(i) Prior to the premium billing date, and you the termination date. Such
agree, your premium and administrative termination will be considered
fees will be offset from any indemnity or effective as of the sales closing date
prevented planting payment due you; or and no insurance will be considered
(ii) On or after the premium billing date, your to have attached for the crop year
premium and administrative fees will be and no indemnity will be owed);
offset from any indemnity or prevented (B) For a policy with other amounts due,
planting payment due you. the termination date immediately
following the date you have a
(7 of 16)22-LGM Cattle
delinquent debt (For policies for submitted in accordance with
which the sales closing date is prior section 2(i)(2)(iii)(B)(3); and
to the termination date, such policies (3) You submit a written request for
will terminate for the current crop reinstatement of your policy to us
year even if insurance attached prior no later than 60 days after the
to the termination date. Such termination date or the missed
termination will be considered payment date of a previously
effective as of the sales closing date executed written payment
and no insurance will be considered agreement, or in the case of
to have attached for the crop year overpaid indemnity or any
and no indemnity will be owed); amount that became due after
(C) For all other policies that are issued the termination date, the due
by us under the authority of the Act, date specified in the notice to you
the termination date that coincides of the amount due, if applicable.
with the termination date for the (i) If authorization for
policy with the delinquent debt or, if reinstatement, as defined in
there is no coincidental termination 7 CFR part 400, subpart U, is
date, the termination date granted, your policies will be
immediately following the date you reinstated effective at the
become ineligible; beginning of the crop year for
(D) For execution of a written payment which you were determined
agreement and failure to make any ineligible, and you will be
scheduled payment, the termination entitled to all applicable
date for the crop year prior to the crop benefits under such policies,
year in which you failed to make the provided you meet all
scheduled payment (for this purpose eligibility requirements and
only, the crop year will start the day comply with the terms of the
after the termination date and end on policy; and
the next termination date, e.g., if the (ii) There is no evidence of fraud
termination date is November 30 and or misrepresentation; or
you fail to make a payment on (C) We determine that, in accordance
November 15, 2019, your policy will with 7 CFR part 400, subpart U, and
terminate on November 30, 2018, for FCIC issued procedures, the
the 2019 crop year); or following are met:
(ii) For all policies terminated under sections (1) You can demonstrate:
2(i)(2)(i)(A), (B), or (D), any indemnities (i) You made timely payment
paid subsequent to the termination date for the amount of premium
must be repaid. owed but you inadvertently
(iii) Once the policy is terminated, it cannot omitted some small amount,
be reinstated for the current crop year such as the most recent
unless: month’s interest or a small
(A) The termination was in error; administrative fee;
(B) The Administrator of the Risk (ii) The amount of the payment
Management Agency, at his or her was clearly transposed from
sole discretion, determines that the the amount that was
following are met: otherwise due (For example,
(1) In accordance with 7 CFR part you owed $892 but you paid
400, subpart U, and FCIC $829);
procedures, you provide (iii) You timely made the full
documentation that your payment of the amount owed
inadvertent failure to pay your but the delivery of that
debt is due to an unforeseen or payment was delayed, and
unavoidable event or other was postmarked no more
extenuating circumstances that than seven calendar days
created the inadvertent failure for after the termination date or
you to make timely payment; the missed payment date of
(2) You remit full payment of the a previously executed written
delinquent debt owed to us or payment agreement, or in
FCIC with your request the case of overpaid
indemnity or any amount that
(8 of 16)22-LGM Cattle
became due after the (4) After you become eligible for crop or livestock
termination date, the due insurance, if you want to obtain coverage for
date specified in a notice to your crops or livestock, you must submit a
you of an amount due, as new application on or before the sales closing
applicable. date for the crop (Since applications for crop
(iv) For previously executed insurance cannot be accepted after the sales
written payment closing date, if you make any payment after
agreements, you made the the sales closing date, you cannot apply for
full payment of the insurance until the next available sales
scheduled payment amount closing date).
owed within 15 calendar (5) For example, for the 2020 crop year, if you
days after the missed purchase Livestock Gross Margin (LGM),
payment date. with a termination date of June 30, 2020 and
(2) You remit full payment of the you do not pay the premium or other amounts
delinquent debt owed to us; and due for LGM by the termination date, your
(3) You submit a written request for livestock policies will terminate retroactive to
reinstatement of your policy to us the sales closing date that is immediately
in accordance with 7 CFR part subsequent to the sales period for which the
400, subpart U, and applicable premium is delinquent, even if insurance has
procedures no later than 30 days already attached to a subsequent sales
after the termination date or the period. The ineligibility date would be June
missed payment date of a 30, 2020. In accordance with section
previously executed written 2(i)(2)(i)(C), for any other policy issued under
payment agreement, or in the the authority of the Federal Crop Insurance
case of overpaid indemnity or Act that does not have the same termination
any amount that became due date of June 30, the termination for such
after the termination date, the other policy will be effective on the
due date specified in the notice to termination date following when you become
you of the amount due, if ineligible. For example, a producer
applicable; and purchased an LGM policy on July 31, 2020
(4) If authorization for reinstatement, and did not pay the premium by the premium
as defined in 7 CFR part 400, due date and subsequently purchased a
subpart U, is granted, your Federal reinsured corn policy on March 15,
policies will be reinstated 2021. The LGM policy is terminated June 30,
effective at the beginning of the 2021, and the producer is ineligible for any
crop year for which you were livestock plan of insurance as of the next
determined ineligible, and you sales closing date after June 30, 2021.
will be entitled to all applicable However, the Federal reinsured corn policy
benefits under such policies, would remain in effect for 2021 and would be
provided you meet all eligibility terminated as of March 15, 2022 if the LGM
requirements and comply with premium remained delinquent. No indemnity
the terms of the policy; and will be due for that crop year for either crop.
(5) There is no evidence of fraud or You will not be eligible to apply for crop
misrepresentation. insurance for any crop until after the amounts
(iv) A determination made under: owed are paid in full or you file a petition to
(A) Section 2(i)(2)(iii)(B) may only be discharge the debt in bankruptcy.
appealed to the National Appeals (6) If you are determined to be ineligible under
Division in accordance with 7 CFR section 2(i), persons with a substantial
part 11; and beneficial interest in you may also be
(B) Section 2(i)(2)(iii)(C) may only be ineligible until you become eligible again.
appealed in accordance with section (j) In cases where there has been a death,
19. disappearance, judicially declared incompetence,
(3) To regain eligibility, you must: or dissolution of any insured person:
(i) Repay the delinquent debt in full; (1) If any married individual insured dies,
(ii) Execute a written payment agreement, in disappears, or is judicially declared
accordance with 7 CFR part 400, subpart incompetent, the named insured on the policy
U, and make payments in accordance will automatically convert to the name of the
with the agreement; or spouse if:
(iii) Have your debts discharged in
bankruptcy.
(9 of 16)22-LGM Cattle
(i) The spouse was included on the policy canceled by the cancellation date prior to
as having a substantial beneficial interest the start of the insurance period:
in the named insured; and (A) A new application for insurance must
(ii) The spouse has a share of the crop. be submitted prior to the sales
(2) The provisions in section 2(j)(3) will be closing date for coverage for the
applicable if: subsequent crop year; and
(i) Any partner, member, shareholder, etc., (B) Any indemnity will be paid to the
of an insured entity dies, disappears, or person or persons determined to be
is judicially declared incompetent, and beneficially entitled to the payment
such event automatically dissolves the and such person or persons must
entity; or comply with all policy provisions and
(ii) An individual, whose estate is left to a pay the premium.
beneficiary other than a spouse or left to (5) If section 2(j)(2) or (4) applies, a remaining
the spouse and the criteria in section member of the insured person or the
2(j)(1) are not met, dies, disappears, or is beneficiary is required to report to us the
judicially declared incompetent. death, disappearance, judicial incompetence,
(3) If section 2(j)(2) applies and the death, or other event that causes dissolution not
disappearance, or judicially declared later than the next cancellation date, except if
incompetence occurred: section 2(j)(3)(ii) applies, notice must be
(i) More than 30 days before the provided by the cancellation date for the next
cancellation date, the policy is crop year. If notice is not provided timely, the
automatically canceled as of the provisions of section 2(j)(2) or (4) will apply
cancellation date and a new application retroactive to the date such notice should
must be submitted; or have been provided and any payments made
(ii) Thirty days or less before the after the date the policy should have been
cancellation date, or after the canceled must be returned.
cancellation date, the policy will continue (k) We may cancel your policy if no premium is
in effect through the crop year earned for three consecutive years.
immediately following the cancellation (l) The cancellation date is June 30 for the policy.
date and be automatically canceled as of (m) Any person may sign any document relative to
the cancellation date immediately crop insurance coverage on behalf of any other
following the end of the insurance period person covered by such a policy, provided that
for the crop year, unless canceled by the the person has a properly executed power of
cancellation date prior to the start of the attorney or such other legally sufficient document
insurance period: authorizing such person to sign. You are still
(A) A new application for insurance must responsible for the accuracy of all information
be submitted prior to the sales provided on your behalf and may be subject to
closing date for coverage for the any applicable consequences, if any information
subsequent crop year; and has been misreported.
(B) Any indemnity will be paid to the (n) LGM for Cattle will not be offered for a sales
person or persons determined to be period if the required data for establishing the
beneficially entitled to the payment expected gross margins for each month of the
and such person or persons must insurance period are not available because
comply with all policy provisions and futures did not trade, or were not able to continue
pay the premium. trading at the end of the day (such as the price
(4) If any insured entity is dissolved for reasons moved the maximum allowed by the exchange
other than death, disappearance, or judicially and trading was suspended), for any day that the
declared incompetence: information is needed.
(i) Before the cancellation date, the policy is (1) LGM for Cattle will not be offered if CME
automatically canceled as of the Group live cattle futures prices decline by the
cancellation date and a new application maximum allowed by the exchange two
must be submitted; or consecutive days during the time period for
(ii) On or after the cancellation date, the establishing the expected gross margins.
policy will continue in effect through the (2) LGM for Cattle will not be offered if CME
crop year immediately following the Group feeder cattle or CME Group corn
cancellation date and be automatically futures prices increase by the maximum
canceled as of the cancellation date allowed by the exchanges two consecutive
immediately following the end of the days during the time period for establishing
insurance period for the crop year, unless the expected gross margins.
3. Insurance Coverage
(10 of 16)22-LGM Cattle
(a) Your gross margin guarantee, deductible amount, provide on your application.
and maximum premium for the insurance period (e) Premium or administrative fees owed by you will
are as shown on your summary of insurance. be offset from an indemnity or prevented planting
(b) You must select a deductible amount by t h e payment due you in accordance with section 2(h).
sales closing date. (f) If you qualify as a beginning farmer or rancher,
(c) You may only select one deductible amount that your premium subsidy will be 10 percentage
is applicable for all target marketings. points greater than the premium subsidy that you
(d) Target marketings must be submitted on our form would otherwise receive, unless otherwise
by the sales closing date for each insurance specified in the Special Provisions.
period in which you desire coverage. If target (g) You will be ineligible for any premium subsidy
marketings are not submitted by the sales closing paid on your behalf by FCIC for any policy issued
date, your target marketings for the insurance by us if:
period will be zero. (1) USDA determines you have committed a
(e) Target marketings for any month of an insurance violation of the highly erodible land
period cannot be greater than the approved conservation or wetland conservation
target marketings for that insurance period. Your provisions of 7 CFR part 12 as amended by
target marketings are due at the time of the Agricultural Act of 2014; or
application in the initial insurance period and your (2) You have not filed form AD-1026 with FSA for
target marketings report is due by the sales the reinsurance year by the premium billing
closing date in subsequent insurance periods. date.
(f) No indemnity will be owed, but you will still be (i) Notwithstanding section 5(g)(2), you may
responsible for any premiums owed, if we find be eligible for premium subsidy without
that your marketing report: having a timely filed form AD-1026:
(1) Is not supported by written, verifiable records (A) For the initial reinsurance year if you
in accordance with the definition of marketing certify by the premium billing date for
report; or your policy that you meet the
(2) Fails to accurately report actual marketings qualifications as outlined in FCIC
or other material information. approved procedures for producers
(g) Coverage can be purchased from the time during who are new to farming, new to crop
the sales period or as otherwise specified in the insurance, a new entity, or have not
Special Provisions. Coverage is not available for previously been required to file form
purchase if expected margins are not available on AD-1026; or
the RMA website. (B) If FSA approves relief for failure to
(h) Sales of LGM for Cattle may be suspended for timely file due to circumstances
the next sales period if extraordinary events beyond your control or failure to timely
occur that interfere with the effective functioning provide adequate information to
of the corn, feeder cattle, or live cattle commodity complete form AD-1026 in
markets as determined by FCIC. Evidence of such accordance with the provisions
events may include, but is not limited to, contained in 7 CFR part 12.
consecutive limit down moves in the live cattle (ii) To be eligible for premium subsidy paid
futures markets or consecutive limit up moves in on your behalf by FCIC, it is your
the feeder cattle and/or corn futures markets. responsibility to assure you meet all the
4. Causes of Loss Covered requirements for:
This policy provides insurance only for the difference (A) Compliance with the conservation
between the actual gross margin and the gross provisions specified in section 5(g)(1)
margin guarantee resulting from unavoidable natural of this section; and
occurrences, as required by the Act. This policy (B) Filing form AD-1026, or successor
does not insure against the death or other loss or form, to be properly identified as in
destruction of your cattle, or against any other loss or compliance with the conservation
damage of any kind whatsoever. provisions specified in section 5(g)(1)
5. Premium of this section.
(a) The premium (gross premium less premium 6. Insurance Period
subsidy paid on your behalf by FCIC) is earned (a) Coverage begins on your cattle on the first day of
and payable at the time coverage begins. the second calendar month following the month
(b) You are only eligible for premium subsidy if of the sales closing date. For example, for
you target market in two (2) or more months of contracts with a sales closing d a t e i n
an insurance period. January, coverage will begin on March 1.
(c) The premium amount is shown on your (b) Coverage ends at the earliest of:
summary of insurance. (1) The last month of the insurance period in
(d) The premium will be based on the information you which you have target marketings;
(11 of 16)22-LGM Cattle
(2) As otherwise specified in the policy. specified in the actuarial documents.
(3) If the end date is on a Saturday, Sunday, or (2) We will collect any unpaid amounts owed to
federal holiday, or, if for any reason the us and any interest owed thereon, and, prior
relevant report is not available to us for that to the termination date, we will collect any
day or any other day of the ending period, administrative fees and interest owed
then the actual ending value will be based on thereon to FCIC.
the most recent reports made prior to that (3) After the termination date, FCIC will collect
date. any unpaid administrative fees and any
7. Determining Indemnities interest owed thereon for any catastrophic
(a) In the case of a payable loss on insured cattle, risk protection policy and we will collect any
we will send you a notice of probable loss unpaid administrative fees and any interest
approximately ten days after all actual gross owed thereon for additional coverage
margins applicable for the insurance period are policies.
released by RMA. You must submit a marketing (b) For the purpose of any other amounts due us,
report within 15 days of your receipt of the notice such as repayment of indemnities found not to
of probable loss. have been earned, interest will start to accrue on
(b) In the event of loss covered by this policy, we will the date that notice is issued to you for the
settle your claim by subtracting the actual total collection of the unearned amount.
gross margin from the gross margin guarantee. If (1) Amounts found due under this paragraph will
the result is greater than zero, an indemnity will not be charged interest if payment is made
be paid. Under no circumstances will the within 30 days of issuance of the notice by us.
indemnity be greater than your total target (2) The amount will be considered delinquent if
marketings multiplied by the three-day average not paid within 30 days of the date the notice
CME Group live cattle futures price established at is issued by us.
the beginning of the insurance period multiplied (c) All amounts paid will be applied first to expenses of
by the assumed weight of the cattle. collection, if any, second, to the reduction of
(c) In the event that the total of actual marketings are accrued interest, and then to the reduction of the
less than 75 percent of the total of targeted principal balance.
marketings for the insurance period, indemnities (d) If we determine that it is necessary to contract
will be reduced by the percentage by which the with a collection agency or to employ an attorney to
total of actual marketings for the insurance period assist in collection, you agree to pay all the
fell below the total of targeted marketings for the expenses of collection.
period. (e) The portion of the amounts owed by you for a policy
8. Conformity to Food Security Act authorized under the Act that are owed to FCIC may
Although your violation of a number of federal be collected in part through administrative offset
statutes, including the Act, may cause cancellation from payments you receive from United States
or termination of the policy or may cause the policy government agencies in accordance with 31 U.S.C.
to become void, you should be specifically aware chapter 37. Such amounts include all administrative
that your policy will be canceled if you are fees, and the share of the overpaid indemnities and
determined to be ineligible to receive benefits under premiums retained by FCIC plus any interest owed
the Act due to violation of the controlled substance thereon.
provisions (title XVII) of the Food Security Act of 10. Legal Action Against Us
1985 (Pub. L. 99-198) and the regulations published (a) You may not bring legal action against us unless
at 7 CFR part 400, subpart F. We will recover any you have complied with all the policy provisions.
and all monies paid to you or received by you during (b) If you do take legal action against us, you must
your period of ineligibility, and your premium will be do so within 12 months after denial of your claim.
refunded, less a reasonable amount for expenses Suit must be brought in accordance with the
and handling not to exceed 20 percent of the total provisions of 7 U.S.C. 1508(j).
premium. (c) Under no circumstances will we be liable for the
9. Amounts Due Us payment of damages (compensatory, punitive, or
(a) Interest will accrue at the rate of 1.25 percent other), attorneys’ fees, or other charges in
simple interest per calendar month on any unpaid connection with any claim for indemnity, whether
amount owed to us or on any unpaid we approve or disapprove such claim.
administrative fees owed to FCIC. 11. Payment and Interest Limitations
(1) For the purpose of premium amounts owed We will pay simple interest computed on the net
to us or administrative fees owed to FCIC, indemnity ultimately found to be due by us or by a
interest will start to accrue on the first day of final judgment of a court of competent jurisdiction,
the month following the issuance of the notice from and including the 61st day after the date you
by us, provided that a minimum of 30 days sign, date, and submit to us the properly completed
have passed from the premium billing date marketing report. Interest will be paid only if the
(12 of 16)You can also read
