Reclamation Announces Initial Water Supply Allocation for the Central Valley Project
The Bureau of Reclamation announced the initial 2018 water supply allocation for many Central Valley Project contractors. This allocation is based on a conservative estimate of the amount of water that will be available for delivery to CVP water users and reflects current reservoir storages, precipitation and snowpack in the Central Valley and Sierra Nevada.

South-of-Delta Contractors
  • Agricultural water service contractors South-of-Delta are allocated 20 percent of their contract total.
  • M&I water service contractors South-of-Delta are allocated the greater of 70 percent of their historic use or public health and safety needs.

Friant Division Contractors
  • Based upon Millerton Lake storage and current and forecasted hydrologic conditions in the Upper San Joaquin River Basin, the Friant Division contractors are allocated 30 percent of Class 1 supplies. 
  • For the San Joaquin River Restoration Project, the current best forecast developed jointly by SJRRP and the South-Central California Area Office now indicates a “Critical-High” water year type.

Eastside Water Service Contractors
  • Eastside water service contractors (Central San Joaquin Water Conservation District and Stockton East Water District) will receive 100 percent of their contract total. 
Certain Policies to be Impacted by Recent Water Allocations
Based on the most recent water allocations by the California Department of Water Resources (State Water Project) and the U.S. Bureau of Reclamation (Central Valley Project), there was a known cause of loss due to drought/failure of the irrigation water supply for the state of California effective when the allocations were published:
  • Monday, January 29, 2018 for growers that receive water from the SWP
  • Tuesday, February 20, 2018 for growers that receive water from the CVP

Because there is now a known cause of loss, Global Ag is working to identify policies with coverages that are not eligible to add or increase their prevented planting coverage level (PF/SE) or will not have prevented planting coverage this year due to drought or failure of irrigation water supply. We will be using the criteria below to identify impacted policies, and once finalized, reports will be sent the applicable agencies.

For Transfer or Renewal Policies That Have Added Crop Options (PF/SE)
Section 17(b)(4) of the Common Crop Insurance Policy, Basic Provisions states that an insured cannot increase their “elected or assigned prevented planting coverage level for any crop year if a cause of loss that could prevent planting (even though it is not known whether such cause will actually prevent planting) has occurred” during the coverage period and before the insured requests an increase.

Policies that added or increased the prevented planting coverage level after the cutoff date will have those options reverted to what they were last year. Our underwriting department will work with each of you to determine the best course of action relating to 2019 policies.
 
New Policies that are Not Eligible for Prevented Planting Coverage
Section 17(a)(1)(i) of the Common Crop Insurance Policy, Basic Provisions states in part that for new policies, prevented planting coverage exists for an insured cause of loss that occurs “On or after the sales closing date contained in the Special Provisions for the insured crop…” Though both drought and failure of irrigation water supply are insured causes of loss, they occurred prior to the sales closing date and therefore new policies will not have prevented planting coverage for these causes.

While these new policies will not have any PP coverage for FIS or drought, they will have PP coverage for excess moisture or any other cause of loss that occurs during the insurance period. Those that signed up prior to the cutoff date will keep the PF/SE options on their policy and be eligible for payments based on those options (for covered losses). Those that signed up after the cutoff date will have the PF/SE option removed from their 2018 policies. Again, our underwriting department will work with each of you to address 2019 policies.
RMA Informational Memorandum
PM-18-010: Livestock Capacity $20 Million Limitation

The Federal Crop Insurance Act limited the amount of funds available to support livestock
plans of insurance to $20 million per fiscal year. On February 9, 2018, the Bipartisan
Budget Act of 2018 was signed into law removing the $20 million fund limitation placed
on livestock plans of insurance offered by the Risk Management Agency (RMA).

The removal of the $20 million livestock capacity limit does not change any individual program limitations that may be contained within a particular policy in place for livestock such as number of head per year or limitations stated in the Whole Farm Revenue Protection policy regarding livestock.
RMA Informational Memorandum
PM-18-011: 2017 Crop Year ARH Sweet Cherry and Tart Cherry for Processing Annual Price

The ARH Sweet Cherry and Tart Cherry for Processing Pilot Crop Provisions establish an
Annual Price to determine revenue to count for certain appraised or unsold marketable
production. The Risk Management Agency (RMA) is issuing the following Annual Prices for crop year 2017:

  • Sweet Cherries, Fresh: $1.08/lb. (California)
  • Sweet Cherries, Fresh: $0.76/lb. (All Other States)
  • Sweet Cherries, Processing: $0.35/lb. (All States)
  • Tart Cherries, Processing: $0.18/lb (All States)
Updated Nursery Crop Insurance Standards Handbook
As a follow up to Nursery program updates, RMA has published an updated Nursery Crop Insurance Standards Handbook. This handbook is effective for the 2019 and succeeding crop years and is not retroactive to any 2019 or prior crop year determinations.
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To view previous Global Ag Reports, visit:  http://globalag.com/category/latest-news/