Final Agency Determination: FAD-011

FAD-011

Subject: Section 10(b)(3) of the Nursery Crop Insurance Provisions 7 C.F.R. 457.162

On October 23, 2001, the Risk Management Agency was asked for a final agency determination, applicable for the 2000 and following crop years, regarding the meaning of section 10(b)(3) of the Nursery Crop Insurance Provisions 7 C.F. R. 457.162.

Section 10(b)(3) of the Nursery Crop Insurance Provisions states that insurance is not provided against any loss caused by:

The inability to market the nursery plants as a direct result of quarantine, boycott, or refusal of a buyer to accept production.

The requestor "considers a stop sale order to be a boycott within the meaning of section 10(b)(3) and a nursery's inability to market said nursery crops as a direct result of the order to be an uninsurable cause of loss."

A stop sales order is usually based on State regulations and is issued by State officials to prohibit the sale of inferior quality nursery stock to marketers or consumers.

The Federal Crop Insurance Corporation disagrees with the requestor's interpretation. The term "boycott" is defined in Merriam-Webster's Collegiate Dictionary (Tenth Edition, 1999) as "to engage in a concerted refusal to have dealings with (as a person, store, or organization)." Based on the defined or accepted intent of these terms, a stop sales order cannot be considered a boycott.

If a stop sale order also prohibits the removal of plants from their growing location for the purpose of preventing the spread of insects or diseases, it is, of course, a quarantine. However, in accordance with section 10(b)(3) of the Nursery Crop Insurance Provisions, losses caused by such stop orders would not be covered.

Further, stop orders are not expressly included as causes of loss covered by the Nursery Crop Insurance Provisions and would not qualify as a "drought, flood, or other natural disaster," as required by section 508(a) of the Federal Crop Insurance Act. Therefore, coverage for such losses is prohibited.

The value of damaged nursery plants, including any salvage, should be included when calculating Field Market Value B.

In accordance with 7 C.F.R. 400.765(c), this final agency determination is binding on all participants in the Federal crop insurance program for the 2000 and succeeding crop years.

Date of Issue: December 27, 2001