Final Agency Determination: FAD-014

FAD-014

Subject: Definition of the term "marketable," as used in section 11(c)(1)(iii) of the Apple Crop Insurance Provisions (7 C.F.R. § 457.158).

In a letter dated May 20, 2002, the Risk Management Agency was asked to make a Final Agency Determination (FAD) on the meaning of the term "marketable," as it is used in section 11(c)(1)(iii) of the Apple Crop Insurance Provisions, which state that "production to count" includes "unharvested marketable production."

The term "marketable" is defined in section 1 of the Apple Crop Insurance Provisions as "Apple production that grades U.S. No. 1, 2, or Cider in accordance with the United States Standards for Grades of Apples."

Interpretation Submitted

The requestor interprets the definition of "marketable," as used in section 11(c)(1)(iii) of the Apple Crop Insurance Provisions, as follows:

Any and all of the appraised apple production that grades Cider or better must be included in production to count; and this would be true regardless of the available market for the damaged apples or economic feasibility of sorting out and selling the apples.

The requestor provides the following example: "If the apples in question appraised at 1,000 boxes per acre with 80 percent of the sampled apples grading U.S. No. 1, 2 or Cider, the production to count on the appraised acreage would be 800 boxes per acre."

The requestor believes that the above interpretation is consistent with RMA's interpretation of a similar provision in section 11(c)(2) of the Apple Crop Provisions regarding "All marketable harvested production from insurable acreage," as rendered in Final Agency Determination FAD-010 issued on November 8, 2001. Also, the requestor believes that the above interpretation is consistent with comments published in the Federal Register in conjunction with issuance of the Final Rule implementing the crop year 2001 Apple Crop Insurance Provisions. The requestor notes that the Federal Register comment states in relevant part:

Section 11(c)(1)(iii) is revised to read, "unharvested marketable production." This change provides clarification that quality standards for appraisals of unharvested production are based on the definition of "marketable."

The Federal Crop Insurance Corporation (FCIC) agrees with the requestor's interpretation of the term "marketable" in section 1 and the provisions of section 11(c)(1)(iii) of the Apple Crop Insurance Provisions that any apple production that grades "Cider or better" must be counted as production to count, regardless of whether a processor is willing to buy the apples. This interpretation is consistent with FCIC's FAD-010, regarding section 11(c)(2) of the Apple Crop Insurance Provisions.

In accordance with 7 C.F.R. § 400.765(c), this constitutes the Final Agency Determination and is binding on all participants in the Federal crop insurance program for the 2001 and succeeding crop years.

Date of Issue: August 2, 2002