Final Agency Determination: FAD-026

FAD-026

Subject: Request dated October 7, 2003, requesting a Final Agency Determination for the 2004 crop year, regarding the interpretation of section 14(d)(1) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8.

Section 14(d)(1) of the Basic Provisions states:

14. Duties in the Event of Damage or Loss. Your Duties -

(d) You must:

(1) Provide a complete harvesting and marketing record of each insured crop by unit including separate records showing the same information for production from any acreage not insured. In addition, if you insure any acreage that may be subject to an indemnity reduction as specified in section 15(e)(2) (for example, you planted a second crop on acreage where a first insured crop had an insurable loss and you do not qualify for the double cropping exemption), you must provide separate records of production from such acreage for all insured crops planted on the acreage. For example, if you have an insurable loss on 10 acres of wheat and subsequently plant cotton on the same 10 acres, you must provide records of the wheat and cotton production on the 10 acres separate from any other wheat and cotton production that may be planted in the same unit. If you fail to provide such separate records, we will allocate the production of each crop to the acreage in proportion to our liability for the acreage or, if you fail to provide the records necessary to allow allocation, the reduction specified in section 15 will apply; and . . . .

The requestor interpreted section (14)(d)(1) to mean that insureds must maintain records on an acreage basis rather than on a unit basis and that production records on a unit basis are inadequate. The requestor provided an example of an insured that double cropped cotton on a 100-acre field that is part of a larger 700-acre unit on which the insured previously planted wheat. The requestor stated that the insured must provide wheat and cotton production records that are specific to the 100-acre field and that wheat production records on a unit basis are inadequate under section 14(d)(1).

The Federal Crop Insurance Corporation agrees with the interpretation provided. Producers are required to maintain separate producer records for all crops on any acreage subject to an indemnity reduction in accordance with section 15(e)(2). In addition, section 14(d)(1) states how production will be determined when the separate records are not maintained.

In accordance with 7 C.F.R. 400.765(c), this constitutes the Final Agency Determination and is binding for the 2004 crop year on all participants in the Federal crop insurance program.

Date of Issue: December 31, 2003