Final Agency Determination: FAD-81

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FAD-81

Subject: Request dated September 6, 2007, requesting a Final Agency Determination for the 2006 and succeeding crop years regarding the interpretation of section 11(b) of the Apple Crop Insurance Provisions, published at 7 C.F.R. 457.158. This request is pursuant to 7 CFR part 400, subpart X.

11. Duties in the Event of Damage or Loss.

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(b) You must notify us at least 15 days before any production from any unit will be sold by direct marketing. We will conduct an appraisal that will be used to determine your production to count for production that is sold by direct marketing. If damage occurs after this appraisal, we will conduct an additional appraisal. These appraisals, and any acceptable records provided by you, will be used to determine your production to count

The requestor provided an example to explain the context of the interpretation as follows:

An insured provides timely notice that it intends to sell apples by direct marketing, and the Approved Insurance Provider (AIP) appraises the apple production on multiple units. However, at the time of the appraisal, the insured cannot or does not identify the units or blocks from the direct-marketed apples that will be harvested. Subsequently, the insured provides sales records indicating the percentage of apples it sold by direct marketing but these records do not identify the unit on which the apples were produced. Accordingly, the AIP cannot determine the unit or the block that is the source of the production to be sold by direct marketing.

The requester interprets section 11(b) of the Apple Crop Insurance Provisions to require the AIP to determine the production to count for the entire unit, or all optional units, based upon the appraisal conducted by the AIP regardless of the percentage of apples sold by direct marketing as indicated in the insured’s sales records.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees the AIP may use the appraised production to count if the insured provides unacceptable harvesting and marketing records for direct-marketed production. The insured must comply with the harvesting and marketing provisions in section 14(d)(1) (Your Duties) of the Basic Provisions, which states an insured must, “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.”

The insured must also comply with the direct marketing provisions in section 11 of the Apple Crop Provisions, which states in relevant part:

11. Duties In the Event of Damage or Loss.

(b) You must notify us at least 15 days before any production from any unit will be sold by direct marketing. We will conduct an appraisal that will be used to determine your production to count for production that is sold by direct marketing. If damage occurs after this appraisal, we will conduct an additional appraisal. These appraisals, and any acceptable records provided by you, will be used to determine your production to count.

Taken together, section 14(d)(2) of the Basic Provisions and section 11(b) of the Apple Crop Provisions mean that records for direct marketing cannot be acceptable unless the records are maintained separately by unit. Further, such records must also meet the other requirements for “acceptable records” contained in the procedures.

In accordance with section 11(b) of the Apple Crop Provisions, if acceptable records are not provided, the AIP may use the appraisal as production to count to settle the claim or determine the claim in accordance with section 12 of the Basic Provisions, which states in relevant part:

12. Settlement of Claim.

(a) We will determine your loss on a unit basis. In the event you are unable to provide acceptable production records: (1) For any optional unit, we will combine all optional units for which such production records were not provided; or (2) For any basic unit, we will allocate any commingled production to such units in proportion to our liability on the harvested acreage for the units.

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 2006 and succeeding crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: November 21, 2007