Final Agency Determination: FAD-84

FAD-84

Subject: By request dated December 6, 2007, the Risk Management Agency was asked for a Final Agency Determination for the 2007 and succeeding crop years, regarding the interpretation of section 9(a) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8, and a Special Provisions statement regarding peanuts planted into existing vegetation. This request is pursuant to 7 C.F.R. part 400 subpart X.

Section 9(a) of the Basic Provisions as here pertinent states:

9. Insurable Acreage

(a) Acreage planted to the insured crop in which you have a share is insurable except acreage:

(1) That has not been planted and harvested or insured (including insured acreage that was prevented from being planted) in at least one of the three previous crop years unless you can show that:
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(ii) The Crop Provisions or a written agreement specifically allow insurance for such acreage; or
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A statement on the Special Provisions for peanuts in Georgia states:

A peanut crop which is properly planted, using a machine designed for such purpose, into existing vegetation, i.e. grass or legumes, small grains, or other cover crops recommended by the Cooperative Extension Service, will be insurable provided that prior to emergence of the peanut crop, the existing vegetation is treated with a herbicide which is labeled and recommended for the purpose of killing the existing vegetation.

The submitter interprets the provisions to mean prevented planting is allowed on pasture land if the grass was destroyed prior to the planting period. For example, the pasture has not been planted in a row crop for several years but it was destroyed by chemical and plow five to six months in advance of normal planting of peanuts. The requestor asked if this acreage is eligible for prevented planting since it was a prior pasture.

The Federal Crop Insurance Corporation (FCIC) does not agree with the proposed interpretation. Section 9(a) of the Basic Provisions states acreage is insurable if it has been planted and harvested or insured in one of the three previous years or if one of the listed exceptions is applicable (e.g. a written agreement specifically allows insurance). Insurability of the acreage has to do with the risks associated with the land.

The Special Provisions statement modifies section 8 of the Basic Provisions and section 8 of the Peanut Crop Provisions, which involve the insurability of the crop. These provisions generally involve the farming practices used to produce the crop.

Simply because the “crop” meets the insurability requirements of the Basic Provisions and Crop Provisions does not mean the “acreage” has met insurability requirements. For the acreage on which the crop is grown to be insurable, it must meet the conditions in section 9 of the Basic Provisions and section 9 of the Peanut Crop Provisions. Further, unless the acreage meets these insurability requirements, it is not eligible for a prevented planting payment.

While it is possible for a Special Provisions statement to allow insurance for acreage not planted and harvested in one of the three previous crop years, the Special Provisions statement in question does not allow for such. Therefore, in the example provided, pasture that was destroyed by chemical and plow five to six months in advance of normal planting of peanuts is not eligible for a prevented planting payment in 2007 unless it was planted and harvested or insured in the 2004, 2005 or 2006 crop year or unless one of the exceptions specified in the policy applies.

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 2007 and succeeding crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: January 31, 2008