Final Agency Determination: FAD-114

FAD-114

Subject: Request dated March 5, 2010, requesting a Final Agency Determination for the 2009 crop year regarding the interpretation of section 15(g)(3)(i) and 17(f)(5)(ii) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8. This request is pursuant to 7 C.F.R. part 400, subpart X.

Section 15 of the Basic Provisions states, in relevant part:

15. Production Included in Determining an Indemnity and Payment Reductions.
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(g) The reduction in the amount of indemnity or prevented planting payment and premium specified in sections 15(e) and 15(f), as applicable, will apply:
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(3) For prevented planting only:

(i) If a volunteer crop or cover crop is hayed or grazed from the same acreage, after the late planting period (or after the final planting date if a late planting period is not applicable) for the first insured crop in the same crop year, or is otherwise harvested anytime after the late planting period (or after the final planting date if a late planting period is not applicable); or

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Section 17 of the Basic Provisions states, as here pertinent:

17. Prevented Planting.
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(f) Regardless of the number of eligible acres determined in section 17(e), prevented planting coverage will not be provided for any acreage:
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(5) On which the insured crop is prevented from being planted, if:
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(ii) Any volunteer or cover crop is hayed, grazed or otherwise harvested within or prior to the late planting period or on or prior to the final planting date if no late planting period is applicable;

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The requestor asks that this Final Agency Determination (FAD) be made applicable to the Revenue Assurance (RA) policies.

Interpretation Submitted

The requestor states the following as an interpretation of sections 15(g)(3)(i) and 17(f)(5)(ii):

a. That a volunteer crop for purpose of the regulations cited is a cultivated plant, i.e., a crop plant that can be grown and harvested extensively for profit or subsistence, which grows without having been intentionally sown or planted, but grows from an unintentionally included seed; a seed that is shed or dropped by a previous crop; and that it does not include weeds, like foxtail.

b. That the only activity related to a volunteer or cover crop that will require a reduction in the amount of the indemnity or prevented planting payment is if the volunteer or cover crop is hayed or grazed.

c. That for purposes of the regulations cited, grazing means allowing farm animals to eat vegetation on the affected acreage and does not apply to any use by wild animals.

d. That for purposes of the regulations cited, haying means cutting or otherwise harvesting a volunteer or cover crop for use as animal feed.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees in part with the requestor’s interpretation as follows:

a. “Volunteer crop” is not defined in the Basic Provisions. Therefore, the term must be given the common usage meaning. FCIC agrees that for the purpose of sections 15(g)(3)(i) and 17(f)(5)(ii), a volunteer crop is a crop or plant that was either planted in a previous crop year on the acreage or planted on other acreage and the seed migrated but it was not intentionally sown or planted on the acreage in the current crop year. Further, a volunteer crop does not include plants that would be considered weeds. However, there is no restriction that the plant be grown extensively for profit or subsistence. The question is whether the producer receives a benefit from it by either haying or grazing the crop. If the acreage in question has 100 percent weeds growing on it with NO volunteer crop plants, there is no reduction in the prevented planting payment when the acreage is hayed or grazed. However, if there are ANY volunteer crop plants in the stand and the policyholder bales, stores, or grazes it, the 65 percent reduction would apply.

b. FCIC does not agree the only activity related to a volunteer or cover crop that will require a reduction in the amount of the indemnity or prevented planting payment is if the volunteer or cover crop is hayed or grazed. The provision specifically refers to “otherwise harvested,” which can include something other than haying or grazing.

c. FCIC agrees grazing means allowing farm animals to eat vegetation on the affected acreage. Wild animals eating the vegetation on the acreage would not be considered grazing for the purposes of sections 15(g)(3)(i) and 17(f)(5)(ii).

d. FCIC does not agree haying means cutting or otherwise harvesting a volunteer or cover crop for use as animal feed. Haying means cutting or otherwise harvesting a volunteer or cover crop that is put up in any manner (e.g., baled) or put into storage. The use of the crop is not limited to animal feed.

Even though 7 C.F.R. part 400, subpart X is only applicable to provisions of the Federal Crop Insurance Act and the regulations promulgated thereunder, and the CRC and RA policies have not yet been codified in the Code of Federal Regulations, to the extent those provisions are identical or nearly identical, this Final Agency Determination applies accordingly to assure consistent, uniform, and equitable treatment to all policyholders insured under the same policy provisions.

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 2009 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: Apr 22, 2010