Final Agency Determination: FAD-125

FAD-125

Subject: Request dated June 14, 2010, requesting a Final Agency Determination for the 2009 crop year regarding the interpretation of section 1 of the Northern Potato Crop Insurance Provisions, published at 7 C.F.R. § 457.142. This request is pursuant to 7 C.F.R. § 400, subpart X.

Background

Section 1 of the Northern Potato Crop Insurance Provisions published at 7 C.F.R. § 457.142 states, in relevant part:

1. Definitions

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Tuber rot - Any soft, mushy, or leaky condition of potato tissue (soft rot or wet breakdown as defined in the United States Standards for Grades of Potatoes), including, but not limited to, breakdown caused by Southern Bacterial Wilt, Ring Rot, or Late Blight.

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Sections 1 and 5 of the Northern Potato Crop Insurance Storage Coverage Endorsement, published at 7 C.F.R. § 457.146 states, as herein pertinent:

1. In return for payment of the required additional premium as contained in the actuarial documents, this endorsement is attached to and made part of your Northern Potato Crop Provisions subject to the terms and conditions described herein. In the event of a conflict between the Northern Potato Crop Provisions and this endorsement, this endorsement will control.

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5. In lieu of section 9(b)(1) of the Northern Potato Crop Provisions, the extended coverage provided by this endorsement will be applicable but only if:

(a) Insured potatoes are damaged within the insurance period by an insured cause other than freeze that later results in:

(1) Tuber rot as defined in the Northern Potato Crop Provisions, to the extent that 5.1 percent (by weight) or more of the insured production is affected;

(2) Internal defects to the extent that such defects are in excess of the amount allowed for the U.S. grade standard you elected for purposes of coverage under the Northern Potato Crop Insurance Quality Endorsement. Such defects must not be separable from undamaged production using methods used by the packers or processors to which you normally deliver your potato production. This coverage is applicable only to production covered under the Northern Potato Crop Insurance Quality Endorsement; or

(3) The potatoes damaged by an insurance cause of loss fail to meet any of the following standards or a less stringent standard for the same quality factors specified below, contained in the processor contract, if applicable, (this coverage is applicable only to production covered under the Northern Potato Processing Quality Endorsement):

(i) A specific gravity lower than 1.074;

(ii) A fry color of No. 3 or darker due to either sugar exceeding 10 percent or sugar ends exceeding 19 percent; or

(iii) An Agtron rating lower than 58.

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The Risk Management Agency (RMA) is requested to provide an interpretation of whether or not “tuber rot” as defined in the Northern Potato Crop Provisions published at 7 C.F.R. § 457.142 includes fusarium rot in respect to a claim under the Northern Potato Crop Insurance Storage Coverage Endorsement published at 7 C.F.R. § 457.146.

Interpretation Submitted

The requester interprets the foregoing policy provisions as such that fusarium rot is not within the scope of coverage provided under the Northern Potato Crop Storage Endorsement section 5(a)(1) because it does not fall within the definition of “tuber rot” as defined under the Northern Potato Crop Provisions section 1 as “any soft, mushy, or leaky condition of potato tissue…” The requester states that fusarium dry rot is an entirely different condition than tuber rot that infects potatoes through cuts and openings in the potato skin caused by bruising during harvest and transport. Fusarium dry rot is typically dry, crumbly, and brown in color. This is in marked contrast to tuber rot in which potatoes have a wet rot with soft, mushy, or leaky potato tissue. The requester believes that this interpretation is consistent with the consensus of potato industry reference materials that demonstrate that the characteristics of fusarium rot are completely different than tuber rot, and that decay caused by fusarium is dry, crumbly, brown, and uniquely different than tuber rot as defined in section 1 of the Northern Potato Crop Provision.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees in part with the interpretation submitted. The Northern Potato Crop Provisions definition of “tuber rot” references the Agricultural Marketing Service (AMS) definition of “Soft rot or wet breakdown.” The AMS inspection instruction manual for grading of potatoes advises the classification and tabulation of rots by their principal attribute, i.e., “soft rot” versus “dry rot.” However, proper identification of the causal agent may be necessary for those select soft rots that are specifically named in the standard, e.g., Late Blight, Ring Rot, etc.

Therefore, dry rots such as those caused by the Fusarium fungus are not within the scope of coverage provided under the Northern Potato Crop Provisions. Further, if the producer only has the Northern Potato Storage Coverage Endorsement, fusarium rot is not covered because only tuber rots are included. However, if the producer also elects the Northern Potato Quality Endorsement, fusarium rot may be covered. In some cases, the fusarium infected tubers may develop internal defects. Evidence of this damage appears once the potatoes are cut open. Therefore, fusarium rot may only be covered if the producer has both the Northern Potato Crop Provisions and the Northern Potato Quality Coverage Endorsement.

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

Date of Issue: Sep 2, 2010