Final Agency Determination: FAD-142

FAD-142

Subject: Request dated March 24, 2011, requesting a Final Agency Determination for the 2010 crop year regarding the interpretation of section 17(f)(5) 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.

Background:

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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Interpretation Submitted

The requestor interprets section 17(f)(5) of the Basic Provisions to mean that a prevented planting payment is properly payable when the policyholder can demonstrate the cover crop was destroyed. While normally, this would involve chemical kill, the requestor also interprets the provision as allowing an indemnity for prevented planting where the cover crop, while technically alive, was effectively rendered worthless. In essence, whether or not the policyholder harvested the cover crop is irrelevant if the cover crop was effectively destroyed at an earlier time.

For example, a policyholder uses a crop rotation common to livestock producers in the area - wheat, clover, soybeans. In the fall of 2008, the policyholder seeded winter wheat for harvest in 2009. The wheat was not insured. In late winter/early spring of 2009, the policyholder seeded common red clover into the wheat. The wheat was harvested in June 2009. The policyholder cut a crop of stubble hay late summer 2009. The policyholder intended to follow the clover with soybeans and purchased chemicals to chemically kill the clover. Due to weather in the spring of 2010, the policyholder was prevented from planting the soybeans until it was too late to plant. The policyholder cut and baled the clover in late June 2010. Based on an analysis conducted on the clover, the clover has no nutritional value for the policyholder's livestock. The clover never recovered from the first cutting (possibly due to the late date of the first cutting). The late date of the first appears to have severed the head or bud.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) does not agree with the requestor's interpretation. Section 17(f)(5)(ii) states no prevented planting payment coverage is available for an insured crop if 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 for the insured crop. Therefore, it is the timing of the haying, grazing or otherwise harvesting the crop that determines whether prevented planting coverage is available. It does not matter whether the crop has any nutritional value.

This is consistent with FAD-036-R, which addresses the consequences of planting and utilizing a cover crop at various times. As stated in FAD-036-R, if a cover crop is hayed or grazed prior to the end of the late planting period (final planting date if no late planting period is applicable) for an insured crop that is prevented from being planted, no prevented planting coverage is available. If a cover crop is hayed or grazed after the applicable late planting period (final planting date if no late planting period is applicable) but prior to November 1 of the crop year, the prevented planting payment will be reduced by 65 percent.

Furthermore, in the example provided, FCIC does not agree the red clover would be considered a cover crop. Although the requestor does not specify a final planting date for soybeans in their example, it appears the red clover was planted more than twelve months prior to the final planting date for soybeans for the 2010 crop year. Paragraph 4K(2) of the 2008 Prevented Planting Loss Adjustment Standards Handbook (PP LASH) provides guidance for what is and what is not considered an acceptable cover crop for crop insurance purposes. If the clover was seeded more than twelve months prior to the 2010 final planting date for soybeans, the clover would be considered an established pasture or forage and would be subject to the provisions of section 17(f)(6) of the Basic Provisions. Section 17(f)(6) states prevented planting coverage is not provided for any acreage for which any pasture or other forage crop is in place on the acreage during the time that planting of the insured crop generally occurs in the area. Therefore, if the clover was seeded more than 12 months prior to the 2010 final planting date for soybeans, the policyholder would not be eligible for a prevented planting payment.

Further, even if the clover could be considered a cover crop, for the purposes of prevented planting, the issue is the timing of the harvest, not whether it had any nutritional value. Harvest of the cover crop during the planting period results in no prevented planting; and harvest after the planting period, but before November 1, results in a reduced prevented planting payment.

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 2010 crop year. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: May 13, 2011