Final Agency Determination: FAD-194

Subject: Request dated August 20, 2013, to the Risk Management Agency (RMA) requesting a Final Agency Determination for the 2013 crop year regarding the interpretation of section 3(f) 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. § 400, subpart X.

Background:

Section 1 of the Basic Provisions states in relevant part:

Production report - A written record showing your annual production and used by us to determine your yield for insurance purposes in accordance with section 3. The report contains yield information for previous years, including planted acreage and production. This report must be supported by written verifiable records from a warehouseman or buyer of the insured crop, by measurement of farm-stored production, or by other records of production approved by us on an individual case basis in accordance with FCIC approved procedures.

Section 3(f) of the Basic Provisions states, in relevant part:

3. Insurance Guarantees, Coverage Levels, and Prices.

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(f) You must report all production of the crop (insured and uninsured) to us for the previous crop year by the earlier of the acreage reporting date or 45 days after the cancellation date, unless otherwise stated in the Special Provisions or as specified in section 18:

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It is the requestor’s position that when production from uninsurable acreage is commingled with production from insurable/insured acreage that the total acreage and total production (insurable/insured and uninsurable) is entered in the actual production history (APH) database used to calculate the actual yield for the APH crop year. It is also the requestor’s position that when insurable/insured and uninsurable production is commingled between more than one crop year, with no loss occurring in any year, that the total acreage and total production (insurable/insured and uninsurable) is entered in the APH database used to calculated the actual yield for each respective acreage and crop year(s). (7 CFR, Subtitle B, Subpart G, § 400.53, (a) (3)).

The requestor is requesting an interpretation of what production is to be entered in the APH database when insurable/insured and uninsurable production from two years is commingled.

FCIC agrees in part with the requestor. The regulations used to calculate the APH under the Basic Provisions are found at 7 C.F.R. part 400, subpart G. Section 400.53(a)(3) provides that production reports must be provided to the crop insurance agent no later than the production reporting date for the crop insured and further explains that production on uninsured or uninsurable acreage will not be used to determine the APH yield unless production from such acreage is commingled with production from insured or insurable acreage. Therefore, when production from uninsurable acreage is commingled with production from insurable/insured acreage in the same crop year that the total acreage and total production (insurable/insured and uninsurable) is entered in the APH database used to calculate the actual yield for the crop year.

However, section 3(f) of the Basic Provisions provides that the insured must report all production of the crop, insured and uninsured, for the previous crop year by the earlier of the acreage reporting date or 45 days after the cancellation date. While the definition of “production report” in the Basic Provisions authorizes multiple years of production and acreage be reported. The acreage and production reported is used to calculate the actual yield, which is defined in section 400.52(b) as the “yield per acre for a crop year calculated from the production records or claims for indemnity.” Therefore, the actual yields used to calculate the APH are based on the acreage and production from each single crop year. Production reports containing production commingled across multiple crop years are not acceptable and are not used in an APH database to calculate the actual yield.

Under Exhibit 1B of the Crop Insurance Handbook (18010 06 FCIC 2013), an assigned yield of not more than 75 percent of the prior year’s approved APH yield is used as the annual yield in the APH database when a carryover insured does not provide an acceptable production report or does not have acceptable supporting production records. For new insureds who have produced the insured crop and do not provide acceptable production reports or do not have acceptable supporting production records by the production reporting date, the approved APH yield is 65 percent of the applicable Transitional-Yield as provided in 7 C.F.R. § 400.55 (b)(1).

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 crop years the policy provisions are in effect. Any appeal of this decision must be in accordance with 7 C.F.R. § 400.768(g).

Date of Issue: October 24, 2013