Final Agency Determination: FAD-166
Subject: Request dated August 17, 2012, requesting a Final Agency Determination for the 2011 and subsequent crop years regarding section 7(a) of the Cabbage Crop Insurance Provisions, published at 7 C.F.R. §457.171. This request is pursuant to 7 C.F.R. part 400, subpart X.
Section 7(a) of the Cabbage Crop Insurance Provisions states, in relevant part:
7. Insured Crop
(a) In accordance with the provisions of section 8 of the Basic Provisions, the crop insured will be all the cabbage types in the county for which a premium rate is provided by the actuarial documents, in which you have a share, and that are:
(4) Planted to be:
(i) Harvested and sold as fresh cabbage; or
(ii) Grown and sold as processing cabbage in accordance with the requirements of a processor contract executed on or before the acreage reporting date and not excluded from the processor contract at any time during the crop year; and
(5) Unless allowed by the Special Provisions:
(i) Not interplanted with another crop; and
(ii) Not sold by direct marketing.
The requestor states the Special Provisions for Alachua County, FL list the following as insurable cabbage types: Green (Fresh) and Red (Fresh). In contrast, the requestor states the Special Provisions for Monroe County, NY list the following as insurable cabbage types: Green (Fresh), Red (Fresh), Green (Proc.), and Red (Proc.). Moreover, a premium rate is provided for both fresh cabbage and processing cabbage in the actuarial documents for Monroe County, but only for fresh cabbage for Alachua County, confirming that processing cabbage is not an insured crop in Alachua County, FL.
The requestor also states, although the Risk Management Agency (RMA) clearly recognizes the distinction between fresh cabbage and processing cabbage in the Cabbage Crop Insurance Provisions, and RMA enforces a distinction as to the insurability of each, neither the Cabbage Crop Insurance Provisions nor the Special Provisions provide a definition for the terms “fresh cabbage” or “processing cabbage.” However, section 7(a)(4) of the Cabbage Crop Insurance Provisions includes the additional criterion for an “Insured Crop” as cabbage types that are planted to be harvested and sold as fresh cabbage.
The requestor interprets section 7(a) to mean that, in counties where only fresh cabbage is insurable, the insured’s intent to harvest and sell a crop as fresh cabbage is an essential element in determining whether it is insurable fresh cabbage or uninsurable processing cabbage, and that such intent must continuously exist from the moment of planting through the selling of the crop.
The requestor states other terms of the Cabbage Crop Insurance Provisions and the Special Provisions support this interpretation. For example, the Cabbage Crop Insurance Provisions provide cabbage for “processing as sauerkraut” as an express example of processing cabbage. Similarly, the Special Provisions for Alachua County provides that “[c]abbage to be marketed as coleslaw will be considered to be fresh-market cabbage and will be insurable as the fresh practice or type, as applicable.” Because there is no inherent distinction in the cabbage plant itself, it is the insured’s intent from planting through sale which drives any distinction.
Final Agency Determination
The Federal Crop Insurance Corporation (FCIC) agrees, in part, with the requestor. FCIC agrees with the requestor that processing cabbage is not insurable in Alachua County, FL because the actuarial documents do not provide a premium rate for processing cabbage. FCIC also agrees with the requestor that the Cabbage Crop Insurance Provisions and the Special Provisions do not provide definitions of “fresh cabbage” and “processing cabbage.”
FCIC disagrees with the requestor’s assumption that if the cabbage did not qualify as insurable fresh cabbage it is uninsurable processing cabbage. Cabbage that does not qualify as fresh cabbage does not automatically qualify as processing cabbage. Section 7(a)(4) states the insured crop must be planted to be grown and sold as processing cabbage in accordance with the requirements of a processor contract. Further, the processor contract must be executed on or before the acreage reporting date. Therefore, only cabbage grown in accordance with the requirements of a processor contract that was executed before the acreage reporting date meets the criteria for processing cabbage. Further, to be insurable as processing cabbage, the actuarial documents must provide a premium rate for processing cabbage.
In accordance with the 7 C.F.R. 400.765(c), this constitutes the final agency determination and is binding on all participants in the Federal crop insurance program for the 2011 crop year and any other crop year that contains the above quoted provisions.
Date of Issue: Sep 12, 2012