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Noninsured Crop Disaster Assistance Program (NAP)
Case Study 1: Berry Farmer Jill
October 17th: Berry Farmer Jill has operated a 10-acre U-Pick
strawberry farm as its sole proprietor for the last three years. Jill
typically has five acres idle. In past years, some area strawberry
operations have sustained severe economic damages due to devastating
late-spring freezes. Although Jill was lucky in that she wasn't
affected by the freezes, she does not want to face the same economic
set backs endured by her peers. Consequently, Jill explores options
for managing her crop production risk. She first contacts a local crop
insurance provider, but finds coverage is limited to hail damage, and
that multi-peril crop insurance is not available for strawberries
within her county. The crop insurance agent refers her to the local
Farm Service Agency (FSA) office to inquire about disaster protection
for noninsurable crops.
October 31st: At FSA, Jill speaks to George, Program
Technician, and discovers that FSA has a program called the Noninsured
Crop Disaster Assistance Program; commonly referred to as "NAP."
George explains that NAP is not considered "insurance," but rather
disaster assistance "coverage" for eligible crops with losses greater
than 50% caused by weather or natural disaster events. NAP benefits
are paid on losses greater than 50% and at a rate of 55% of a
statewide-established price. Jill discovers that different crops have
different requirements. For strawberries, Jill must apply for NAP
coverage in Minnesota by an established application deadline of
November 20th, for coverage that begins December 20th and extends
through September 20th of the following calendar year; a nonrefundable
fee of $100 per crop is required at the time of application. Believing
that it is a reasonable investment, Jill immediately applies for NAP
coverage on strawberries, pays $100 and receives a copy for her
application.
George also informs Jill that eligible NAP losses are based on an
approved yield for each producer, calculated by FSA using the
producer's actual production history, commonly referred to as "APH."
Since Jill has been producing the crop for more than two years, she is
considered an established producer. In order to maximize her coverage
level, Jill needs to provide acceptable actual production records for
all previous crop years, but not more than ten years, to FSA by the
crop's application deadline of November 20th. George indicates that if
she misses the deadline, or cannot provide acceptable production
records for the years in which she produced the crop, a reduced yield
may result. Producers without acceptable production records receive a
percentage of an established state or county average yield, commonly
known as a "T-yield," which is 5900 pounds per acre for strawberries.
Jill leaves the FSA office and returns with her production records for
the last three years, including production summaries for each year.
George date-stamps all the records, makes photocopies, returns the
date-stamped originals to Jill and retains the copies for review.
George indicates that FSA will review the records to determine whether
they are acceptable and notify Jill of the result. Acceptable records
need to be considered "verifiable" (through an independent source) or
at least "reliable" (showing an accurate accounting of production).
Jill's production records include: a summary statement for three years
prior indicating a total of 34,000 pounds; contemporaneous pick
records, ledgers of income and register tapes, along with a summary
statement for the next year indicating a total of 48,000 pounds; and
dated production receipts from a wholesale buyer, invoices from custom
harvesters, detailed daily pick records with corresponding sales
receipts, and a summary statement for the most recent year indicating
a total of 43,500 pounds. All records are based on 5 acres of
fruit-bearing plants per year.
FSA determines: the production record from three years prior is not
acceptable because it is neither "verifiable" nor "reliable," as it is
merely a summary without specific production information; the next
year's production records are acceptable as "reliable," as specific
production information is similar to neighboring farms; and, the most
recent year's production records are acceptable as "verifiable" and
"reliable," because the records can be verified through independent
sources. Consequently, FSA calculates a preliminary yield for Jill of
7230 pounds per acre. Because the first year's records were not
acceptable, FSA only uses Jill's last two years of actual production
history. However, because APH base period must have at least four
years to calculate a yield, 90% of the 5900 pound T-yield (or 5310
pounds/acre) is used for the first two years of Jill's APH.
FSA notifies Jill of the yield and she signs a form (CCC-452) in
agreement to the calculated yield for NAP. With a yield of 7230 pounds
per acre, Jill now knows that she will be compensated if she produces
less than 18075 pounds on her five, fruit-bearing acres of
strawberries. If she is totally wiped out, she will receive
approximately $7277 in disaster assistance, based on 55% of the
statewide-established average price of $0.7320 per pound for
strawberries.
In addition, George informs Jill that timely acreage reporting and
notice of loss are required to be eligible for NAP benefits. NAP crop
acreage must be reported to FSA 15 days prior to harvest, but no later
than July 15th. Since strawberry harvest usually begins in early June,
Jill will need to report her crop in May. Notice of loss is required
whenever a crop sustains eligible damage in order to receive NAP
payments for the loss. Specifically, notice of loss must be filed in
writing (on Form CCC-576) with FSA within 15 days after crop loss or
damage is apparent to the producer. Jill makes note of these
requirements for future reference.
Jill is also made aware that, because her crop is hand-harvested, she
is required to request a post-harvest appraisal to account for
production left in the field. She must request the appraisal within 15
days of the end of harvest; NAP benefits may be denied if she fails to
do so.
May 21th: A hard freeze hits the area in which Jill farms. Her
strawberries were growing well and she fears that they are adversely
affected by the freeze. Jill calls the FSA office two days later to
notify them of the weather event and damage to her crop. George
informs Jill that she needs to come in and file a notice of loss. Jill
is quite busy with farming activities, so she doesn't know when she
will make it into the office and wants to simply file over the phone.
George reminds Jill that the producer is required to file the notice
of loss in writing and sign the CCC-576 within 15 day after the damage
is apparent. Because she notices crop damage already, she plans to
visit the office and complete the CCC-576 on May 25th.
May 25th: Jill completes and signs the CCC-576, on which she
describes the loss, how the acreage had been prepared, the current
status of the crop and what she plans to do with the acreage. Jill
hopes the crop will not be severely damaged and intends to proceed
with harvest; however, she notes on the CCC-576 that she may cease
harvest if production is poor. In addition to her notice of loss, Jill
files her acreage report, indicating she has 5 acres of fruit-bearing
strawberry plants for this crop year. Because she typically begins
harvest around June 10th, the acreage report is considered timely
filed. George indicates that FSA will contact a Loss Adjustment
Contractor (LAC) to visit her field within 5 calendar days and assess
the damage, conducting an appraisal if necessary. The LAC will contact
Jill directly to arrange a time to inspect the acreage.
May 28th: FSA reviews Jill's CCC-576 (notice of loss) to
determine the cause of loss is consistent with the claimed weather
event, and contacts a LAC to conduct a crop inspection. The LAC
contacts Jill and arranges the earliest possible time to visit on June
3rd.
June 3rd: Debbie, the LAC, begins the inspection by measuring
the acreage. The 5 acres reported is accurate. The LAC then discusses
the operation with Jill and determines that she will be harvesting the
crop, but perhaps not entirely. The LAC further understands that Jill
keeps production records that are considered acceptable to FSA.
Consequently, they agree to conduct an appraisal immediately upon
cessation of harvest to account for any remaining production, as
Jill's production records will be sufficient for harvested production.
However, the LAC thoroughly documents the crop damage for future
reference, in particular that the whole acreage was equally affected
by the freeze and determines a general extent of loss.
June 12th: After just a few days of harvesting, Jill's
customers do not want to continue as the remaining fruit is not
marketable. Jill contacts the LAC to indicate that harvest has ceased
and an appraisal can now be conducted. They arrange a field visit for
June 15th.
June 15th: The LAC appraises the remaining production on the 5
acres at 500 pounds, total. No additional production or harvest is
expected, as the freeze caused severe damage to the plants. The LAC
indicates that she needs to account for any harvested production as
well. Jill indicates that it will take her a couple days to compile
the records; the LAC instructs her to submit the records to the FSA
office where she will calculate the actual production and meet with
Jill to finalize the claim thereafter.
June 20th: Jill submits her production records to FSA. The
records include a production summary and dated production receipts
from a wholesale buyer; harvested production totals 2500 pounds. The
production evidence is considered acceptable to FSA. The LAC is
notified that Jill's production records have been submitted and the
claim can be completed.
June 21st: The LAC meets with Jill to go over the total
production to count and finalize the claim on the Appraisal/Production
Report, Form CCC-576-1. The total production to count is 3000 pounds
for the entire 5 acres, including harvested and appraised production.
Jill agrees to the determined amounts and signs the CCC-576-1. Based
on Jill's approved yield of 7230 pounds per acre, for a total of 36150
pounds expected production, Jill's strawberries have sustained a 91.7%
loss. This is a qualifying loss for NAP benefits, as it is a loss
greater than 50% of expected production.
June 27th: With the CCC-576-1 finalized, and no additional
production to count, FSA completes the CCC-576 (entering the
determined production) and Jill signs the form in application for
payment. The final date that Jill could have signed the CCC-576 would
be the next crop year's application date of November 20th. If the
CCC-576 is not signed by that deadline, the producer is ineligible for
NAP benefits.
June 30th: FSA conducts a final review of Jill's claim and
application for NAP payments. FSA notes that Jill is in compliance
with the wetland and highly erodible land provisions (Form AD-1026 has
been certified), she is considered a "Person" for payment limitation
purposes (Form CCC-502 has been submitted), she does not exceed the
gross revenue limitation of $2 million per year (Form CCC-441 has been
completed) and she has not been disqualified by the Federal Crop
Insurance Corporation (FCIC) from participating in crop insurance
programs. In addition, FSA has on file a timely filed CCC-576 (notice
of loss), FSA-578 (acreage report) and a finalized CCC-576-1
(appraisal report). Consequently, FSA approves Jill's application for
NAP benefits and processes the payment.
Jill's NAP payment totals $5995; based on 15075 pounds loss,
multiplied by 0.7230 per pound, times 55%. Because Jill harvested the
crop to the extent possible, she received the maximum benefits. Had
she chose not to harvest, the payment would have been factored down,
using .45 as the unharvested factor. Harvesting all the crop possible
is always beneficial when determining payments. Although the NAP
benefit paid to Jill does not replace all her lost income, it provides
protection from catastrophic losses and mitigates the risk in growing
specialty crops; and for $100, it is a sound risk management tool.
September 15th: Jill receives a notice from FSA indicating that
she had NAP coverage on strawberries for the current year and that
this coverage will remain continuous if she submits her application by
November 20th for the next crop year. Jill visits FSA the next day to
apply for NAP coverage again.
The U.S. Department of Agriculture (USDA) prohibits discrimination in
all its programs and activities on the basis of race, color, national
origin, gender, religion, age, disability, political beliefs, sexual
orientation, and marital or family status. (Not all prohibited bases
apply to all programs.) USDA is an equal opportunity provider and
employer.
Home | RMA Pilot Programs | Understanding and Determining APH | Record Keeping: Essential for Risk Management | Notice of Loss: Reporting Noninsured Crop Loss to
FSA | Case Study 1: Berry Farmer Jill | Case Study 2: Veggie Joe
   
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