(a) Stage 2 payments for eligible crops and units that were insured under a value loss crop plan but were not indemnified for a loss will be calculated according to this section.

(b) To calculate a Stage 2 payment for an eligible crop and unit that was insured under a value loss policy, FSA will:

(1) Determine the calculated loss by:

(i) Multiplying the dollar value before the disaster by the SDRP factor;

(ii) Subtracting the dollar value after the disaster from the result of paragraph (b)(1)(i) of this section and multiplying by the unharvested factor;

(iii) Subtracting the salvage value from the result of paragraph (b)(1)(ii) of this section; and

(iv) Multiplying the result of paragraph (b)(1)(iii) of this section by the producer's share;

(2) Determine the potential insured indemnity by:

(i) Multiplying the dollar value before the disaster by the producer's coverage level under their insurance plan, then subtracting the dollar value after the disaster, and then multiplying by the unharvested factor;

(ii) Subtracting salvage value from the result of paragraph (b)(2)(i) of this section; and

(iii) Multiplying the result of paragraph (b)(2)(ii) of this section by the producer's share;

(3) If the amount of the calculated loss minus the potential insured indemnity is greater than zero, determine the factored gross Stage 2 payment by:

(i) Subtracting the potential insured indemnity from the calculated loss, and adding the administrative fees and premiums for the crop and unit; and

(ii) Multiplying the result of paragraph (b)(3)(i) of this section by 35 percent to stay within available funding; and

(4) If the amount of the calculated loss minus the potential insured indemnity is equal to or less than zero, determine that the payment amount is zero.

(c) If an applicant designates shares for SBIs on FSA-504, the payment amounts for the primary policy holder and SBIs will be multiplied by the applicable share.