(a) Stage 2 payments for eligible NAP-covered value loss crops and units without an approved NAP application for payment will be calculated according to this section.

(b) To calculate the Stage 2 payment, FSA will:

(1) Determine the calculated loss by:

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

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

(iii) Multiplying the result of paragraph (b)(1)(ii) of this section by the unharvested payment factor, if applicable, and subtracting the salvage value from the result; and

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

(2) Determine the potential NAP payment by:

(i) Multiplying the dollar value before the disaster by the coverage level, and subtracting the dollar value after the disaster from the result;

(ii) Multiplying the result of paragraph (b)(2)(i) of this section by the unharvested payment factor, if applicable, and subtracting the salvage value from the result;

(iii) Multiplying the result of paragraph (b)(2)(ii) of this section by the price election; and

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

(3) If the calculated loss in paragraph (b)(1) of this section minus the potential NAP payment in paragraph (b)(2) of this section is greater than zero, determine the factored gross Stage 2 payment by:

(i) Subtracting the potential NAP payment from the calculated payment specified in paragraph (c) of this section, and adding service fees and premiums; and

(ii) Multiplying the result of paragraph (b)(3)(i) of this section by the producer's share, and then multiplying by 35 percent to stay within available funding.

(4) If the calculated loss in paragraph (b)(1) of this section minus the potential NAP payment in paragraph (b)(2) of this section is equal to or less than zero, determine that the payment amount is zero.