(a) Stage 2 payments for yield-based uninsured eligible crops will be calculated according to this section.

(b) For the purpose of calculating payments under this section:

(1) The SDRP liability is equal to the eligible acres multiplied by the average market price, times the SDRP factor, times:

(i) 65 percent of the county expected yield for crops planted on native sod; or

(ii) 100 percent of the county expected yield for all other crops;

(2) Eligible acres are the eligible acres reported on the FSA-578; and

(3) The quality loss percentage is the percentage determined according to § 760.2209(b)and (c).

(c) A producer will provide SDRP producer-certified production on the FSA-504, and FSA may adjust the amount of production if necessary to reflect the amount substantiated by the producer's documentation.

(d) Stage factors will be used to calculate payments for crops produced with significant and variable production and harvesting expenses that are not incurred because the crop acreage was prevented planted, or planted but not harvested, as determined by FSA. The use of stage factors is based on whether the crop acreage was unharvested or prevented planted, not whether a participant actually incurs or does not incur expenses. Stage factors are generally applicable to all similarly situated participants and are not established in response to individual participants. A crop that is intended for mechanical harvest, but subsequently grazed and not mechanically harvested, will have an unharvested payment factor applied.

(e) To calculate a Stage 2 payment for an eligible uninsured yield-based crop, FSA will:

(1) Determine the calculated loss by:

(i) Converting the quality loss percentage to a decimal and subtracting the amount from 1;

(ii) Multiplying the production specified in paragraph (c) of this section by the result of paragraph (e)(1)(i) of this section, and then multiplying by the average market price; and

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

(iv) Subtracting the result of paragraph (e)(1)(iii) of this section from the SDRP liability, and then multiplying by the producer's share;

(2) If the calculated loss in paragraph (e)(1) of this section is greater than zero, determine the factored gross Stage 2 payment by multiplying the result of paragraph (e)(1) of this section by 35 percent to stay within available funding; and

(3) If the calculated loss in paragraph (e)(1) of this section is equal to or less than zero, determine that the payment amount is zero.