Commodity Loans And Loan Deficiency Payments
FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE
Agricultural Adjustment Act of 1938, 7 U.S.C. 1301-1393, Public Law 75-430; Commodity Credit Corporation Charter Act, as amended, 15 U.S.C. 714 et. seq.; Agricultural Act of 1949, as amended, 7 U.S.C. 1421, et. seq., Public Law 81- 439, as amended; Food Security Act of 1985, Public Law 99-198, as amended; Joint Resolution Making Appropriations for Government Agencies for Fiscal Year 1987, Public Laws 99-500 and 99-591; Omnibus Budget Reconciliation Act of 1987, Public Law 100-203; Food, Agriculture, Conservation, and Trade Act of 1990, Public Law 101-624; Omnibus Budget Reconciliation Act of 1990, Public Law 101- 508; Omnibus Budget Reconciliation Act of 1993, Public Law 103-66; National Wool Act Amendments of 1993, Public Law 103-130; Federal Agriculture Improvement and Reform Act of 1996, Public Law 104-127; Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act, Public Law 106-78; Agricultural Risk Protection Act of 2000, Public Law 106-224; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 2001, Public Law 106-387.
To improve and stabilize farm income, to assist in bringing about a better balance between supply and demand of the commodities, and to assist farmers in the orderly marketing of their crops.
Types of Assistance
Direct Payments with Unrestricted Use; Direct Loans.
Uses and Use Restrictions
Loans and loan deficiency payments (LDP's) give farmers a means of promoting more orderly marketing. Loans to producers may be "nonrecourse" which means that producers have the option of forfeiting the collateral to CCC at loan maturity in full satisfaction of the loan obligation; or "recourse" for low quality grain, or un-ginned seed cotton, which means that producers must repay the loans by maturity." If market prices are above the support level producers may repay their loans at the original loan principal plus interest and market their commodities. When market prices are low, most nonrecourse commodity loan repayments are less than the original loan principal plus interest. Eligible commodities for loans are feed grains, wheat, rice, peanuts, tobacco, upland cotton, extra-long staple cotton, sugar, soybeans, crambe, canola, flaxseed, mustard seed, rapeseed, safflower, and sunflower seed. LDP's are offered for feed grains, wheat, upland cotton, rice, soybeans, crambe, canola, flaxseed, mustard seed, rapeseed, safflower, and sunflower seed. If the loan repayment rates for these commodities are less than the established loan levels, producers may, for most commodities that are eligible for a nonrecourse loan, agree to forego such loan and elect to receive an LDP. The LDP payment rate equals the amount by which the loan rate exceeds the loan repayment rate in effect at the time the LDP application is approved, or the delivery date for commodities delivered directly to processor, buyer, or warehouse from the field. LDP's and any gain realized from repaying a loan at a level lower than the original loan level are subject to a $75,000 per "person" payment limitation, except for crops produced in 1999, for which the payment limitation is $150,000 per "person".
Owner, landlord, tenant, or sharecropper on an eligible farm that has produced the eligible commodities or, in the case of sugar, a processor or refiner who meets program requirements as announced by the Secretary.
Owner, landlord, tenant, or sharecropper on a farm that has produced the eligible commodities, meets program requirements as announced by the Secretary, and maintains beneficial interest in the commodity.
Record of farming operation must be on file in the FSA county office. This program is excluded from coverage under OMB Circular No. A-87.
Application and Award Process
None. This program is excluded from coverage under E.O. 12372 and OMB Circular No. A-102.
In the case of warehouse-stored commodities, producer or Cooperative Marketing Association presents warehouse receipts to the FSA county office (warehouse-stored peanut and tobacco loans are made through producer associations). In the case of farm-stored commodities (including sugar), producer/processor or Cooperative Marketing Association requests a loan at the FSA county office. This program is excluded from coverage under OMB Circular Nos. A-102 and A-110.
Applications are approved by the FSA upon determination that applicant and commodity are eligible.
Loans and LDP's are available for wheat, barley, oats, canola, flaxseed, crambe, and rapeseed and loans are available for quota peanuts pledged as collateral for farm-stored loans through March 31 of the year following the year in which the crop is normally harvested. Loans and LDP's are available for rice, corn, grain sorghum, cotton, soybeans, safflower, sunflower seed and mustard seed through May 31 of the year following the year in which the crop is normally harvested. Loans are available for sugar through September 30.
Range of Approval/Disapproval Time
Approximately 3 days.
Applications may be reviewed by county, State, or national offices.
Formula and Matching Requirements
Length and Time Phasing of Assistance
Assistance is generally available for 9 months or less, and is normally disbursed on a lump-sum basis.
Post Assistance Requirements
Necessary loan documents will be held at the county FSA office.
Periodic and required spot checks of farm-stored grain will be made by the county FSA office. Recipients are subject to audit by Office of Inspector General, USDA.
(Commodity Loans and Loan Deficiency Payments) FY 07 $9,493,383,881; FY 08 est not available; and FY 09 est not reported.
Range and Average of Financial Assistance
Direct payments (Purchases): Range and average not available. Loans: $162 to $1,006,400. Average: $22,959.
Regulations, Guidelines and Literature
Program regulations published in the Federal Register 7 CFR, Chapter XIV, Parts 1421, 1425, 1427, 1430, 1434, 1435, 1446, and 1464; announcements issued to news media and letters to producers; " FSA Commodity Fact Sheets, " no cost: The Price Support Program," BI-4-USDA, no cost; Farm Service Agency, Department of Agriculture, STOP 0532, 1400 Independence Avenue S.W., Washington, DC 20250-0532.
Regional or Local Office
Consult the local telephone directory for location of the FSA county office. If no listing, get in touch with appropriate FSA State office listed under the Farm Service Agency section of Appendix IV of the Catalog.
Department of Agriculture, Farm Service Agency, Price Support Division, STOP 0512, 1400 Independence Avenue S.W., Washington, DC 20250-0512. Telephone: (202) 720-7901.
Web Site Address
10.155, Marketing Agreements And Orders
Examples of Funded Projects
Criteria for Selecting Proposals