Commodity Loans and Loan Deficiency Payments

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.

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Agency - Department of Agriculture

Established in 1862, the Department of Agriculture serves all Americans through anti-hunger efforts, stewardship of nearly 200 million acres of national forest and rangelands, and through product safety and conservation efforts. The USDA opens markets for American farmers and ranchers and provides food for needy people around the world.

Office - None.

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.

Relevant Nonprofit Program Categories





Program Accomplishments

Not Applicable.

Uses and Use Restrictions

Commodity 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 non-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 produced and harvested wheat, corn, grain sorghum, oats, barley, rice, peanuts, upland cotton, extra-long staple cotton, soybeans, crambe, canola, flaxseed, mustard seed, rapeseed, safflower, sunflower seed, sesame seed, dry peas, lentils, small and large chickpeas, graded and ungraded wool, honey, and sugar.

LDP's are offered for produced and harvested wheat, corn, grain sorghum, oats, barley, upland cotton, rice, soybeans, crambe, canola, flaxseed, mustard seed, rapeseed, safflower, sunflower seed, sesame seed, peanuts, dry peas, lentils, small and large chickpeas, graded and ungraded wool, unshorn pelts, honey, hay, and silage.

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, or date sold or date beneficial interest is lost, as applicable.

The 2016 Consolidated Appropriations Act authorized producers the option of a commodity certificate exchange as a nonrecourse loan repayment mechanism.

Effective for crop years 2015 through 2018, in situations when the loan rate exceeds the exchange rate, producers may opt to purchase a commodity certificate from the local FSA office and immediately exchange that certificate for their outstanding loan collateral.

Eligibility Requirements

Applicant Eligibility

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.

Beneficiary Eligibility

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. State and County governments may be eligible for MAL's and LDP's when they have a share in produced and harvested eligible commodities on land they own, if the benefits or payments are used to support public schools.

Credentials/Documentation

The commodity must be produced and harvested by the producer, and the producer must meet program requirements as announced by the Secretary. Requirements include a record of the farming operation on file in the FSA county office and a complete acreage report to account for all cropland on the farm must be submitted for the applicable crop year. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.

Aplication and Award Process

Preapplication Coordination

Preapplication coordination is required.

Environmental impact information is not required for this program.

This program is excluded from coverage under E.O.

12372.

Application Procedures

This program is excluded from coverage under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. In the case of warehouse-stored commodities, producer or Cooperative Marketing Association presents warehouse receipts to the FSA county office (warehouse-stored peanut loans may be made through Designated Marketing Associations). In the case of farm-stored commodities (including sugar), producer/processor or Cooperative Marketing Association requests a loan at the FSA county office.

Award Procedures

Applications are approved by the FSA upon determination that applicant and commodity are eligible.

Deadlines

Jan 31, 2018: Deadline for crop year 2017 peanuts and wool. Deadline for the year following year in which crop is normally harvested if as follows: Mar 31 - MAL's and LDP's are available for wheat, barley, oats, canola, flaxseed, crambe, rapeseed, sesame seed, and honey; May 31 - MAL's and LDP's are available for rice, corn, grain sorghum, cotton, soybeans, safflower, sunflower seed, mustard seed, small and large chickpeas, lentils, dry peas , and cotton; and Sept. 30 - Loans are available for sugar.

Authorization

Agricultural Act of 2014, Public Law 113-79.

Range of Approval/Disapproval Time

Approximately 3 days but could take from 15 to 30 days.

Appeals

From 60 to 90 days. Applications may be reviewed by county, State, or national offices.

Renewals

Not Applicable.

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula. This program has no matching requirements. This program does not have MOE 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. Method of awarding/releasing assistance: lump sum.

Post Assistance Requirements

Reports

No reports are required.

Audits

In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements, non-Federal entities that expend financial assistance of $750,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Non-Federal entities that expend less than $750,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 2 CFR 200.503. Periodic and required spot checks of farm-stored grain will be made by the county FSA office. Recipients are subject to other audits by FSA and by the Office of Inspector General, USDA.

Records

Not applicable.

Financial Information

Account Identification

12-4336-0-3-351.

Obigations

(Direct Loans) FY 16 $6,560,230,313; FY 17 est $6,914,144,153; and FY 18 est $8,242,908,500. (Direct Payments with Unrestricted Use) FY 16 $212,967,255; FY 17 est $46,564,581; and FY 18 est $74,570,000 - Loan Deficiency Payments.

Range and Average of Financial Assistance

No Data Available.

Regulations, Guidelines, and Literature

Program regulations published in the Federal Register 7 CFR, Chapter XIV, Parts 1421, 1425, 1427, 1434, and 1435; announcements issued to news media and letters to producers; ' FSA Commodity Fact Sheets, ' no cost: The Price Support Program,' ; Farm Service Agency, Department of Agriculture, STOP 0506, 1400 Independence Avenue S.W., Washington, DC 20250-0506.

Information Contacts

Regional or Local Office

None. 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.

Headquarters Office

DeAnn Allen 1400 Independence Avenue, SW, Stop 0510, Washington, District of Columbia 20250-0510 Email: deann.allen@wdc.usda.gov Phone: (202) 720-9889

Criteria for Selecting Proposals

Not Applicable.


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