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Commodity Loans and Loan Deficiency Payments

Price Supports
Number: 10.051
Agency: Department of Agriculture
Office: Farm Service Agency

Program Information 

Program Number/Title (010):
10.051 Commodity Loans and Loan Deficiency Payments
Popular Name (020):
(Price Supports)
Federal Agency (030):
Farm Service Agency, Department of Agriculture
Authorization (040):
Food, Conservation, and Energy Act of 2008, Public Law 110-246.
Objectives (050):
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 (060):
DIRECT LOANS; DIRECT PAYMENTS WITH UNRESTRICTED USE
Uses and Use Restrictions (070):
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".
Eligibility Requirements (080)
Applicant Eligibility (081):
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 (082):
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.
Credentials/Documentation (083):
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. This program is excluded from coverage under OMB Circular No. A-87.
Application and Award Process (090)
Preapplication Coordination (091):
Preapplication coordination is not applicable. Environmental impact information is not required for this program. This program is excluded from coverage under E.O. 12372.
Application Procedures (092):
This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under OMB Circular No. A-110. 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.
Award Procedure (093):
Applications are approved by the FSA upon determination that applicant and commodity are eligible.
Deadlines (094):
Sep 30, 2009 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 (095):
From 15 to 30 days. Approximately 3 days.
Appeals (096):
From 60 to 90 days. Applications may be reviewed by county, State, or national offices.
Renewals (097):
Not Applicable.
Assistance Consideration (100)
Formula and Matching Requirements (101):
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 (102):
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 (110)
Audits (112):
In accordance with the provisions of OMB Circular No. A-133 (Revised, June 27, 2003), "Audits of States, Local Governments, and Non-Profit Organizations," nonfederal entities that expend financial assistance of $500,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. Nonfederal entities that expend less than $500,000 a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in Circular No. A-133. 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.
Records (113):
Not applicable.
Financial Information (120)
Obligations (122):
(Direct Loans) FY 08 $9,509,047,023; FY 09 est $8,604,655,000; FY 10 est $7,716,553,000. (Direct Payments with Unrestricted Use) FY 08 $6,035,694; FY 09 est $139,938,000; FY 10 est $64,179,000 - Loan Deficiency Payments.
Range and Average of Financial Assistance (123):
No Data Available.
Program Accomplishments (130):
Not Applicable.
Regulations, Guidelines, and Literature (140):
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.
Information Contacts (150)
Regional or Local Office (151) :
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 (152):
Raellen Erickson 1400 Independence Avenue, SW
Stop 0512, Wasshington, District of Columbia 20250-0512 Email: Raellen.Erickson@wdc.usda.gov Phone: 202-720-7901 Fax: 202-690-3307
Website Address (153):
http://www.fsa.usda.gov .
Related Programs (160):
Not Applicable.
Examples of Funded Projects (170):
Not Applicable.
Criteria for Selecting Proposals (180):
Not Applicable.