Changes Coming in Marketing Assistance Loans

Improved method will minimize potential forfeitures.

Published on: Apr 13, 2009

USDA will begin using, what Secretary of Agriculture Tom Vilsack calls, an improved and more stable system for determining non-recourse marketing assistance loan repayment rates and loan deficiency payment rates for wheat, feed grains, pulse crops, oilseeds, wool, mohair and honey.

"The new method will moderate fluctuations of the loan repayment rate," said Vilsack. "In keeping with President Obama's commitment to American agriculture, this decision reduces the effects daily market volatilities have on loan repayment rates and provides more certainty for producers who have taken advantage of marketing assistance loans or loan deficiency payments."

For wheat, corn, grain sorghum, soybeans, barley, oats, canola, flaxseed and sunflower seed, starting April 15, USDA's Commodity Credit Corporation will publish daily loan repayment rates based on the average market prices during the preceding 30 days. At the same time, CCC will announce a repayment rate based on the preceding five days. The effective repayment rate will be the lower of the two numbers. The current method is based on the previous day's market rates.

After April 15, CCC will determine and publish loan repayment rates once a week for pulse crops such as lentils, dry peas, small chickpeas based on average market prices during the preceding 30 days. This method will also be used beginning with the 2009 crop-year of large chickpeas, and crambe, mustard seed, rapeseed, safflower, sesame seed, wool, mohair and honey. A repayment rate using current methodology each week will be announced by CCC. The effective repayment rate will be the lower of the two numbers with the exception of honey, which has no alternative repayment rate.