§1346 Penalties

Summary

When cotton quotas are in effect, farmers who market more cotton than their farm allotment must pay a penalty equal to 50% of the parity price per pound for cotton on June 15 of the year the crop is grown. The penalty is figured on the normal yield of the acreage planted over the allotment. If that excess amount is later reduced, the difference in the penalty is returned or credited. Interest at 6% per year is added from the date the penalty is due until it is paid. Until the penalty is paid, all cotton from the farm that is sold is subject to the penalty and the United States has a lien on the whole crop. For 1966 through 1970 upland cotton, a farm operator who gives up price support may apply for extra acreage from a national export reserve and then plant up to the farm allotment plus the reserve acreage and export that crop without penalty. This option is only for farms that had 1965 allotments and are run by the same operator or that operator’s heir. The national export reserve was 250,000 acres for 1966 and, for later years, the amount depended on how much the cotton carryover changed (250,000; 187,500; 125,000; 62,500; or none). The Secretary assigns reserve acres by application, lets operators cancel and return acres for reassignment, and limits applications to acreage actually available on the farm. Operators using this option cannot get price support on cotton from other farms they control. Extra acreage won’t count in future allotments. The operator or buyers must post a bond or pay an amount to guarantee export without a government export subsidy and within the time required. If the bond or payment is not provided, or if too much acreage is planted, the extra acreage is treated as excess and penalized. Money collected goes to the Commodity Credit Corporation.