§1308a Cost Reduction Options

Summary

The Agriculture Secretary must use certain cost-saving actions when they will lower the federal cost of a commodity program and will not hurt the income of small- and medium-sized producers, even if other laws say otherwise. When a program is announced, the Secretary must say which actions will be used at first and must say more may be added later. The Secretary can only change a producer’s contract later if the producer agrees. The options the Secretary can use include buying the commodity on the commercial market during a nonrecourse loan program (including the program under section 1445e) if that will be cheaper than taking it after loan defaults; letting a producer settle a loan for less than the full principal and interest to avoid default when low prices would cause defaults, if that cut still helps the government (for example by getting some interest or avoiding storage costs); and, before harvest, reopening a program so producers can bid to convert planted acres to diverted acres for payment in kind from Commodity Credit Corporation surplus stocks when supply or demand has changed. Those in-kind payments do not count toward the per-person payment limit in section 1308 but are capped at $20,000 per year per producer for any one commodity. These powers are in addition to other authorities the Secretary has.