§1346 Penalties

Summary

If a farmer grows more cotton than their farm allotment, they 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 extra amount is figured from the normal yield of the extra acreage. If that extra amount is later reduced under the rules in section 1345, the farmer gets back the difference. The person who must pay the penalty also owes interest at 6% per year from when the penalty is due until it is paid. Until the penalty is paid, all cotton from the farm is subject to the penalty and the United States has a lien on the whole crop. For the 1966 through 1970 upland cotton crops, a farm operator who gives up price support can plant up to their allotment plus any acreage given from a national export market reserve and sell that cotton for export without this penalty, but only if the farm had an allotment in 1965 and is run by the same operator or their heir. The reserve was 250,000 acres for 1966. For later years, the reserve size depends on the carryover at the end of the prior marketing year: at least 1,000,000 bales = 250,000 acres; at least 750,000 but less than 1,000,000 bales = 187,500 acres; at least 500,000 but less than 750,000 = 125,000 acres; at least 250,000 but less than 500,000 = 62,500 acres; less than 250,000 bales = none. The Secretary assigns reserve acreage based on applications and limits applications to what can be planted. Operators can cancel and return acreage for reassignment. Operators who forgo support cannot get support on other farms they control. Extra acreage will not count toward future allotments. Operators or buyers must provide a bond or pay an amount instead, to guarantee export without government subsidy; failure to do so or to follow rules makes the excess acreage subject to the penalty rules. Money collected goes to the Commodity Credit Corporation.