7 U.S.C. § 8734: Repayment of loans

Summary

The Secretary must let farmers pay back marketing loans using the lowest of a few possible repayment rates. For most crops (not including certain kinds of cotton, rice, and some sunflower seeds) the options are: the loan rate plus interest; a rate based on the average market price over the last 30 days; or a rate the Secretary sets using other methods that aim to reduce loan forfeitures, federal stockpiles and storage costs, help U.S. crops compete in markets, and keep benefits consistent across states and counties. For upland cotton and long- and medium-grain rice, repayment is the lower of the loan rate plus interest or the prevailing world market price as the Secretary sets and adjusts. Extra long staple cotton must be repaid at the loan rate plus interest. The Secretary must make a formula and a way to announce world prices. Rice prices are adjusted for U.S. quality and location. Upland cotton prices are adjusted for U.S. quality and location, reduced by any premium for higher grades and by average marketing and transport costs, and could be further adjusted through July 31, 2013 for reasons like avoiding forfeitures or helping U.S. cotton compete. Confectionery and other non-oil sunflower seeds can be repaid at the lower of the loan rate plus interest or the oil sunflower seed repayment rate. The Secretary must pay cotton storage costs at the same method and base 2006 rates but reduced by 10% for the 2008–2011 crops and by 20% starting with the 2012 crop. If there is a severe disruption to marketing, transportation, or related systems, the Secretary may temporarily change repayment rates for a short time.

Title 7, §8734

Agriculture, Source: USLM XML via OLRC

(a)General rule

The Secretary shall permit the producers on a farm to repay a marketing assistance loan under section 8731 of this title for a loan commodity (other than upland cotton, long grain rice, medium grain rice, extra long staple cotton, and confectionery and each other kind of sunflower seed (other than oil sunflower seed)) at a rate that is the lesser of— (1)

(2)a rate (as determined by the Secretary) that—

(A)is calculated based on average market prices for the loan commodity during the preceding 30-day period; and

(B)will minimize discrepancies in marketing loan benefits across State boundaries and across county boundaries; or

(3)a rate that the Secretary may develop using alternative methods for calculating a repayment rate for a loan commodity that the Secretary determines will—

(A)minimize potential loan forfeitures;

(B)minimize the accumulation of stocks of the commodity by the Federal Government;

(C)minimize the cost incurred by the Federal Government in storing the commodity;

(D)allow the commodity produced in the United States to be marketed freely and competitively, both domestically and internationally; and

(E)minimize discrepancies in marketing loan benefits across State boundaries and across county boundaries.

(b)Repayment rates for upland cotton, long grain rice, and medium grain rice

The Secretary shall permit producers to repay a marketing assistance loan under section 8731 of this title for upland cotton, long grain rice, and medium grain rice at a rate that is the lesser of— (1)

(2)the prevailing world market price for the commodity, as determined and adjusted by the Secretary in accordance with this section.

(c)Repayment rates for extra long staple cotton

Repayment of a marketing assistance loan for extra long staple cotton shall be at the loan rate established for the commodity under section 8732 of this title, plus interest (determined in accordance with section 7283 of this title).

(d)Prevailing world market price

For purposes of this section and section 8737 of this title, the Secretary shall prescribe by regulation—

(1)a formula to determine the prevailing world market price for each of upland cotton, long grain rice, and medium grain rice; and

(2)a mechanism by which the Secretary shall announce periodically those prevailing world market prices.

(e)Adjustment of prevailing world market price for upland cotton, long grain rice, and medium grain rice

(1)Rice

The prevailing world market price for long grain rice and medium grain rice determined under subsection (d) shall be adjusted to United States quality and location.

(2)Cotton

The prevailing world market price for upland cotton determined under subsection (d)—

(A)shall be adjusted to United States quality and location, with the adjustment to include—

(i)a reduction equal to any United States Premium Factor for upland cotton of a quality higher than Middling (M) 13⁄32-inch; and

(ii)the average costs to market the commodity, including average transportation costs, as determined by the Secretary; and

(B)may be further adjusted, during the period beginning on the date of enactment of this Act and ending on July 31, 2013, if the Secretary determines the adjustment is necessary to—

(i)minimize potential loan forfeitures;

(ii)minimize the accumulation of stocks of upland cotton by the Federal Government;

(iii)ensure that upland cotton produced in the United States can be marketed freely and competitively, both domestically and internationally; and

(iv)ensure an appropriate transition between current-crop and forward-crop price quotations, except that the Secretary may use forward-crop price quotations prior to July 31 of a marketing year only if—

(I)there are insufficient current-crop price quotations; and

(II)the forward-crop price quotation is the lowest such quotation available.

(3)Guidelines for additional adjustments

In making adjustments under this subsection, the Secretary shall establish a mechanism for determining and announcing the adjustments in order to avoid undue disruption in the United States market.

(f)Repayment rates for confectionery and other kinds of sunflower seeds

The Secretary shall permit the producers on a farm to repay a marketing assistance loan under section 8731 of this title for confectionery and each other kind of sunflower seed (other than oil sunflower seed) at a rate that is the lesser of— (1)

(2)the repayment rate established for oil sunflower seed.

(g)Payment of cotton storage costs

(1)2008 through 2011 crop years

Effective for each of the 2008 through 2011 crop years, the Secretary shall provide cotton storage payments in the same manner, and at the same rates as the Secretary provided storage payments for the 2006 crop of cotton, except that the rates shall be reduced by 10 percent.

(2)Subsequent crop years

Beginning with the 2012 crop year, the Secretary shall provide cotton storage payments in the same manner, and at the same rates as the Secretary provided storage payments for the 2006 crop of cotton, except that the rates shall be reduced by 20 percent.

(h)Authority to temporarily adjust repayment rates

(1)Adjustment authority

In the event of a severe disruption to marketing, transportation, or related infrastructure, the Secretary may modify the repayment rate otherwise applicable under this section for marketing assistance loans under section 8731 of this title for a loan commodity.

(2)Duration

Any adjustment made under paragraph (1) in the repayment rate for marketing assistance loans for a loan commodity shall be in effect on a short-term and temporary basis, as determined by the Secretary.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The date of enactment of this Act, referred to in subsec. (e)(2)(B), is the date of enactment of Pub. L. 110–246, which was approved June 18, 2008. Codification Pub. L. 110–234 and Pub. L. 110–246 enacted identical sections. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246.

Statutory Notes and Related Subsidiaries

Effective Date

Enactment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as a note under section 8701 of this title.

§8734 Repayment of Loans