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USDA announces new loan repayment rate methods

Methods are for those commodities participating in the marketing assistance loan program


Gary Wall, Acting Executive Director of USDA's Farm Service Agency in Colorado, announced that USDA has started using 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 2008 farm bill provided Secretary of Agriculture Tom Vilsack the authority to establish a loan repayment rate that may be determined as the lesser of the loan rate plus interest and a rate based on: 1) average market prices during the previous 30 days, or 2) an alternative method the secretary may develop.

"The new method established by the secretary will provide more certainty for producers with marketing assistance loans or loan deficiency payments," said Wall. "It establishes a repayment rate based on the average market price during the preceding 30-day or 5-day period instead of the prior previous day's commodity price, and minimizes discrepancies in benefits across county and state lines."

Beginning April 15, for wheat, corn, grain sorghum, soybeans, barley, oats, canola, flaxseed and sunflower seed, USDA's Commodity Credit Corporation will determine and publish daily loan repayment rates based on the average market prices during the preceding 30 days. At the same time, CCC will begin announcing each day a repayment rate based on the preceding five days. The new method will replace the current one, which is based on the previous day's market rates. The effective alternative repayment rate will be the lower of either the 30-day average or the 5-day average.

The 30-day method will reflect a 30-day moving average of all terminal market prices for the crop, adjusted by the difference between the applicable national loan rate and the county loan rate. The 5-day method will reflect a 5-day moving average of applicable terminal market prices adjusted by applicable county differential and terminal adjustments.

Previously, the loan repayment rate for a county was based on the daily posted county price for the commodity, and this rate is adjusted by any premiums and discounts made to a non-recourse marketing assistance loan at the time the loan was made.

For pulse crops (lentils, dry peas, small chickpeas--and starting with the 2009-crop year, large chickpeas), crambe, mustard seed, rapeseed, safflower, sesame seed, wool, mohair and honey, CCC will determine and publish loan repayment rates once a week based on average market prices during the preceding 30 days. CCC will also announce an alternative repayment rate using current methodology each week. The effective repayment rate will be the lower of either the 30-day average or the alternative repayment rate. No alternative repayment rate will be available for honey.

Additionally, the 2008 farm bill removed the requirement for the secretary to establish loan and loan repayment rates based on feed grade for peas, and number 3 grade for lentils and small chickpeas. Also effective today, loan repayment rates for 2008-crop pulse marketing assistance loans will be based on U.S grade #1.

Colorado producers can check loan repayment rates at these FSA websites for:

--Wheat, feed grains, soybeans, and other oilseeds loan repayment rates: www.fsa.usda.gov/FSA/webapp?area=home&subject=prsu&topic=landing.

--Pulse crop loan repayment rates: www.fsa.usda.gov/Internet/FSA_File/pulses.xls.

--Wool and mohair loan repayment rates: www.fsa.usda.gov/Internet/FSA_File/mktpriclean1.xls; www.fsa.usda.gov/Internet/FSA_File/mktpriclean2.xls; www.fsa.usda.gov/Internet/FSA_File/mktpriclean3.xls.

--Honey loan repayment rates www.fsa.usda.gov/Internet/FSA_File/honey_arr.doc.

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