What is in this article?:
- USDA announcement it was reducing commodity loan rates and suspending loan processing creates consternation in ag circles.
- Group of senators ask Agriculture Secretary Tom Vilsack for clarification of the Ag Department's Sept. 30 announcement.
- Farmers face "unrecoverable losses" due to the sudden suspension of the loan-making process.
No budget savings
“The action will result in little if any budget savings to the government since loans are repaid fully with interest.”
Dodson noted that the announcement also lacked clarification of how loan redemptions would be calculated, further confusing the market and creating uncertainty. He said the fact the 2012 crop loans were not reduced by sequestration, which calls into question USDA’s selected use of any statutory flexibility. Earlier this year, USDA made the decision to reduce direct payments by a greater percentage than required in order to not claw back SURE and MILC payments.
Dodson said the NCC will continue to work with members of Congress and other commodity organizations to urge USDA to reconsider its decision and to resume loan processing as quickly as possible as peak harvest approaches and the adverse impacts worsen.
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The USDA announcement said the programs, which provide interim financing for agricultural commodities to be stored after harvest and sold throughout the year when unaffected by harvest-season pressure on prices, are subject to sequester reductions of 5.1 percent. With commodity loan programs operating on a crop year basis and Sept. 30 marking the end of the federal fiscal year, adjustments will occur for the 2013 crop year as follows:
• Loan-making for all commodities will be suspended on Oct. 1 and are targeted to resume mid-October.
• Loan repayment and loan servicing for all disbursed commodity loans will continue.
• Beginning in mid-October, the 2013 crop loans, and if applicable, loan deficiency payments (LDPs) will receive 5.1 percent reductions.
• Re-pledged 2012 crop sugar loans are not subject to sequester.
• 2013 crop loan rates are not affected.
Commodity loans issued by FSA, marketing associations and loan servicing agents are all subject to these reductions.
Copies of the senators’ letter are on the NCC’s website.