Posted October 22, 2013
Fourteen senators have expressed concern over a cut to USDA’s Marketing Assistance Loan Program, according to an article by The Hill available here.
On September 30, the USDA decided to apply a 5.1 percent cut to marketing assistance loans made after October 1. The department also announced a delay in processing some loans by two weeks, due to the 16-day government shutdown. The announcement by USDA’s Farm Service Agency is available here.
In a letter to Secretary of Agriculture, Tom Vilsack, the senators wrote, “The decision to apply sequestration and delay loan processing just as harvest across much of the Sunbelt is gearing up is particularly damaging because it was made without warning.” They added, “Without predictable cashflow that Marketing Assistance Loans provide, producers will not be able to repay or extend their operating loans which will lead to additional interest charges if growers are unable to avoid defaulting on their financial obligations.”
Sen. Thad Cochran (R-MS) ranking member of the Senate Agriculture Committee, stated the decision by USDA could result in price reductions for peanut and cotton yields, according to an article by DTN The Progressive Farmer available here. The letter also asks for USDA to explain why it made this decision. Y’all Politics also reported on the story here.
Senators who sent the letter include: Sens. Thad Cochran (R-MS), Saxby Chambliss (R-GA), John Boozman (R-AR), Richard Burr (R-NC), John Cornyn (R-TX), Lindsey Graham (R-SC), Kay Hagan (D-NC), James Inhofe (R-OK), Johnny Isakson (R-GA), Mary Landrieu (D-LA), Mark Pryor (D-AR), Richard Shelby (R-AL), David Vitter (R-LA), and Roger Wicker (R-MS).
Marketing assistance loans are short-term nonrecourse loans to producers who use covered commodities as collateral. The loans are designed to provide producers with cash at harvest and allow them to market the commodities throughout the year. Producers may forfeit the collateral in full satisfaction of the loan.
For more information on marketing assistance loans and other commodity programs, please visit the National Agricultural Law Center’s website here.