August, 2003

The Farm Security and Rural Investment Act of 2002 (2002 Act) provides, for the first time, marketing assistance loans and loan deficiency payment provisions for dry peas, lentils, and small chickpeas for the 2002-2007 crops. Marketing assistance loans provide interim financing on eligible production and facilitate the orderly marketing of loan eligible commodities throughout the year.

Nonrecourse Marketing Assistance Loans - To be eligible for marketing assistance loans, producers must:

1. Comply with conservation and wetland protection requirements; and

2. Report how they use all their farms' cropland acreage.

Direct and counter-cyclical payment agreements are not required for marketing assistance loan eligibility.

Marketing assistance loans provide eligible producers interim financing on their production. Instead of selling the crop immediately at harvest, producers may pledge their production as loan collateral, receiving loan proceeds equal to the loan rate times the quantity placed under loan. Marketing assistance loans mature at the end of the ninth month following the month in which the loan was received.

Under marketing loan provisions, producers may (under certain conditions) repay a 9-month nonrecourse price support loan at less than the loan rate plus accrued interest and other charges whenever the Commodity Credit Corporation (CCC) estimates that the local market price is lower. Producers are also eligible for a loan deficiency payment (LDP) in lieu of obtaining a loan.

1/ #1 grade loan rates for 2002 crop. Feed grade dry peas, #3 grade lentils, and #3 grade small chickpeas loan rates for 2003-2007 crops.

Two dry pea regional markets were identified for the 2003 crop. West region includes all counties in the Palouse (Idaho, Oregon, and Washington) and other states west of the Rocky Mountains (Arizona, California, Nevada, New Mexico, and Utah). East region includes all counties in Montana and North Dakota, plus all counties in all other states not in the West Region. For the 2003 crop, the West dry pea loan rate is $6.68 per cwt. The East loan rate is $5.89 per cwt.

Producers must:

A producer retains beneficial interest in the commodity if all of the following remain with the producer:

Control of the commodity - The producer retains the ability to make all decisions affecting the commodity, including movement, sale, and the request for a loan or LDP;

Risk of loss in the commodity - The producer is responsible for loss or damage to the commodity. If the commodity is insured, any indemnity must be payable to the producer; and

Title to the commodity - The producer has not sold or delivered the commodity or warehouse receipt to the buyer. Title may be considered to be transferred before the producer receives payment for the commodity.

Once beneficial interest in the commodity is lost, the commodity loses loan and LDP eligibility and remains ineligible even if the producer later regains beneficial interest. For further information, see the Farm Program fact sheet on "Beneficial Interest Requirements For Loans and LDPs, Excluding Sugar and Tobacco," or contact a local FSA county office.

Loans mature on the last day of the ninth calendar month following the month in which the loan is approved.

Producers may settle their outstanding nonrecourse loan:

The loan repayment rate is the lower of (1) the applicable county loan rate plus accrued interest and other charges (per cwt) or (2) the marketing loan repayment rate for the respective commodity.

Pulse crop loan repayment rates are established on a weekly basis and announced each Friday at 7:00 a.m. Eastern time and are available at each FSA county office. The loan repayment rates are based on the previous week's market prices for each pulse crop, as CCC determines. National loan repayment rates are announced for the 2002 crop. National loan repayment rates are applicable for lentils and small chickpeas for the 2002 and 2003 crops. A national loan repayment rate applied to 2002-crop dry peas. Regional loan repayment rates will be applicable for 2003-crop dry peas.

The interest rate charged on loans is based on the rate the U.S. Treasury charges CCC, plus 1 percentage point at the time the loan is made. Any loan outstanding as of December 31 is subject to the January interest rate from January 1 until the loan is repaid.

Producers may receive LDPs for pulses delivered directly from the field to a processor, buyer, warehouse, or cooperative and receive the LDP rate effective on the date of delivery. Request for such payments must be made on or before the date of harvest using form CCC-709. Pulse crop quantities included under such requests are not eligible for marketing assistance loans, even if the LDP rate on the date of delivery is zero.

The final pulse loan/LDP availability date is May 31 of the calendar year after the calendar year the pulse is harvested.

Commodity certificates are available to producers for acquiring 2002- through 2007-crop collateral pledged to CCC for a commodity loan. Commodity certificate exchanges will be available for sale at FSA county offices to producers with outstanding nonrecourse marketing assistance loans. The exchange rate will be the effective loan repayment rate on the date the commodity certificate is purchased. Commodity certificate exchanges are not available when the exchange rate exceeds the applicable loan rate or when the repayment rate has been locked in on the CCC-697.

For further information, see the fact sheet "Commodity Certificates," contact a local FSA office, or visit the FSA Web site at: www.fsa.usda.gov

Producers repaying a loan at less than the loan rate plus accrued interest and other charges or receiving an LDP must provide production evidence acceptable to CCC, such as evidence of sales, warehouse receipts, or load summary or assembly sheets.

The 2002 Act continues wild rice, fruit, and vegetable (WR/FAVs) planting restrictions, but slightly eases the restrictions compared with those under the Federal Agriculture Improvement Act of 1996 (1996 Act). To be eligible for loan benefits and payments under the 1996 Act, producers signed 7-year contracts and fruit and vegetable restrictions applied to the entire contract period. Under the 2002 Act, producers may annually opt out of eligibility for direct and counter-cyclical payments and plant fruits, vegetables, and wild rice without restrictions.

Producers seeking to receive direct and counter-cyclical payments with respect to the farm are prohibited from planting wild rice, fruits, and vegetables (other than lentils, mung beans, and dry peas) on base acres unless the commodity, if planted, is destroyed before harvest or meets the following statutory exceptions. Plantings of WR/FAVs are not limited:

1.In any region with a history of double cropping commodities eligible for direct and counter-cyclical payments with WR/FAVs;

2. On a farm with a history of planting WR/FAVs, except that direct and counter-cyclical payments will be reduced by an acre for each acre planted to a WR/FAV; and

3. By a producer with an established history of planting a specific WR/FAV, except that the acreage may not exceed the average annual plantings in the 1991-1995 or the 1998-2001 crop years (excluding any crop year with no plantings) and that direct and counter-cyclical payments shall be reduced by an acre for each acre planted to a WR/FAV.

Starting with the 2003 crop, individuals and entities whose previous 3-year average adjusted gross income (AGI) exceeds $2.5 million are ineligible for many program benefits unless they can establish that at least 75 percent of their AGI is derived from agriculture. Program benefits for which individuals or entities exceeding the AGI limit will be ineligible include:

The 2002 Act also establishes limits on payments a "person" may receive from farm programs. The definition of "person" includes individual farmers, but also encompasses limited partnerships, corporations, and other types of organizations. The 3-entity rule, carried over from previous legislation, limits to three the number of entities through which a "person" may receive payments.

The sum of LDPs and marketing loan gains for the commodities listed below is subject to a $75,000-per-person payment limitation for each crop year. This payment limitation is separate from the $40,000-per-person limitation for direct payments and $65,000-per-person limitation for counter-cyclical payments. For more information on payment limitations see the FSA fact sheet Payment Eligibility and Limitations, contact a local FSA office, or visit the FSA Web site at www.fsa.usda.gov

The per "person" payment limitations apply for each crop year for the following:

Note: Please see Pulse PDF for the following tables:

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact USDA's TARGET Center at 202-720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, D.C., 20250-9410, or call (202) 720-5964 (voice or TDD).

USDA is an equal opportunity provider and employer.