February 2013

The Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill) authorizes Marketing Assistance Loans (MALs) and Loan Deficiency Payments (LDPs) for crop years 2008-2012 for peanut producers. Producers may apply for MALs for farm or warehouse-stored peanuts or for LDPs. These programs help to stabilize America's peanut industry and ensure the well being of agriculture in the United States. The American Taxpayer Relief Act of 2012 (ATRA) extends the MAL and LDP provisions for peanuts from the 2008 Farm Bill to the 2013 crop year.

Peanut nonrecourse MALs provide eligible producers with interim financing on their production and facilitate the orderly distribution of MAL-eligible peanuts throughout the year. A nonrecourse MAL allows a producer with eligible peanuts to store the production and pledge the peanuts as collateral instead of selling them immediately after harvest. The MAL helps an eligible producer pay bills without having to sell the peanuts at a time of year when prices tend to be lowest. When market conditions may be more favorable, a producer may sell the peanuts and repay the MAL with the proceeds of the sale. If a producer is unable to repay the MAL, he or she can deliver to Commodity Credit Corporation (CCC) the quantity of peanuts pledged as collateral as full payment for the MAL at maturity.

Nonrecourse MALs and LDPs are administered by the U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) on behalf of CCC.

See the fact sheet "Nonrecourse Marketing Assistance Loans/Loan Deficiency Payments" located at http://www.fsa.usda.gov/Internet/FSA_File/mal_ldp_2013.pdf for additional information on MALs and LDPs.

To be eligible for a MAL or LDP, the peanuts must:

Producers must have beneficial interest in the peanuts at the time of the request to obtain a MAL or LDP. Beneficial interest consists of the producer's maintaining control of and title to the peanuts.

For further information, see the FSA fact sheet on "Beneficial Interest Requirements for MALs and LDPs" at http://www.fsa.usda.gov/Internet/FSA_File/benint11.pdf

For a MAL, producers can request a farm-stored or warehouse-stored loan. Warehouse-stored MALs will be adjusted for premiums and discounts, if applicable.

The 2008 Farm Bill requires CCC to pay handling and associated (other than storage) costs for all peanuts placed in the MAL program through the 2008-2012 crop years when the MAL is disbursed. Subsequently, when the MAL is redeemed, all handling and associated costs must be repaid to CCC. ATRA extends the handling and associated costs provisions from the 2008 Farm Bill to the 2013 crop year.

Farm-stored MALs are either certified or measured. Certified loans refer to the producer personally certifying the crop quantity in farm storage.

Measured loans refer to on-site measurement conducted by an FSA employee, which requires payment for the service at the time of request.

Producers who request warehouse-stored MALs must present an acceptable warehouse receipt issued by a CCC-approved warehouse. To obtain a warehouse-stored MAL, CCC loan collateral peanuts must be stored in a CCC-approved warehouse.

The 2008 Farm Bill sets the national loan rate for peanuts at $355 per ton. CCC utilizes the national loan rate of $355 per ton and five year average quality factors, along with a three-year simple average of weighted production to determine the specific crop year loan rate for the type of peanuts (Runner, Spanish, Valencia, or Virginia). Each crop year, CCC will announce the loan rate per ton by type of peanuts. ATRA extends the national loan rate of $355 per ton for peanuts from the 2008 Farm Bill to the 2013 crop year.

The MAL rate will be reduced by 30 percent if production comes from a farm participating in the ACRE program. Alternative loan repayment rates will not be adjusted by 30 percent. The LDP rate for commodities produced on farms enrolled in ACRE must include the 30 percent reduction from the MAL rate before determining the LDP rate. See fact sheet entitled Average Crop Revenue Election (ACRE) Program, located at www.fsa.usda.gov/Internet/FSA_File/acre_2013.pdf, or contact a local USDA Service Center, or visit the FSA website at www.fsa.usda.gov.

The peanut MAL service fee, which is nonrefundable, shall be the smaller of the following:

Exception: This fee is not applicable to Designated Marketing Associations (DMAs).

A producer realizes a marketing loan gain if the MAL is repaid at less than the MAL principal. The marketing loan gain rate equals the amount by which the applicable loan rate exceeds the loan repayment rates.

Offsets from the MAL proceeds (or deductions) may be made for amounts contained on a separate statement of unpaid charges or a separate bill for unpaid charges. These charges must be associated with the handling of the peanuts represented by the warehouse receipt and the marketing of the peanuts pledged as loan collateral. The FSA county offices, peanut DMAs and Cooperative Marketing Associations (CMAs) are only authorized to offset charges associated with cleaning, drying, custom harvesting, seed accounts and storage of peanuts from the producer's MAL proceeds. These charges are not considered a lien and must be included on a form CCC-679, Lien Waiver, block 5(c)(3), if an offset will be made for these charges. The deputy administrator for Farm Programs must approve all other requests for offset of charges.

A producer who is eligible to obtain a MAL, but who agrees to forgo the MAL, may obtain a LDP. The LDP rate equals the amount by which the applicable loan rate where the commodity is stored exceeds the National Posted Price.

When the National Posted Price by peanut type is higher than the applicable loan rate, there would be no LDP.

LDPs can either be certified or based on submitted acceptable production evidence. LDPs must be requested on form CCC-633 EZ, Loan Deficiency Payment (LDP) Agreement and Request. Eligible producers must indicate their intentions by submitting a completed CCC-633 EZ, page 1, to their local FSA county office before beneficial interest is lost and by the final MAL availability date. The CCC-633 EZ, page 2, must be submitted by the producer when the producer wants the LDP payment. LDPs are assignable and not subject to premiums or discounts. The basic LDP rate is the rate in effect on the date of request.

Peanut DMA's will obtain the CCC-633 EZ from their customers.

Note: Form FSA-1007, Inspection Certificate and Calculation Worksheet, may be considered acceptable production evidence only if a producer has filed a completed CCC-633 EZ (pages 1 and 2) and the peanuts are immediately sold upon delivery. The date the peanuts are sold will be printed on the FSA-1007, and this date is used to determine when beneficial interest is lost.

The use of peanut electronic warehouse receipts (EWR) is acceptable and FSA has designated a provider (EWR Inc.) to issue peanut EWRs. The electronic system is designed to:

CCC announces the National Posted Price for peanuts weekly on Tuesdays at 3 p.m. Eastern Time (ET) on the FSA website and in local FSA offices. The repayment rate becomes effective Wednesday at 12:01 a.m. ET. The rates can be obtained by visiting: http://www.fsa.usda.gov/FSA/epasReports?area=home&subject=ecpa&topic=fta-pn.

Producers may designate an agent to redeem all or a portion of the peanuts pledged as collateral for a MAL.

Designation of an agent does not relieve the producer from the terms and conditions of the note and security agreement. Designated agents may transfer the designation to a subsequent agent on form CCC-605P, Designation of Agent - Peanuts, by endorsement. Agents who are subsequently designated may transfer the designation to other subsequent agents on CCC-605P-2, Designation of Subsequent Agent - Peanuts, by endorsement. County offices will make forms CCC-605P, CCC-605-1, Continuation for Form CCC-605P, and CCC-605P-2 available to the public. Producers should be advised that a separate CCC-605P is required for each MAL. These forms are available at http://forms.sc.egov.usda.gov/eForms/welcomeAction.do? Home or in FSA county offices.

If a MAL is not repaid within the nine-month loan period and the peanuts are subsequently forfeited to CCC, CCC will pay storage, handling and other associated cost for all peanuts pledged as collateral.

Peanut MALs and LDPs are available to all eligible producers. All applications for peanut MALs or LDPs must be made by Jan. 31 of the year following the time period when peanuts are normally harvested.

Additional information on MALs and LDPs for peanut producers is available from local USDA Service Centers and on the FSA website at http://www.fsa.usda.gov.