NCC Thanks Senators for Seeking Clarification on Marketing Assistance Loans
October 18, 2013 The National Cotton Council (NCC) has expressed appreciation to Senators Thad Cochran (R-MS), Saxby Chambliss (R-GA) and 12 of their Sunbelt colleagues for their bipartisan communication to Agriculture Secretary Tom Vilsack requesting clarification of the decision to reduce Marketing Assistance Loans and to shut down loan processing until software modifications are made.
The adjustments to commodity loan programs, including Marketing Assistance Loans, were announced by USDA’s Farm Service Agency (FSA) on September 30. Those programs – which provide interim financing for post-harvest storage of agricultural commodities for sale throughout the year without harvest-season price pressures – received sequester reductions of 5.1 percent.
The NCC letter explains that growers, merchants and marketing cooperatives were unable to make contingency plans to mitigate the adverse impact of the last-minute announcement without warning or consultation with Congress or the private sector.
NCC Chairman Jimmy Dodson, a South Texas cotton producer, said, “The sudden and unexpected decision to reduce loans and stop loan processing has a significant impact on the availability of working capital, orderly marketing, and, in some cases, results in unrecoverable income losses for farmers who forward-contracted their crops. The action will result in little, if any, budget savings to the government, since loans are repaid fully with interest.”
Dodson noted the announcement was unclear on how loan redemptions would be calculated, causing more confusion and uncertainty for the market. He said the action was even more surprising and unexpected because 2012 crop loans were not reduced by sequestration, which called 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 Supplemental Revenue Assistance Payments (SURE) and Milk Income Loss Contract (MILC) payments.
Joining Senators Cochran and Chambliss in the clarification request were Senators Wicker (R-MS), Isakson (R-GA), Boozman (R-AR), Pryor (D-AR), Cornyn (R-TX), Landrieu (D-LA), Vitter (R-LA), Graham (R-SC), Inhofe (R-OK), Shelby (R-AL), Burr (R-NC) and Hagan (D-NC). Senator Sessions (R-AL), ranking member of the Budget Committee, sent a separate letter.
“We greatly appreciate that our industry’s concerns and questions on these matters have been effectively conveyed in the Senate letters,” added Dodson.
The NCC has said it 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 potentially worsen.
Copies of the letters are available for review on the NCC website at www.cotton.org/issues/2013/upload/13CochranMalsLet.pdf and www.cotton.org/issues/2013/upload/13sessionsmalslet.pdf.
Source – NCC
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