Farm Programs: Changes to the Marketing Assistance Loan Program Have Had Little Impact on Payments

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A letter report issued by the General Accounting Office with an abstract that begins "Under the Department of Agriculture's (USDA) Marketing Assistance Loan Program, the federal government accepts harvested crops as collateral for interest-bearing loans (marketing assistance loans) that are typically due in nine months. When market prices drop below the loan rate (the loan price per pound or bushel), the government allows farmers to repay the loan at a lower rate and retain ownership of their commodity for eventual sale. The difference between the loan rate and the lower repayment rate is called the "marketing loan gain." Conversely, farmers ... continued below

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United States. General Accounting Office. September 28, 2001.

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Description

A letter report issued by the General Accounting Office with an abstract that begins "Under the Department of Agriculture's (USDA) Marketing Assistance Loan Program, the federal government accepts harvested crops as collateral for interest-bearing loans (marketing assistance loans) that are typically due in nine months. When market prices drop below the loan rate (the loan price per pound or bushel), the government allows farmers to repay the loan at a lower rate and retain ownership of their commodity for eventual sale. The difference between the loan rate and the lower repayment rate is called the "marketing loan gain." Conversely, farmers who do not have marketing assistance loans can also receive a benefit when prices are low called a "loan deficiency payment." The loan deficiency payment is equal to the marketing loan gain that the farmer would have received if he or she had a loan. Farmers may choose to obtain either a marketing loan gain or a loan deficiency payment--both of which are known as the marketing loan benefit. The increase in the payment limit and the availability of commodity certificates had only modest effects on the $15 billion in marketing assistance loan payments provided for crop year 1999 and for crop year 2000 through May 2001. Because of the increase in the payment limit, total payments over the two-year period were 1.9 percent more than they would have been under the previous limit, or an additional $261.1 million. Most farmers did not use commodity certificates to receive gains more than the payment limit, but a small number of farmers did benefit from the program. According to the best available data from USDA's county offices, 47 farmers used certificates to receive more than $150,000 in 1999, and 100 farmers did so in 2000."

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Government Accountability Office Reports

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the U.S. Congress investigating how the federal government spends taxpayers' money. Its goal is to increase accountability and improve the performance of the federal government. The Government Accountability Office Reports Collection consists of over 13,000 documents on a variety of topics ranging from fiscal issues to international affairs.

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  • September 28, 2001

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  • June 11, 2014, 5:03 a.m.

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United States. General Accounting Office. Farm Programs: Changes to the Marketing Assistance Loan Program Have Had Little Impact on Payments, report, September 28, 2001; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc295055/: accessed August 20, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.