Certificates Formalized for Producers

February 17, 2000

In a notice to state and county offices dated Tuesday, USDA formalized a commodity certificate program for producers to begin next week. The value of the certificates is not subject to the payment limitation. Agriculture Secretary Dan Glickman, decrying what he told commodity groups would be "some mighty big payments" to large farm corporations, nevertheless went ahead and exercised his legal discretion to implement the certificate program.

Glickman reportedly felt he had no choice in announcing the program, given it had bipartisan congressional support and that farmers otherwise would be forced to forfeit commodities to USDA rather than pay off the loans on those commodities.

The certificates will represent in-kind payments through negotiable certificates that will be exchanged for a commodity owned or controlled by CCC.

A producer must request a commodity certificate that will be issued for the exact dollar value needed to acquire the loan collateral from the county office. The producer signs for the certificate and uses it to acquire the loan collateral.

An eligible producer must have an outstanding commodity loan not past maturity to purchase certificates, and the certificates must be exchanged immediately for the loan collateral.

Eligible loan commodities include cotton, wheat, corn, grain sorghum, oats, barley, soybeans, rice, sunflower seed, canola, rapeseed, safflower, flaxseed, mustard seed and crambe.

Certificates will be available starting Feb. 22. Loan repayments received before that date will be processed as marketing assistance loan repayments, not as commodity certificate exchanges.

The certificate will be valid only for immediate use and will expire upon repayment of the loan and exchange of the certificate for the commodity. The exchange rate is the adjusted world price for cotton and rice and the CCC-determined value for all other commodities. There will be no certificate exchange if either rate is equal to or greater than the applicable county loan rate. The program does not apply to seed cotton or extra long-staple cotton.

Certificates do not apply to the payment limitation.