To provide farmers with better prices and higher profits through the marketplace.

To provide farmers with better prices and higher profits through the marketplace.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SEC. 101. DEFINITIONS.

Section 102 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7202) is amended--

(1) by striking paragraph (2) and inserting the following:

`(2) CONSIDERED PLANTED- The term `considered planted' means--

`(A) any acreage that producers on a farm were prevented from planting to a crop because of drought, flood, or other natural disaster, or other condition beyond the control of the producers on the farm; and

`(B) such other acreage as the Secretary considers as fair and equitable.';

(2) by striking paragraph (4) and inserting the following:

`(4) CONTRACT ACREAGE; LOAN ACREAGE- The terms `contract acreage', and `loan acreage' mean (at the option of eligible owners or producers on a farm)--

`(A) the total crop acreage bases established for all contract commodities and loan commodities under title V of the Agricultural Act of 1949 (7 U.S.C. 1461 et seq.) that would have been in effect for the 1996 crop (but for suspension under section 171 (b)(1)); or

`(B) the average number of acres planted and considered planted to all contract commodities and loan commodities, respectively, during the 1996 through 2001 crop years, excluding any crop year in which such commodities were not planted or considered planted, on the farm.';

(3) by striking paragraph (9) and inserting the following:

`(9) FARM PROGRAM PAYMENT YIELD- The term `farm program payment yield' means the average yield per planted acre for a crop for a farm for the 1996 through 2001 crop years, excluding any crop year during which--

`(A) producers on the farm were prevented from planting the crop because of drought, flood, or other natural disaster, or other condition beyond the control of the producers on the farm; or

`(B) the crop was not planted or considered planted on the farm.'.

SEC. 201. NONRECOURSE MARKETING ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS.

AMENDMENT TO THE AGRICULTURAL MARKET TRANSITION ACT- Title I of the Agricultural Market Transition Act (7 U.S.C. 7201) is amended by inserting after subtitle H the following new subtitle:

`Subtitle I--Counter-Cyclical Economic Assistance for the 2002 Through 2008 Crops--Nonrecourse Marketing Assistance Loans and Loan Deficiency Payments

`SEC. 131A. AVAILABILITY OF NONRECOURSE MARKETING ASSISTANCE LOANS.

`(a) NONRECOURSE LOANS AVAILABLE- For each of the 2002 through 2008 crops of each loan commodity, the Secretary shall make available to producers on a farm nonrecourse marketing assistance loans for loan commodities produced on the farm. The loans shall be made under terms and conditions that are prescribed by the Secretary and at the loan rate established under section 132A for the loan commodity.

`(1) ELIGIBLE PRODUCTION- Any production on a farm of a program participant of a loan commodity shall be eligible for a marketing assistance loan under subsection (a) subject to the limitations established in paragraphs (2), (2)(A), (2)(B), and (3) conditions established in section 202.

`(2) Except as provided in section 202, the producers on a farm shall be eligible for a marketing assistance loan for a quantity of a loan commodity for a crop year under subsection (a) obtained by multiplying--

`(A) the number of acres planted to each loan commodity on the farm, by

`(B) the farm program payment yield for the loan commodity on the farm.

`(3) MAXIMUM NUMBER OF ACRES- The producers on a farm shall not be eligible for a marketing assistance loan for production on acres planted to loan commodities in excess of the total program crop loan acreage for the farm.

`(b) COMPLIANCE WITH CONSERVATION AND WETLANDS REQUIREMENTS- As a condition of the receipt of a marketing assistance loan under subsection (a), the producer shall comply with the applicable conservation requirements under subtitle B of title XII of the Food Security Act of 1985 (16 U.S.C. 3811 et seq.) and applicable wetland protection requirements under subtitle C of title XII of the Act (16 U.S.C. 3821 et seq.) during the term of the loan.

`(c) ADDITIONAL OUTLAYS PROHIBITED- The Secretary shall carry out this subtitle in such a manner that there are no additional outlays as a result of the reconstitution of a farm that occurs as a result of the combination of another farm that does not contain eligible cropland covered by a production flexibility contract for the 1996 through 2002 crops.

`(d) Option To Participate With Respect to 2002 Crop- Under such terms and conditions as may be prescribed by the Secretary, a producer may terminate the

`(e) FULL PLANTING FLEXIBILITY PROVIDED- Notwithstanding section 118 of subtitle B, or any other provision of this Act, any commodity or crop may be planted on contract acreage or other acreage on a farm.

`(f) USE OF COMMODITY CERTIFICATES- Notwithstanding any other provision of law, including section 115 of this Act, the Secretary may not make use of commodity certificates or the commodity loan redemption certificate program for the purposes of this subtitle, or any other purpose.

`SEC. 132A. LOAN RATES FOR MARKETING ASSISTANCE LOANS.

`(a) GENERALLY- Loan rates for crops eligible for marketing assistance loans under section 131A for any loan commodity, as defined in section 102, to mean wheat, corn, grain sorghum, barley, oats, upland cotton, rice, extra long staple cotton, and oilseeds, including soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, and other oilseeds, if designated by the Secretary, shall be established in accordance with this section.

`(b) ANNUAL DETERMINATION- The Secretary shall, for each of the 2002 through 2008 crops, make an annual determination, in accordance with subsections (c) and (d), to establish the national and individual loan rate for each loan commodity.

`(c) NATIONAL AVERAGE LOAN RATE- The national average commodity marketing loan rate for each loan commodity shall be established at a rate--

`(1) after making weighted county loan rate adjustments, that is not less than 80 percent of the three year moving average of the full economic cost of production per unit per planted acre, and annually adjusted for both the percentage change in variable production input expenses, and productivity changes as determined by the Economic Research Service using the best and most recently available data;

`(2) for each of the 2002 crops, the national average loan rate is not less than--

`(A) for wheat: $3.88 per bushel;

`(B) for corn: $2.40 per bushel;

`(C) for soybeans: $5.36 per bushel;

`(D) for upland cotton: $60.65 per hundredweight;

`(E) for rice: $8.61 per hundredweight; and

`(3) for the 2002-2011 crops of feed grains and other loan commodities closely related to those identified in paragraph (2), the Secretary shall determine the rate at a level that is fair and reasonable in relation to the rate provided for the closely related commodity.

`(4) For producers of program commodities who exceed the limitations established in section 202 of this Act, the Secretary shall provide recourse commodity marketing loans subject to the agreement of eligible producers as a condition for receiving such commodity marketing loans that the producer agrees to repay the Commodity Credit Corporation, on or before the maturity of such loans, the full amount of the loan principal plus any accrued interest on those loans.

`(d) INDIVIDUAL MARKETING LOAN RATES- The national average commodity marketing loan rates established under subsection (c) shall be adjusted to establish individual marketing loan rates for eligible producers in accordance with the provisions of this subsection.

`(e) PAYMENTS IN LIEU OF LOANS- For payments under this subtitle taken in lieu of loans, including loan deficiency payments made under section 135A of this subtitle, the Secretary shall develop a similar methodology as described in paragraphs (1) through (3). The methodology shall assume for the purpose of establishing the loan deficiency payment that the marketing loan was actually taken by the producer.

`SEC. 133A. TERM OF LOANS.

`(a) TERM OF LOANS- In the case of each loan commodity (other than upland cotton and extra long staple cotton), a marketing assistance loan under section 131A shall have a term of 9 months beginning on the first day of the first month after the month in which the loan is made.

`(b) SPECIAL RULE FOR COTTON- A marketing assistance loan for upland cotton or extra long staple cotton shall have a term of 10 months beginning on the first day of the month in which the loan is made.

`(c) EXTENSIONS ALLOWED- The Secretary may extend the term of a marketing assistance loan for any loan commodity for the purpose of establishing or maintaining any of the commodity reserves established under the Agricultural Act of 1949.

`SEC. 134A. REPAYMENT OF LOANS.

`(a) REPAYMENT RATES FOR WHEAT, FEED GRAINS, AND OILSEEDS- The Secretary shall permit a producer to repay a non-recourse marketing assistance loan under section 131A for wheat, corn, grain sorghum, barley, oats, and oilseeds at a rate that is the lesser of--

`(1) the loan rate established for the commodity under section 132A, plus interest (as determined by the Secretary); or

`(2) a rate that the Secretary determines, consistent with the policies and purposes of section 110A of the Agricultural Act of 1949, will--

`(A) minimize potential loan forfeitures;

`(B) minimize the accumulation of stocks of the commodity by the Federal Government;

`(C) minimize the cost incurred by the Federal Government in storing the commodity; and

`(D) allow the commodity produced in the United States to be marketed freely and competitively, both domestically and internationally.

`(b) REPAYMENT RATES FOR UPLAND COTTON AND RICE- The Secretary shall permit producers to repay a non-recourse marketing assistance loan under section 131A for upland cotton and rice at the rate that is the lesser of--

`(1) the loan rate established for the commodity under section 132A, plus interest (as determined by the Secretary); or

`(2) the prevailing world market price for the commodity (adjusted to United States quality and location), as determined by the Secretary.

`(c) REPAYMENT RATES FOR EXTRA LONG STAPLE COTTON- Repayment of a marketing assistance loan for extra long staple cotton shall be at the loan rate established for the commodity under section 132A, plus interest (as determined by the Secretary).

`(d) PREVAILING WORLD MARKET PRICE- For purposes of this section, the Secretary shall prescribe by regulation--

`(1) a formula to determine the prevailing world market price for each commodity, adjusted to United States quality and location;

`(2) a mechanism by which the Secretary shall announce periodically the prevailing world market price for each loan commodity;

`(3) further adjustments to the prevailing world market price for upland cotton, as described in subsection (e) of section 134 of this Act.

`SEC. 135A. LOAN DEFICIENCY PAYMENTS.

`(a) AVAILABILITY OF LOAN DEFICIENCY PAYMENTS- Except as provided in subsection (d), the Secretary may make loan deficiency payments available to producers who, although eligible to obtain a non-recourse marketing assistance loan under section 131A with respect to a loan commodity, agree to forgo obtaining the loan for the commodity in return for payments under this section.

`(b) COMPUTATION- A loan deficiency payment under this section shall be computed by multiplying--

`(1) the loan payment rate determined under subsection (c) for the loan commodity, by

`(2) the quantity of the loan commodity that the producers on a farm are eligible to place under the non-recourse commodity marketing loan but for which the producers forgo obtaining the loan in return for payments under this section.

`(c) LOAN PAYMENT RATE- For purposes of this section, the loan payment rate shall be the amount by which--

`(1) the loan rate established under section 132A for the loan commodity exceeds

`(2) the rate at which a loan for the commodity may be repaid under section 134A.

`(d) EXCEPTION FOR EXTRA LONG STAPLE COTTON- This section shall not apply with respect to extra long staple cotton.'.

SEC. 202. PROGRAM TARGETING.

(a) APPLICABILITY OF PAYMENT LIMITATIONS- Except as provided in subsections (b)-(d), the provisions of sections 1001 through 1001C of the Food Security Act of 1985, as amended, shall be applicable to contract payments made under this Act for the 2002 crops.

(b) SINGLE ATTRIBUTION- The Food Security Act of 1985 is amended by adding after section 1001E, the following section--

`(b) SINGLE ENTITY- Notwithstanding any other provision of this Act, the limitations on payments provided in sections 1001 through 1001C shall apply to a single farming or ranching entity. Payments to a simple farming entity shall not exceed the payment limitations provided under this Act, the Agricultural Act of 1949, or any other law.

`(c) USE OF TAX IDENTIFICATION NUMBER- The Secretary shall promulgate regulations to ensure that the payment limitations of this title are enforced through a single attribution rule. Payments to a single farming or ranching entity, as described or identified by employer tax identification number, shall not exceed the applicable payment limitation amount. Notwithstanding any other provision of law, such regulations issued by the Secretary shall eliminate the multiple or three-entity allowance.

`(d) PARTNERSHIPS AND RELATED ENTITIES- With respect to partnerships and related entities which are not organized as sole-proprietorships, benefits available under the marketing loan provisions of subtitle I of the Agricultural Act of 1949 shall be allocated according to the share of production and market risk assumed by each member of the entity.'.

(c) LIMITATION OF ELIGIBILITY OF OTHER ENTITIES- No individual, organization or institution with annual gross income in excess of $2 million shall be eligible for commodity marketing loan program benefits if agricultural production does not account for at least 75 percent of that entity's annual gross income.

(d) LIMITATION ON ELIGIBILITY FOR NON-RECOURSE COMMODITY MARKETING ASSISTANCE LOANS- Notwithstanding any other provisions of sections 1001 through 1001C of the Food Security Act of 1985 and subject to the provisions contained in section 202, subsections (a) through (d) of this Act, the Secretary shall establish a maximum number of commodity production units for each program crop per individual producer that are eligible for non-recourse commodity marketing assistance loans.

(e) In fulfilling the requirements of subsection (d), the Secretary shall ensure producer flexibility to determine which crops and the percentage volume of those crops on which the producer may receive program benefits, except that in no instance shall a producer be entitled to receive benefits on a volume of production that exceeds 100 percent of the production for an individual crop or the sum of percentages of the maximum eligible volume of production from two or more eligible crops.

(f) The quantity limitations established by the Secretary shall not be more than 10 percent greater or 10 percent less than the quantities for each crop described as follows:

(1) Wheat--125,000 bushels,

(2) Corn--225,000 bushels,

(3) Sorghum--225,000 bushels,

(4) Barley--225,000 bushels,

(5) Oats--250,000 bushels,

(6) Rice--75,000 hundredweight,

(7) Upland Cotton--10,500 hundredweight,

(8) Extra Long Staple Cotton--12,500 hundredweight,

(9) Soybeans--100,000 bushels, and

(10) Minor Oilseeds--60,000 hundredweight.

SEC. 203. COMMODITY RESERVES.

Amendment to the Agricultural Act of 1949- Title 1 of the Agricultural Act of 1949 is amended by adding after section 110 the following new section:

`SEC. 110A. COMMODITY RESERVES.

`(a) Farmer Owned Production Loss Reserve-

`(1) PURPOSE- It is the purpose of this subsection to create a farmer owned reserve to provide--

`(A) stocks to be released to the marketplace when prices rise to appropriate levels; and

`(B) a reserve that may be utilized to provide additional production assurance and economic support to supplement the Federal Crop Insurance Program, and for other purposes.

`(2) ESTABLISHMENT- The Secretary shall establish and administer a farmer-owned and farmer-stored reserve program under which producers of agricultural commodities will be able to--

`(A) store agricultural commodities when those commodities are in abundant supply;

`(B) extend the time period for the orderly marketing of the commodities;

`(C) provide for adequate carry over stocks to ensure a reliable supply of commodities;

`(D) replace lost production or declines in crop yields for agricultural producers that participate in the Federal Crop Insurance Program; and

`(E) such other purposes which will assist farmers bear the economic uncertainty of agricultural production; or provide for the orderly marketing of agricultural commodities.

`(3) NAME- The agricultural commodity reserve established under this subsection shall be known as the `Farmer Owned Production Loss Reserve'.

`(4) RESERVE OPEN- The reserve shall initially be open to all agricultural producers to enter up to 20 percent of average annual individual production of crops determined eligible by the Secretary. Additional amounts may be accepted up to the maximum allowable national level established under paragraph (9). No individual may enter more than 20 percent of average annual production of the commodity.

`(5) EQUITABLE PARTICIPATION- The Secretary shall ensure that equitable participation opportunities are provided to all eligible producers within the limited scope of the reserve program authorized by this subsection.

`(6) PRICE SUPPORT LOANS AND DIRECT ENTRY- In carrying out this section, the Secretary shall provide both--

`(A) for direct entry into the reserve; and

`(B) extended price support loans, and loan discounts, for agricultural commodities. An extended loan shall be made to a producer after the expiration of the original 9-month price support loan, and the loan shall be extended at no less favorable terms than the current rate of support for the commodity.

`(7) PRODUCTION LOSSES-

`(A) GENERALLY- The Secretary shall administer a program to utilize the commodity reserve authorized by this subsection to allow agricultural producers that participate in the Federal Crop Insurance Program to--

`(i) under certain conditions, redeem and market reserve commodities at a discount to the entry level price; and

`(ii) use stocks in the reserve to offset a portion of actual insurable production losses not indemnified through multi-peril or other buy-up crop insurance policies.

`(B) LOAN REPAYMENTS- Under the program authorized by this paragraph, the Secretary shall discount the repayment amount of the loan or extended loan if the actual production of the commodity on the farm for any crop year, as provided in paragraph (C), is less than the actual production history established for the farm. The amount of this discount shall be determined by the Secretary after considering anticipated payments from the Federal Crop Insurance program, costs of production, and other factors in order to provide support to the producer for the full value of lost crop or reduced yield.

`(C) REPLACEMENT FOR PRODUCTION- The Secretary shall utilize the reserve to fully replace lost production for a producer when actual production yields for the commodity for the crop year on the farm is less than 95 percent of the actual production history established for the farm.

`(D) LIMITATION- At no time may the reserve be utilized to assist any producer in excess of 20 percent of individual annual production.

`(8) STORAGE PAYMENTS- The Secretary shall also provide storage payments to producers of agricultural commodities to maintain the reserve established under this subsection. Storage payments shall--

`(A) be in such amounts and under such conditions as the Secretary determines appropriate to encourage producers to participate in the program;

`(B) reflect local, commercial storage rates subject to appropriate conditions concerning quality management and other factors; and

`(C) not be less than comparable commercial rates, except as provided by paragraph (B).

`(9) QUANTITY OF COMMODITIES IN PROGRAM- The Secretary shall establish maximum quantities of commodities that may receive loans and storage payments under this subsection in such reasonable amounts as will enable the purposes of the program to be achieved. In no event may the reserve exceed 20 percent of the average annual production of the agricultural commodity.

`(10) DISCRETIONARY EXIT- A producer may repay a loan extended under this section at any time.

`(b) HUMANITARIAN FOOD ASSISTANCE RESERVE-

`(1) PURPOSES- It is the purpose of this subsection to create a food reserve that will--

`(A) ensure the capacity of the United States to fulfill its current and future commitments for humanitarian nutrition assistance programs;

`(B) support the International School Lunch Program which will seek to prevent hunger and malnourishment and improve educational opportunities among the estimated 300 million needy school children around the world; and

`(C) for other purposes to meet domestic and international humanitarian food relief needs, and to establish and maintain a food reserve to enable the United States to meet its emergency food assistance needs.

`(2) ESTABLISHMENT- The Secretary is authorized to establish and administer a government-owned and farmer-stored reserve program under which producers of agricultural commodities will be able to--

`(A) sell agricultural commodities authorized by the Secretary into the reserve; and

`(B) store such agricultural commodities.

`(3) NAME- The agricultural commodity reserve established under this subsection shall be known as the `Humanitarian Food Assistance Reserve'.

`(4) PURCHASES- The Secretary shall purchase agricultural commodities at commercial rates in order to establish, maintain, or enhance the reserve when--

`(A) such commodities are in abundant supply; and

`(B) there is need for adequate carryover stocks to ensure a reliable supply of the commodities to meet the purposes of the reserve; or

`(C) it is otherwise necessary to fulfill the needs and purposes of the domestic and international nutrition assistance programs administered or assisted by the Secretary.

`(5) LIMITATION- Purchases under this subsection shall be limited to amounts of agricultural commodities needed to fill one-year estimated needs and commitments of the nutrition programs supported by the reserve. Otherwise, the Secretary may establish maximum quantities of commodities in such reasonable amounts as will enable the purposes of the program to be achieved.

`(6) RELEASE OF STOCKS- Stocks shall be released at cost of acquisition, and in amounts determined appropriate by the Secretary, when market prices of the agricultural commodity exceed 100 percent of the full economic cost of production of those commodities. Cost of production for the commodity shall be determined by the Economic Research Service using the best available information, and based on a three year moving average.

`(7) STORAGE PAYMENTS- The Secretary shall provide storage payments to producers that wish to store agricultural commodities to maintain the reserve established under this subsection. Storage payments shall--

`(A) be in such amounts and under such conditions as the Secretary determines appropriate to encourage producers to participate in the program;

`(B) reflect local, commercial storage rates subject to appropriate conditions concerning quality management and other factors; and

`(C) not be less than comparable local commercial rates, except as may be provided by paragraph (B).

`(8) QUANTITY OF COMMODITIES IN PROGRAM- The Secretary may establish maximum quantities of commodities that may receive loans and storage payments under this subsection in such reasonable amounts as will enable the purposes of the program to be achieved.

`(9) MANAGEMENT OF COMMODITIES- Whenever fungible commodities are stored under this subsection, the Secretary may buy and sell at an equivalent price, allowing for customary location and grade differentials, substantially equivalent quantities of commodities in different locations or warehouses to the extent needed to handle, rotate, distribute, and locate the commodities that the Commodity Credit Corporation owns or controls. The Secretary shall make purchases to offset such sales within a reasonable time, and shall make public full disclosure of such transactions.

(c) Renewable Energy Reserve-

`(1) PURPOSES- It is the purpose of this subsection to create a reserve of agricultural commodities to--

`(A) provide feedstocks to support and further the production of the renewable energy; and

`(B) support the renewable energy industry in times when production is at risk of decline due to reduced feedstock supplies or significant commodity price increases.

`(2) ESTABLISHMENT- The Secretary is authorized to establish and administer a government-owned and farmer-stored renewable energy reserve program under which producers of agricultural commodities will be able to--

`(A) sell agricultural commodities authorized by the Secretary into the reserve; and

`(B) store such agricultural commodities.

`(3) NAME- The agricultural commodity reserve established under this subsection shall be known as the `Renewable Energy Reserve'.

`(4) PURCHASES- The Secretary shall purchase agricultural commodities at commercial rates in order to establish, maintain, or enhance the reserve when--

`(A) such commodities are in abundant supply; and

`(B) there is need for adequate carryover stocks to ensure a reliable supply of the commodities to meet the purposes of the reserve; or

`(C) it is otherwise necessary to fulfill the needs and purposes of the renewable energy program administered or assisted by the Secretary.

`(5) LIMITATION- Purchases under this subsection shall be limited to--

`(A) the type and quantities of agricultural commodities necessary to provide approximately one-year's estimated utilization for renewable energy purposes;

`(B) an additional amount of commodities to provide incentives for research and development of new renewable fuels and bio-energy initiatives; and

`(C) such maximum quantities of agricultural commodities determined by the Secretary as will enable the purposes of the renewable energy program to be achieved.

`(6) RELEASE OF STOCKS- Stocks shall be released at cost of acquisition, and in amounts determined appropriate by the Secretary, when market prices of the agricultural commodity exceed 100 percent of the full economic cost of production of those commodities. Cost of production for the commodity shall be determined by the Economic Research Service using the best available information, and based on a three year moving average.

`(7) STORAGE PAYMENTS- The Secretary shall provide storage payments to producers of agricultural commodities to maintain the reserve established under this subsection. Storage payments shall--

`(A) be in such amounts and under such conditions as the Secretary determines appropriate to encourage producers to participate in the program;

`(B) reflect local, commercial storage rates subject to appropriate conditions concerning quality management and other factors; and

`(C) not be less than comparable local commercial rates, except as may be provided by paragraph (B).

`(d) COMMODITY CREDIT CORPORATION- The Secretary shall use the Commodity Credit Corporation to fulfill the purposes of this subsection. To the maximum extent

SEC. 204. DISCRETIONARY INVENTORY MANAGEMENT AND PROGRAM COST-CONTAINMENT.

(a) SHORT TITLE- This section may be cited as the `Discretionary Inventory Management, Program Cost-Containment, and Fiscal Responsibility Act of 2001'.

(b) AMENDMENTS TO THE FEDERAL AGRICULTURE IMPROVEMENT AND REFORM ACT- Subtitle F of title I of the Federal Agriculture Improvement and Reform Act (7 U.S.C. 7201) is amended by--

(1) striking out the subtitle heading and inserting the following new heading--

`Subtitle F--Permanent Authorities

`CHAPTER 1--PRICE SUPPORT';

and

(2) by adding at the end the following new chapter--

`CHAPTER 2--DISCRETIONARY INVENTORY MANAGEMENT AND PROGRAM COST-CONTAINMENT

`SEC. 173. DISCRETIONARY INVENTORY MANAGEMENT AUTHORITY.

`(a) GENERALLY- Notwithstanding any other provision of this Act, or the Agricultural Act of 1949, the Secretary may establish a voluntary inventory management program for loan commodities under the provisions of this section. Such program shall be established on a whole farm basis and shall include total program crop acreage for the farm.

`(b) INCENTIVES OFFERED- The Secretary may offer incentives, as defined in subsection (f), to agricultural producers of loan commodities that agree to forgo production on a specified percentage of the acreage planted to eligible commodities. The production management program may be announced when the Secretary determines that the estimated total supply of loan commodities for the next crop year, in the absence of such a program, will be excessive taking into account the need for an adequate carryover to maintain reasonable and stable supplies and prices and to meet a national emergency.

`(c) ACREAGE DEFINED- Inventory management acreage must be acreage that either--

`(1) has previously been under a production flexibility contract, or

`(2) was previously planted as eligible loan commodities for at least three of the last five years.

`(d) CONSERVATION USES- Inventory management acreage shall be devoted to approved conservation and wildlife uses, as defined by the Secretary. Adequate safeguards from weeds, and wind, soil, and water erosion must be provided.

`(e) ACREAGE OPTIONS- If announced, the inventory management program shall offer the producer a range of acreage participation options. Under such a program, the Secretary shall offer producers the option to set-aside 5 percent, 10 percent, 15 percent, or 20 percent of total commodity acreage. Total program acreage shall include applicable inventory management acres from the previous crop year.

`(f) Incentive Defined-

`(1) The incentive offered by the Secretary for agreement to forgo production on a specified percentage of loan commodity production acres shall be an increase in the marketing loan rates for eligible commodities for the individual producer in an amount that is equal to one-half of the percentage of the percentage inventory management or acreage option selected under subsection (e).

`(2) The increase in the marketing loan rate for an individual producer, shall be as follows--if the inventory management acreage is--

`(A) 5 percent, then the marketing loan rate shall be increased by 2.5 percent,

`(B) 10 percent, then the marketing loan rate shall be increased by 5 percent,

`(C) 15 percent, then the marketing loan rate shall be increased by 7.5 percent, and

`(D) 20 percent, then the marketing loan rate shall be increased by 10 percent.

`(g) COMMODITY CREDIT CORPORATION- The Secretary shall carry out the program authorized by this section through the Commodity Credit Corporation.

`(h) REGULATIONS- The Secretary shall issue such regulations as may be necessary to carry out this section.

`(i) CROSS COMPLIANCE AND OFFSETTING COMPLIANCE- The Secretary shall require that compliance on a farm with the terms and conditions of any other commodity, conservation, or any other program is required as a condition of eligibility for inventory management incentives provided under authority of this section.'.