Nonrecourse loan program

Program providing commodity-secured loan funds to producers for a specified period of time (typically 9 months), after which producers may either repay the loan and accrued interest or transfer ownership of the commodity amount pledged as collateral to the Commodity Credit Corporation (CCC) as full settlement of the loan, without penalty. These loans, also referred to as "commodity loans," are available on a crop-year basis for wheat, feed grains, cotton, peanuts, rice, oilseeds, pulse crops, wool, mohair, and honey. Sugar processors are also eligible for nonrecourse loans. Participants in commodity loan programs receive loan funds based on the commodity-specific, per-unit loan rate specified in legislation. The loans are called nonrecourse because, at the producer's option, the CCC has no recourse but to accept the commodity as full settlement of the loan. Under the Marketing Loan Program,producers of eligible commodities may repay the loan at the world price (rice and upland cotton), posted county price (wheat, feed grains, and oilseeds) or national posted price (peanuts) when these prices are below the year's set commodity loan rate, thus providing a disincentive to crop forfeiture. Some commodity loans are recourse loans, meaning producers must pay back the loans in cash.

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