FACT SHEET

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY

Page 1

April 2011

Fees and Charges Assessed by the Commodity Credit Corporation for 

Cotton Loans, Loan Forfeitures, and Relocation of Collateral

Overview

USDA’s Commodity Credit 

Corporation (CCC) marketing 

assistance loans (MAL) are a 

marketing tool producers can 

use to store their production 

after harvest, which increases 

their marketing opportunities. 

In place of using MALs, 

producers may elect to take a 

loan deficiency payment (LDP) 

that provides a payment equal to 

any net gain from a MAL. 

This fact sheet explains various 

fees and charges associated 

with cotton MALs, LDPs, and 

the relocation of cotton loan 

collateral.

Loan Service Fee 

CCC assesses a fee to cover 

a portion of its administrative 

costs for providing the loan. 

This loan service fee is deducted 

from the total amount of the 

loan before it is disbursed. The 

service fee is the smaller of onehalf of 1 percent (0.5 percent), 

multiplied by the gross loan 

amount, or $7.50 per loan plus 

90 cents for each bale of cotton. 

No service fees are assessed for 

processing or disbursing LDPs.

Research and Promotion Fees 

CCC deducts research and 

promotion fees from upland 

cotton loan proceeds and LDPs 

in accordance with regulations 

for administering the Cotton 

Research and Promotion Act. 

Such fees do not apply to, and 

are not deducted from, ELS loan 

disbursements. CCC remits all 

amounts collected to the Cotton 

Board. For upland cotton loans, 

the fee is $1.00 per bale plus 

one-half percent of the total loan 

value. For LDPs the fee is onehalf percent of the LDP. These 

fees are established by statute.

Cotton Clerk Fee 

If a cotton clerk prepares loan 

documents at the request of a 

producer, the clerk may collect 

fees deducted from the loan 

proceeds, not to exceed the 

following rates: 25 cents for the 

first bale plus 15 cents for bales 

two through six; for seven or 

more bales, $1.00 plus 10 cents 

for each bale over six.

Charges Due at Time of 

Collateral Forfeiture 

Producers are responsible 

for certain unpaid warehouse 

charges if they forfeit their 

cotton loan collateral to CCC 

instead of repaying the loan 

obligation. CCC does not assess 

any fees of its own on forfeited 

cotton. However, CCC pays 

any unpaid warehouse fees that 

apply to the forfeited cotton and 

then invoices the producer for 

such charges. These charges are 

discussed below and normally 

include warehouse receiving 

charges, unpaid warehouse 

compression, storage charges 

that accrued prior to the loan 

and storage charges that accrued 

during the loan period but 

that exceed authorized storage 

credits.

Unpaid Warehouse 

Compression Charges 

CCC disburses MALs for 

cotton with unpaid warehouse 

compression charges. However, 

CCC holds the producer 

responsible for such charges. 

If the cotton under MAL is 

forfeited, CCC invoices the 

producer for all warehouse 

compression charges listed 

as unpaid on the warehouse 

receipt. 

Warehousing Receiving and 

Pre-loan Storage Charges 

The cotton producer (or 

designated agent repaying the 

loan) is responsible for any 

warehouse receiving charges for 

forfeited cotton. If the cotton 

under an MAL is forfeited, CCC 

pays any unpaid warehouse 

receiving charges along with 

any storage charges that accrued 

from the date the warehouse 

received the cotton to the date 

the loan began. CCC invoices 

the producers for these charges. 

Storage Charges during the 

Loan Period of Forfeited 

Cotton

A producer’s responsibility 

for paying storage charges is 

different for forfeited upland 

cotton than it is for Extra Long 

Staple (ELS) cotton. This 

is because current authority 

provides storage credits for 

upland cotton so that upland 

loan obligations can be 

repaid at a value equal to the 

adjusted world price level. 

Thus, if ELS loan collateral is 

forfeited to CCC, the producer 

is responsible for all storage 

charges that accrued from the 
FACT SHEET

Cotton Loans and Fees April 2011

time the warehouse received the 

cotton to the date of forfeiture. 

CCC pays these accrued 

charges to the warehouse and 

subsequently invoices the 

producer.

For upland cotton loan collateral 

that is forfeited, CCC will pay 

all or a portion of warehouse 

storage charges that accrue, 

but only for the period that 

the cotton was pledged as 

loan collateral. CCC storagecredits begin on the “documents 

received date” of the loan. 

This date is the latter of 1) 

the date all loan application 

documents were received, or 

2) the date warehouse receipts 

were received by CCC. Under 

this definition, CCC may 

calculate storage credits starting 

on a date previous to the loan 

disbursement date. 

Storage credits are based on the 

lower of the actual warehouse 

storage rate or the maximum 

storage-credit rate as established 

according to statutory limits. 

For the 2008 through 2012 

crops of upland cotton, CCC 

calculates storage credits based 

on the lesser of the warehouse’s 

2005-crop tariff rate or the 

maximum rate where stored. 

For the 2008 through 2011 

crops, the maximum storage 

credit rates are $3.9330 per 

bale per month for Arizona and 

California, and $2.394 per bale 

per month for all other states. 

For the 2012 crop, the maximum 

storage credit rates are $3.496 

per bale per month for Arizona 

and California, and $2.128 per 

bale per month for all other 

states. These monthly rates 

are converted to an equivalent 

daily-rate basis. 

If the cotton loan collateral is 

forfeited, CCC automatically 

pays the warehouse any unpaid 

receiving charges and all 

accrued storage charges from 

the date the cotton was received 

based on the warehouse’s 

storage rate for loan cotton. 

CCC then invoices the producer 

for any warehouse charges paid 

by CCC including receiving 

charges, compression charges, 

storage charges that accrued 

before the loan was forfeited, 

and any portion of the accrued 

storage charges during the 

period of the loan in excess 

of charges, based on CCC’s 

storage-credit rate. 

Loan Offset and Assignment 

Charges 

A loan offset charge is an 

amount deducted from a loan or 

LDP to pay an amount owed to 

CCC, the FSA, or other federal 

creditors, or for other debts 

having lien status under state 

law. An assignment charge is 

a transfer of a person’s right to 

receive a payment to another 

party. 

Charges Associated with 

Cotton Transfers

CCC does not assume 

responsibility for charges 

associated with relocating 

warehouse-stored loan collateral 

to another warehouse, regardless 

of the reason the cotton is 

relocated. This policy applies 

even if CCC informs a producer 

that cotton loan collateral must 

be moved, such as when a 

warehouse closes or loses its 

authority to store loan bales. 

CCC approves requests from 

agents authorized by producers 

to transfer loan cotton only if 

such agents agree to pay all 

such charges associated with 

the transfer. Thus, in most 

cases, the producer is not billed 

for any charges incurred due 

to a relocation made by the 

producer’s agent. However, 

producers may be responsible 

for relocation charges incurred 

but not paid by their agent. 

Individual transfer charges are 

explained in the following table: 

For More Information

Further information on this and 

other FSA programs is available 

from local FSA offices or on 

FSA’s Web site at: www.fsa.

usda.gov.

The U.S. Department of Agriculture 

(USDA) prohibits discrimination in all 

of its programs and activities on the 

basis of race, color, national origin, 

age, disability, and where applicable, 

sex, marital status, familial status, 

parental status, religion, sexual 

orientation, political beliefs, genetic 

information, reprisal, or because all 

of part of an individual’s income is 

derived from any public assistance 

program. (Not all bases apply to all 

programs.) Persons with disabilities 

who require alternative means for 

communication of program information 

(Braille, large print, audiotape, etc.) 

should contact USDA’s TARGET 

Center at (202) 720-2600 (voice and 

TDD). 

To file a complaint of discrimination, 

write to USDA, Assistant Secretary 

for Civil Rights, Office of the Assistant 

Secretary for Civil Rights, 1400 

Independence Avenue, S.W., Stop 

9410, Washington, DC 20250-9410, 

or call toll-free at (866) 632-9992 

(English) or (800) 877-8339 (TDD) or 

(866) 377-8642 (English Federal-relay) 

or (800) 845-6136 (Spanish Federalrelay). USDA is an equal opportunity 

provider and employer.

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FACT SHEET

Cotton Loans and Fees April 2011

Charge Loan without Transfer Transfer of Loan Collateral

Original Storing 

Warehouse

Shipping 

(Original)Warehouse

Receiving Warehouse

Receiving at 

warehouse

Paid by buyer upon loadout. If collateral is 

forfeited, paid by CCC 

and billed to producer.

Paid by requestor of 

transfer.

Paid by requestor of 

transfer at load-out. If 

forfeited, paid by CCC, 

then billed to producer.

Pre-loan Storage Paid by producer or 

buyer. If collateral is 

forfeited, paid by CCC 

and billed to producer 

based on the CSA rate 

for loan cotton.

Paid by requestor of 

transfer. 

Not applicable. Cotton is 

under loan when received 

under a transfer.

Accrued Storage 

During Loan 

Period

Paid by buyer for 

redeemed cotton. CCC 

may reduce the loan 

repayment amount by all 

or a portion of the

storage charges during 

the loan period based on 

CCC's storage credit rate 

for the warehouse. If 

cotton forfeits, charges 

are paid by CCC and any 

amount exceeding the 

storage-credit rate is 

billed to producer. 

Paid by requestor of 

transfer. 

Paid by buyer for 

redeemed cotton. The loan 

redemption amount may be 

reduced based on the CCC 

storage credit rate 

applicable at the shipping 

warehouse for the entire 

loan period; credits are 

reduced by a fixed two-day 

period for time in transit 

and may be subject to the

75-day limit from the date 

a new EWR is issued by 

receiving warehouse. If 

cotton forfeits, CCC pays 

receiving warehouse based 

on its rate for loan cotton; 

any amount exceeding the 

storage-credit rate at 

receiving warehouse is 

billed to producer.

After Loan Storage Paid by buyer. If 

forfeited, CCC pays the 

warehouse at the CSA 

rate for CCC owned 

cotton.

Not applicable 

because under a 

transfer any after-loan 

storage charges would 

occur at the receiving 

warehouse.

Paid by buyer. If forfeited, 

CCC pays the warehouse at 

the CSA rate for CCC 

owned cotton.

Compression Paid by buyer upon loadout, regardless of 

whether loan is repaid or 

if cotton is bought from 

CCC. If cotton forfeits, 

billed by CCC to 

producer.

Paid by requestor of 

transfer.

Paid by buyer upon loadout, regardless of whether 

loan is repaid or if cotton is 

bought from CCC. If 

cotton forfeits, billed by 

CCC to producer based on 

rate at receiving 

warehouse.

Load-out Paid by buyer. Paid by requestor of 

transfer. 

Paid by buyer.

Freight to 

Receiving 

Warehouse

Paid by producer. N/A Paid by requestor of 

transfer.

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