Commodity Fact Sheet

Rice: 1997 Mar 1997 Marketing Assistance Loan

and Loan Deficiency Payment Pr yment Programs

April 1997

continues Ø

Program Overview

The marketing assistance loan program

provides loans to eligible producers on

rough rice provided as loan collateral at

farm or warehouse locations.

Producers are allowed to deliver the rice

to the Commodity Credit Corporation

upon maturity of the loan as full

repayment of the loan obligation. These

loans assist producers to extend

marketing periods and stabilize prices.

A reduced repayment provision, when

applicable, helps U.S. rice prices remain

competitive in world markets.

A loan deficiency payment (LDP) is a

payment made to a producer who,

although eligible to obtain a marketing

assistance loan, agrees to forgo the

loan in return for the LDP. LDPs are not

available for rice previously pledged as

collateral for a price support loan. An

LDP payment is available only when the

adjusted world price is below the loan

rate.

Eligible Producer

A producer is eligible to receive a

marketing assistance loan if the

producer shares in the risk of producing

the rice on a farm and has beneficial

interest in the rice for which the loan is

requested. The farm must have an

approved Production Flexibility

Contract. Approved cooperatives may

obtain loans on behalf of their eligible

producer members.

Acreage Certification

Requirement

Producers are required to certify their

acreage for crops for which marketing

assistance loan or LDP benefits will be

requested. The final date to certify rice

acreage is July 15 before harvest.

Eligibility--Rice Quality

Requirements

Rice (Oryza sativa) must be U.S. Grade

#5 or better rough rice produced in

1997 and not exceeding 14 percent

moisture, not containing mercurial

compounds, toxin-producing molds, or

other substances poisonous to humans

or animals, and not otherwise

contaminated. Rice is ineligible if it is

milled, parboiled, smutty, infested, or is

a glutinous variety. Grains referred to

as wild rice are ineligible.

Aromatic rice (such as Jasmine

varieties) must be pledged under a loan

agreement separately from nonaromatic rice. Aromatic rice delivered to

CCC must be delivered to CCCapproved storage that is able to store

such rice. Producers shall not receive

any credit for expenses incurred in the

delivery of aromatic rice to storage.

Eligibility--Beneficial Interest

Rice loans and repayments must occur

while the producer has beneficial

interest in the rice; that is, only rice

owned by the producer is eligible, and

loans must be repaid before the rice is

sold or beneficial interest of the

producer terminates.

Loan Rate

The national average loan rate for the

1997-2002 crops of rice is $6.50 per

hundredweight (cwt). To achieve this

national average rate and provide rate

adjustments for different classes and

qualities of rice, separate loan rates are

provided for whole and broken milled

rice kernels. For 1997-crop rice, the

whole kernel loan rates per pound are

10.69 cents for long grain and 9.69

cents for medium and short grain. The

broken kernel rate is 5.35 cents per

pound. Additionally, discounts apply to

rice that is U.S. Grade #3 or lower.

Farm And Warehouse Stored

Loan Rates

Loan rates for farm-stored rice (or rice

for which the grade and milling yield are

not determined) are based on state

average grade and milling qualities for

the prior three years. The farm-stored

marketing assistance loan rates for

1997-crop rice are:

Long Medium Short

Grain Grain Grain

($/Cwt) ($/Cwt) ($/Cwt)

Arkansas 6.66 6.31 6.07

California 6.11 6.09 6.07

Louisiana 6.60 6.11 6.07

Mississippi 6.58 6.14 6.07

Missouri 6.68 6.14 6.07

Texas 6.85 6.17 6.07

Other (USA Avg) 6.67 6.14 6.07

Loan rates for warehouse-stored rice

are based on class, quality, and milling

yield determinations obtained from

grading and milling a sample of the

individual lot of rice. The milling quality

of rice is the quantity of milled whole

and milled broken kernels produced

when rough rice is well milled. Milling

quality is determined by milling a

sample of the rice. The following

example assumes that the milling of 1

cwt of long grain rice yields 55 pounds

of whole kernels, 15 pounds of broken

kernels, and 30 pounds of hulls and
Commodity Fact Sheet

Rice: 1997 Marketing Assistance Loan and

Loan Deficiency Payment Programs

The United States Department of Agriculture

(USDA) prohibits discrimination in its programs on

the basis of race, color, national origin, sex, religion, age, disability, political beliefs and marital or

familial status. (Not all prohibited bases apply to all

programs.) Persons with disabilities who require

alternative means for communication of program

information (braille, large print, audiotape, etc.)

should contact the USDA Office of Communications at (202) 720-2791.

To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture, Washington,

D.C., 20250, or call 1 800-245-6340 (voice) or (202)

720-1127 (TDD).

USDA is an equal employment opportunity em2 ployer.

bran (for which no loan value is

provided). The loan value for long grain

rough rice of this milling quality would

be calculated as follows:

55 lbs whole x 10.69 cents/lb = $5.88

15 lbs broken x 5.35 cents/lb = 0.80

Loan value per cwt rough rice $6.68

Applicable discounts may be applied to

this rate for grade or smut. Costs

associated with storing rice while under

loan are the responsibility of the

producer.

Discounts for Grade and Smut

Loan rates are subject to discounts for

grade and smut content. Rice must be

U.S. Grade # 5 or better for loan

eligibility. Discounts for grade (per cwt

of rough rice) are 30 cents for Grade 3,

60 cents for Grade 4, and $1.00 for

Grade 5. If upon delivery to CCC, the

rice is found to be lower than Grade #5,

the rice is discounted $2.00 for Grade 6

and $5.50 for sample grade. Sample

grade rice may be subject to additional

discounts.

Smutty rice contains over 3.0 percent

smut and is ineligible for loan.

Discounts (per cwt of rough rice) for

smut content are 5 cents for 0.1 to 1.0

percent smut; 10 cents for 1.1 to 2.0

percent smut; and 15 cents for 2.1 to

3.0 percent smut.

Availability Period and Maturity

Loans and LDPs are available upon

harvest of the rice through May 31 of

the following year. Loans mature on

demand, but not later than the last day

of the 9th calendar month after the

month in which the loan was disbursed.

Loans may be repaid at any time before

the loan maturity date.

Loan Repayment And

Settlement

A marketing assistance loan can be (1)

repaid at the lower of the loan rate plus

accumulated interest or the adjusted

world price of rice, or (2) settled in full

upon maturity by delivery to the CCC of

the rice provided as collateral for the

loan.

Announcement of World

Price and LDP Rates

The world price of rice is announced

every Tuesday at 3 pm eastern time

along with applicable loan gains and

LDP rates. If the Tuesday is a federal

holiday or not a government workday,

the announcements are made on the

next workday. Announced world prices

and rates are applicable until the next

announcement. Producers can obtain

these prices and rates from their local

Farm Service Agency office.

The prices, as well as other agency

news releases and media advisories

are available on the World Wide Web at

the Farm Service Agency home page:

http://www.fsa.usda.gov

If the world price is below the loan rate

when the loan is repaid, the producer is

allowed to retain the difference between

the loan rate and the world price. This

retained amount is referred to as the

loan gain. Loan gains and LDP rates

are calculated and announced

separately for long, medium and short

grain rice based on national average

qualities of rice and are not adjusted for

individual loans. Gains and LDP rates

are announced weekly along with the

world price levels.

Loan repayments at a rate less than the

loan rate plus accumulated interest are

not accepted during the one-hour period

preceding the announcement unless the

repayment rate has been locked in

using a CCC 681-1. (Loans repaid at

the original loan rate plus interest are

not subject to this restriction.) Also,

loans repaid under the marketing loan

provision require submission of

acceptable production evidence.

World price levels are calculated based

on the prices of milled rice in major

world markets and U.S. costs of

exporting milled rice.

Interest Rate

The interest rate charged on loans is

based on the rate charged by the U.S.

Treasury to the Commodity Credit

Corporation (CCC) plus 1 percentage

point. Any loans outstanding as of

December 31 will be subject to the

January interest rate from January 1

until the loan is repaid.

LDPs for Rice Sold Upon

Harvest

Producers may receive LDPs for rice

delivered directly from the field to a

processor, buyer, warehouse, or

cooperative and receive the LDP rate

effective on the date of delivery.

Request for such payments must be

made on or before the date of harvest.

Rice quantities included under such

requests are not eligible for price

support loans, even if the LDP rate on

the date of delivery is zero.

Limitation of Loan Gains and

LDPs

Gains from repayment of one or more

loans at a rate lower than the original

loan rate and from LDPs may not

exceed $75,000 per person for all

marketing assistance commodities.