II

105TH CONGRESS

2D SESSION S. 1918

To require the Secretary of Agriculture to make available to producers of

the 1998 and subsequent crops of wheat and feed grains nonrecourse

loans that provide a fair return to the producers in relation to the

cost of production.

IN THE SENATE OF THE UNITED STATES

APRIL 2, 1998

Mr. DORGAN (for himself, Mr. DASCHLE, Mr. WELLSTONE, Mr. JOHNSON,

Mr. CONRAD, Mr. HARKIN, and Mr. BAUCUS) introduced the following

bill; which was read twice and referred to the Committee on Agriculture,

Nutrition, and Forestry

A BILL

To require the Secretary of Agriculture to make available

to producers of the 1998 and subsequent crops of wheat

and feed grains nonrecourse loans that provide a fair

return to the producers in relation to the cost of production.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Cost of Production

5 Safety Net Act of 1998’’.
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•S 1918 IS

1 SEC. 2. DEFINITIONS.

2 In this Act:

3 (1) LOAN COMMODITY.—The term ‘‘loan com4 modity’’ means wheat, corn, oats, rye, barley, and

5 grain sorghums.

6 (2) SECRETARY.—The term ‘‘Secretary’’ means

7 the Secretary of Agriculture.

8 SEC. 3. FAIR RETURN COMMODITY LOANS FOR WHEAT AND

9 FEED GRAINS.

10 (a) IN GENERAL.—

11 (1) LOANS.—For each of the 1998 and subse12 quent crops of a loan commodity, the Secretary shall

13 make available to producers on a farm described in

14 paragraph (2) nonrecourse fair return commodity

15 loans at such rate as the Secretary determines will

16 provide a fair return to the producers in relation to

17 the cost of production of the loan commodity.

18 (2) ELIGIBILITY.—To be eligible to obtain a

19 loan for a loan commodity under paragraph (1), the

20 producers on a farm must agree to forgo obtaining

21 a marketing assistance loan under subtitle C of the

22 Agricultural Market Transition Act (7 U.S.C. 7231

23 et seq.) with respect to the loan commodity.

24 (b) LOAN RATES.—

25 (1) WHEAT AND CORN.—
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1 (A) IN GENERAL.—The loan rate for wheat

2 and corn, respectively, determined under sub3 section (a) shall not be less than 75 percent of

4 the simple average of the annual economic costs

5 of production of wheat and corn, respectively, in

6 the United States during the most recent 5

7 crop years for which data are available.

8 (B) CALCULATION.—The costs of produc9 tion under subparagraph (A) shall be based on

10 the yield for each planted acre, as determined

11 by the Secretary using the economic costs of

12 production data series of the Economic Re13 search Service.

14 (2) OTHER FEED GRAINS.—The loan rate for

15 grain sorghum, barley, and oats, respectively, deter16 mined under subsection (a) shall be established at

17 such level as the Secretary determines is fair and

18 reasonable in relation to the rate that loans are

19 made available for corn, taking into consideration

20 the feeding value of the commodity in relation to the

21 feeding value of corn.

22 (c) TERM OF LOANS.—

23 (1) IN GENERAL.—Subject to paragraph (2), a

24 fair return commodity loan made under this section

25 shall have a term of 12 months beginning on the
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1 first day of the first month after the month in which

2 the loan is made.

3 (2) EXTENSION.—The Secretary may extend

4 the term of a fair return commodity loan made to

5 producers on a farm for any loan commodity for 1

6 6-month period if the Secretary determines that the

7 extension would be beneficial to the producers in

8 marketing the loan commodity.

9 (d) REPAYMENT RATES.—The Secretary shall permit

10 the producers on a farm to repay a fair return commodity

11 loan under this section for a loan commodity at a rate

12 that is the lesser of—

13 (1) the loan rate established for the loan com14 modity under subsection (b), plus interest (as deter15 mined by the Secretary); or

16 (2) a rate that the Secretary determines will—

17 (A) minimize potential loan forfeitures;

18 (B) minimize the accumulation of stocks of

19 the loan commodity by the Federal Govern20 ment;

21 (C) minimize the cost incurred by the Fed22 eral Government in storing the loan commodity;

23 and
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1 (D) allow the loan commodity produced in

2 the United States to be marketed freely and

3 competitively, domestically and internationally.

4 SEC. 4. LIMITATIONS.

5 (a) MAXIMUM QUANTITY OF LOAN COMMODITIES.—

6 The maximum quantity of a loan commodity that produc7 ers on a farm are eligible to place under loan to receive

8 a fair return commodity loan under this Act during any

9 crop year shall be—

10 (1) in the case of wheat, 20,000 bushels;

11 (2) in the case of corn, 30,000 bushels; and

12 (3) in the case of grain sorghum, barley, and

13 oats, a quantity that the Secretary determines is

14 equivalent to 30,000 bushels of corn.

15 (b) MAXIMUM AMOUNT OF LOANS AND PAYMENTS.—

16 (1) IN GENERAL.—The total amount of fair re17 turn commodity loans that a person shall be entitled

18 to receive under this Act for 1 or more loan com19 modities during any crop year shall not exceed

20 $100,000.

21 (2) REGULATION.—

22 (A) IN GENERAL.—The Secretary shall

23 promulgate a regulation—

24 (i) defining the term ‘‘person’’ for

25 purposes of this subsection; and
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1 (ii) prescribing such rules as the Sec2 retary determines are necessary to ensure

3 a fair and reasonable application of the

4 limitation established under this sub5 section.

6 (B) RELATED PROVISIONS.—Except as

7 provided in subsection (g), the regulation shall

8 be consistent with paragraphs (5) through (7)

9 of section 1001 of the Food Security Act of

10 1985 (7 U.S.C. 1308).

11 (c) ELIGIBILITY FOR LOANS AND PAYMENTS.—To be

12 eligible for a fair return commodity loan for a loan com13 modity under this Act, the producers on a farm shall—

14 (1) be individuals who own the loan commodity,

15 directly or indirectly;

16 (2) provide resident, day-to-day labor for and

17 management of the farm; and

18 (3) provide capital investment in—

19 (A) the operation of the farm; and

20 (B) the leasing or ownership of the farm.

21 SEC. 5. ADMINISTRATION.

22 (a) REGULATIONS.—Not later than 90 days after the

23 date of enactment of this Act, the Secretary and the Com24 modity Credit Corporation, as appropriate, shall promul-
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1 gate such regulations as are necessary to carry out this

2 Act.

3 (b) RELATED PROVISIONS.—Subtitle E of the Agri4 cultural Market Transition Act (7 U.S.C. 7281 et seq.)

5 shall apply to fair return commodity loans made under

6 this Act.

7 SEC. 6. EXTENSION OF MARKETING ASSISTANCE LOANS.

8 Section 133 of the Agricultural Market Transition

9 Act (7 U.S.C. 7233) is amended by striking subsection

10 (c) and inserting the following:

11 ‘‘(c) EXTENSION.—The Secretary may extend the

12 term of a marketing assistance loan made to producers

13 on a farm for any loan commodity for 1 9-month period

14 if the Secretary determines that the extension would be

15 beneficial to the producers in marketing the loan commod16 ity.’’.

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