Union Calendar No. 223
104TH CONGRESS
2D SESSION
H. R. 2854
[Report No. 104–462, Parts I and II]
A BILL
To modify the operation of certain agricultural
programs.
FEBRUARY 9, 1996
Reported from the Committee on Agriculture with an
amendment
FEBRUARY 9, 1996
Referral to the Committee on Ways and Means extended
for a period ending not later than February 9, 1996
FEBRUARY 9, 1996
Committee on Ways and Means discharged; committed to
the Committee of the Whole House on the State of the
Union and ordered to be printed
IB
Union Calendar No. 223
104TH CONGRESS
2D SESSION
H. R. 2854
[Report No. 104–462, Parts I and II]
To modify the operation of certain agricultural programs.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1996
Mr. ROBERTS (for himself, Mr. EMERSON, Mr. ALLARD, Mr. BARRETT of Ne-
braska, Mr. EWING, Mr. COMBEST, Mr. BOEHNER, Mr. CHAMBLISS, and
Mr. NETHERCUTT) introduced the following bill; which was referred to
the Committee on Agriculture, and in addition to the Committee on Ways
and Means, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned
FEBRUARY 9, 1996
Additional sponsors: Mr. TIAHRT, Mr. EVERETT, Mr. LEWIS of Kentucky, Mr.
SMITH of Michigan, Mr. CHRYSLER, Mr. EHLERS, and Mr. GUNDERSON
FEBRUARY 9, 1996
Reported from the Committee on Agriculture with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
FEBRUARY 9, 1996
Referral to the Committee on Ways and Means extended for a period ending
not later than February 9, 1996
FEBRUARY 9, 1996
Committee on Ways and Means discharged; committed to the Committee of
the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on January 5, 1996]
A BILL
To modify the operation of certain agricultural programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Ag-
ricultural Market Transition Act’’.
(b) TABLE OF CONTENTS.—The table of contents of this
Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—AGRICULTURAL MARKET TRANSITION PROGRAM
Sec. 101. Purpose.
Sec. 102. Definitions.
Sec. 103. Production flexibility contracts.
Sec. 104. Nonrecourse marketing assistance loans and loan deficiency payments.
Sec. 105. Payment limitations.
Sec. 106. Peanut program.
Sec. 107. Sugar program.
Sec. 108. Administration.
Sec. 109. Elimination of permanent price support authority.
Sec. 110. Effect of amendments.
TITLE II—DAIRY
Subtitle A—Milk Price Support and Other Activities
Sec. 201. Milk price support program.
Sec. 202. Recourse loans for commercial processors of dairy products.
Sec. 203. Dairy export incentive program.
Sec. 204. Dairy promotion program.
Sec. 205. Fluid milk standards under milk marketing orders.
Sec. 206. Manufacturing allowance.
Sec. 207. Establishment of temporary Class I price and temporary Class I equali-
zation pools.
Sec. 208. Establishment of temporary Class IV price and temporary Class IV
equalization pool.
Sec. 209. Authority for establishment of standby pools.
Subtitle B—Reform of Federal Milk Marketing Orders
Sec. 221. Issuance or amendment of Federal milk marketing orders to implement
certain reforms.
Sec. 222. Reform process.
Sec. 223. Effect of failure to comply with reform process requirements.
TITLE III—CONSERVATION
Sec. 301. Conservation.
TITLE IV—AGRICULTURAL PROMOTION AND EXPORT
PROGRAMS
Sec. 401. Market promotion program.
Sec. 402. Export enhancement program.
TITLE V—MISCELLANEOUS
Sec. 501. Crop insurance.
Sec. 502. Collection and use of agricultural quarantine and inspection fees.
Sec. 503. Commodity Credit Corporation interest rate.
Sec. 504. Establishment of Office of Risk Management.
Sec. 505. Business Interruption Insurance Program.
Sec. 506. Continuation of options pilot program.
TITLE VI—COMMISSION ON 21ST CENTURY PRODUCTION
AGRICULTURE
Sec. 601. Establishment.
Sec. 602. Composition.
Sec. 603. Comprehensive review of past and future of production agriculture.
Sec. 604. Reports.
Sec. 605. Powers.
Sec. 606. Commission procedures.
Sec. 607. Personnel matters.
Sec. 608. Termination of Commission.
TITLE VII—EXTENSION OF CERTAIN AUTHORITIES
Sec. 701. Extension of authority under Public Law 480.
Sec. 702. Extension of food for progress program.
TITLE I—AGRICULTURAL
MARKET TRANSITION PROGRAM
SEC. 101. PURPOSE.
It is the purpose of this title—
(1) to authorize the use of binding production
flexibility contracts between the United States and ag-
ricultural producers to support farming certainty and
flexibility while ensuring continued compliance with
farm conservation compliance plans and wetland pro-
tection requirements;
(2) to make nonrecourse marketing assistance
loans and loan deficiency available for certain crops;
(3) to improve the operation of farm programs
for peanuts and sugar; and
(4) to terminate price support authority under
the Agricultural Act of 1949.
SEC. 102. DEFINITIONS.
In this title:
(1) CONSIDERED PLANTED.—The term ‘‘consid-
ered planted’’ means acreage that is considered plant-
ed under title V of the Agricultural Act of 1949 (7
U.S.C. 1461 et seq.) (as in effect prior to the amend-
ment made by section 109(b)(2)).
(2) CONTRACT.—The term ‘‘contract’’ means a
production flexibility contract entered into under sec-
tion 103.
(3) CONTRACT
ACREAGE.—The term ‘‘contract
acreage’’ means 1 or more crop acreage bases estab-
lished for contract commodities under title V of the
Agricultural Act of 1949 (as in effect prior to the
amendment made by section 109(b)(2)) that would
have been in effect for the 1996 crop (but for the
amendment made by section 109(b)(2)).
(4) CONTRACT COMMODITY.—The term ‘‘contract
commodity’’ means wheat, corn, grain sorghum, bar-
ley, oats, upland cotton, and rice.
(5) CONTRACT
PAYMENT.—The term ‘‘contract
payment’’ means a payment made under section 103
pursuant to a contract.
(6) CORN.—The term ‘‘corn’’ means field corn.
(7) DEPARTMENT.—The term ‘‘Department’’
means the United States Department of Agriculture.
(8) FARM PROGRAM PAYMENT YIELD.—The term
‘‘farm program payment yield’’ means the farm pro-
gram payment yield established for the 1995 crop of
a contract commodity under title V of the Agricul-
tural Act of 1949 (as in effect prior to the amendment
made by section 109(b)(2)).
(9) LOAN
COMMODITY.—The term ‘‘loan com-
modity’’ means each contract commodity, extra long
staple cotton, and oilseeds.
(10) OILSEED.—The term ‘‘oilseed’’ means a
crop of soybeans, sunflower seed, rapeseed, canola, saf-
flower, flaxseed, mustard seed, or, if designated by the
Secretary, other oilseeds.
(11) PERSON.—The term ‘‘person’’ means an in-
dividual, partnership, firm, joint-stock company, cor-
poration, association, trust, estate, or State agency.
(12) PRODUCER.—
(A) IN
GENERAL.—The term ‘‘producer’’
means a person who, as owner, landlord, tenant,
or sharecropper, shares in the risk of producing
a crop, and is entitled to share in the crop avail-
able for marketing from the farm, or would have
shared had the crop been produced.
(B) HYBRID SEED.—The term ‘‘producer’’
includes a person growing hybrid seed under
contract. In determining the interest of a grower
of hybrid seed in a crop, the Secretary shall not
take into consideration the existence of a hybrid
seed contract.
(13) PROGRAM.—The term ‘‘program’’ means the
agricultural market transition program established
under this title.
(14) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Agriculture.
(15) STATE.—The term ‘‘State’’ means each of
the several States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, and
any other territory or possession of the United States.
(16) 
UNITED
STATES.—The 
term 
‘‘United
States’’, when used in a geographical sense, means all
of the States.
SEC. 103. PRODUCTION FLEXIBILITY CONTRACTS.
(a) CONTRACTS AUTHORIZED.—
(1) OFFER AND TERMS.—Beginning as soon as
practicable after the date of the enactment of this
title, the Secretary shall offer to enter into a contract
with an eligible owner or operator described in para-
graph (2) on a farm containing eligible farmland.
Under the terms of a contract, the owner or operator
shall agree, in exchange for annual contract pay-
ments, to comply with—
(A) the conservation plan for the farm pre-
pared in accordance with section 1212 of the
Food Security Act of 1985 (16 U.S.C. 3812);
(B) wetland protection requirements appli-
cable to the farm under subtitle C of title XII of
the Act (16 U.S.C. 3821 et seq.); and
(C) the planting flexibility requirements of
subsection (j).
(2) ELIGIBLE
OWNERS
AND
OPERATORS
DE-
SCRIBED.—The following persons shall be considered
to be an owner or operator eligible to enter into a
contract:
(A) An owner of eligible farmland who as-
sumes all of the risk of producing a crop.
(B) An owner of eligible farmland who
shares in the risk of producing a crop.
(C) An operator of eligible farmland with a
share-rent lease of the eligible farmland, regard-
less of the length of the lease, if the owner enters
into the same contract.
(D) An operator of eligible farmland who
cash rents the eligible farmland under a lease ex-
piring on or after September 30, 2002, in which
case the consent of the owner is not required.
(E) An operator of eligible farmland who
cash rents the eligible farmland under a lease ex-
piring before September 30, 2002, if the owner
consents to the contract.
(F) An owner of eligible farmland who cash
rents the eligible farmland and the lease term ex-
pires before September 30, 2002, but only if the
actual operator of the farm declines to enter into
a contract. In the case of an owner covered by
this subparagraph, contract payments shall not
begin under a contract until the fiscal year fol-
lowing the fiscal year in which the lease held by
the nonparticipating operator expires.
(G) An owner or operator described in any
preceding subparagraph of this paragraph re-
gardless of whether the owner or operator pur-
chased catastrophic risk protection for a fall-
planted 1996 crop under section 508(b) of the
Federal Crop Insurance Act (7 U.S.C. 1508(b)).
(3) TENANTS AND SHARECROPPERS.—In carry-
ing out this section, the Secretary shall provide ade-
quate safeguards to protect the interests of operators
who are tenants and sharecroppers.
(b) ELEMENTS.—
(1) TIME FOR CONTRACTING.—
(A) DEADLINE.—Except as provided in sub-
paragraph (B), the Secretary may not enter into
a contract after April 15, 1996.
(B) CONSERVATION RESERVE LANDS.—
(i) IN GENERAL.—At the beginning of
each fiscal year, the Secretary shall allow
an eligible owner or operator on a farm cov-
ered by a conservation reserve contract en-
tered into under section 1231 of the Food
Security Act of 1985 (16 U.S.C. 3831) that
terminates after the date specified in sub-
paragraph (A) to enter into or expand a
production flexibility contract to cover the
contract acreage of the farm that was sub-
ject to the former conservation reserve con-
tract.
(ii) 
AMOUNT.—Contract 
payments
made for contract acreage under this sub-
paragraph shall be made at the rate and
amount applicable to the annual contract
payment level for the applicable crop.
(2) DURATION OF CONTRACT.—
(A) BEGINNING
DATE.—A contract shall
begin with—
(i) the 1996 crop of a contract com-
modity; or
(ii) in the case of acreage that was sub-
ject to a conservation reserve contract de-
scribed in paragraph (1)(B), the date the
production flexibility contract was entered
into or expanded to cover the acreage.
(B) ENDING DATE.—A contract shall extend
through the 2002 crop.
(3) ESTIMATION OF CONTRACT PAYMENTS.—At
the time the Secretary enters into a contract, the Sec-
retary shall provide an estimate of the minimum con-
tract payments anticipated to be made during at
least the first fiscal year for which contract payments
will be made.
(c) ELIGIBLE FARMLAND DESCRIBED.—Land shall be
considered to be farmland eligible for coverage under a con-
tract only if the land has contract acreage attributable to
the land and—
(1) for at least 1 of the 1991 through 1995 crops,
at least a portion of the land was enrolled in the acre-
age reduction program authorized for a crop of a con-
tract commodity under section 101B, 103B, 105B, or
107B of the Agricultural Act of 1949 (as in effect
prior to the amendment made by section 109(b)(2)) or
was considered planted;
(2) was subject to a conservation reserve contract
under section 1231 of the Food Security Act of 1985
(16 U.S.C. 3831) whose term expired, or was volun-
tarily terminated, on or after January 1, 1995; or
(3) is released from coverage under a conserva-
tion reserve contract by the Secretary during the pe-
riod beginning on January 1, 1995, and ending on
the date specified in subsection (b)(1)(A).
(d) TIME FOR PAYMENT.—
(1) IN GENERAL.—An annual contract payment
shall be made not later than September 30 of each of
fiscal years 1996 through 2002.
(2) ADVANCE PAYMENTS.—
(A) FISCAL YEAR 1996.—At the option of the
owner or operator, 50 percent of the contract
payment for fiscal year 1996 shall be made not
later than June 15, 1996.
(B) SUBSEQUENT
FISCAL
YEARS.—At the
option of the owner or operator for fiscal year
1997 and each subsequent fiscal year, 50 percent
of the annual contract payment shall be made on
December 15.
(e) AMOUNTS AVAILABLE FOR CONTRACT PAYMENTS
FOR EACH FISCAL YEAR.—
(1) IN GENERAL.—The Secretary shall, to the
maximum extent practicable, expend on a fiscal year
basis the following amounts to satisfy the obligations
of the Secretary under all contracts:
(A) For fiscal year 1996, $5,570,000,000.
(B) For fiscal year 1997, $5,385,000,000.
(C) For fiscal year 1998, $5,800,000,000.
(D) For fiscal year 1999, $5,603,000,000.
(E) For fiscal year 2000, $5,130,000,000.
(F) For fiscal year 2001, $4,130,000,000.
(G) For fiscal year 2002, $4,008,000,000.
(2) ALLOCATION.—The amount made available
for a fiscal year under paragraph (1) shall be allo-
cated as follows:
(A) For wheat, 26.26 percent.
(B) For corn, 46.22 percent.
(D) subtracting an amount equal to the
amount, if any, necessary during that fiscal year
to satisfy payment requirements for the commod-
ity under sections 103B, 105B, or 107B of the
Agricultural Act of 1949 (as in effect prior to the
amendment made by section 109(b)(2)) for the
1994 and 1995 crop years.
(4) SPECIAL ADJUSTMENT TO COVER EXISTING
RICE PAYMENT REQUIREMENTS.—As soon as possible
after the date of the enactment of this Act, the Sec-
retary shall determine the amount, if any, necessary
to satisfy remaining payment requirements under sec-
tion 101B of the Agricultural Act of 1949 (as in effect
prior to the amendment made by section 109(b)(2))
for the 1994 and 1995 crops of rice. The total amount
determined under this paragraph shall be deducted,
in equal amounts each fiscal year, from the amount
allocated for rice under paragraph (2)(G) for fiscal
years after the fiscal year in which the final remain-
ing payments are made for rice.
(f) DETERMINATION OF CONTRACT PAYMENTS.—
(1) INDIVIDUAL
PAYMENT
QUANTITY
OF
CON-
TRACT COMMODITIES.—For each contract, the pay-
ment quantity of a contract commodity for each fiscal
year shall be equal to the product of—
(A) 85 percent of the contract acreage; and
(B) the farm program payment yield.
(2) ANNUAL PAYMENT QUANTITY OF CONTRACT
COMMODITIES.—The payment quantity of each con-
tract commodity covered by all contracts for each fis-
cal year shall equal the sum of the amounts calculated
under paragraph (1) for each individual contract.
(3) ANNUAL PAYMENT RATE.—The payment rate
for a contract commodity for each fiscal year shall be
equal to—
(A) the amount made available under sub-
section (e) for the contract commodity for the fis-
cal year; divided by
(B) the amount determined under para-
graph (2) for the fiscal year.
(4) ANNUAL PAYMENT AMOUNT.—The amount to
be paid under a contract in effect for each fiscal year
with respect to a contract commodity shall be equal
to the product of—
(A) the payment quantity determined under
paragraph (1) with respect to the contract; and
(B) the payment rate in effect under para-
graph (3).
(5) ASSIGNMENT OF CONTRACT PAYMENTS.—The
provisions of section 8(g) of the Soil Conservation and
Domestic Allotment Act (16 U.S.C. 590h(g)) (relating
to assignment of payments) shall apply to contract
payments under this subsection. The owner or opera-
tor making the assignment, or the assignee, shall pro-
vide the Secretary with notice, in such manner as the
Secretary may require in the contract, of any assign-
ment made under this paragraph.
(6) SHARING
OF
CONTRACT
PAYMENTS.—The
Secretary shall provide for the sharing of contract
payments among the owners and operators subject to
the contract on a fair and equitable basis.
(g) PAYMENT LIMITATION.—The total amount of con-
tract payments made to a person under a contract during
any fiscal year may not exceed the payment limitations es-
tablished under sections 1001 through 1001C of the Food
Security Act of 1985 (7 U.S.C. 1308 through 1308–3).
(h) EFFECT OF VIOLATION.—
(1) TERMINATION OF CONTRACT.—Except as pro-
vided in paragraph (2), if an owner or operator sub-
ject to a contract violates the conservation plan for
the farm containing eligible farmland under the con-
tract, wetland protection requirements applicable to
the farm, or the planting flexibility requirements of
subsection (j), the Secretary shall terminate the con-
tract with respect to the owner or operator on each
farm in which the owner or operator has an interest.
On the termination, the owner or operator shall for-
feit all rights to receive future contract payments on
each farm in which the owner or operator has an in-
terest and shall refund to the Secretary all contract
payments received by the owner or operator during
the period of the violation, together with interest on
the contract payments as determined by the Sec-
retary.
(2) REFUND OR ADJUSTMENT.—If the Secretary
determines that a violation does not warrant termi-
nation of the contract under paragraph (1), the Sec-
retary may require the owner or operator subject to
the contract—
(A) to refund to the Secretary that part of
the contract payments received by the owner or
operator during the period of the violation, to-
gether with interest on the contract payments as
determined by the Secretary; or
(B) to accept a reduction in the amount of
future contract payments that is proportionate
to the severity of the violation, as determined by
the Secretary.
(3) FORECLOSURE.—An owner or operator sub-
ject to a contract may not be required to make repay-
ments to the Secretary of amounts received under the
contract if the contract acreage has been foreclosed on
and the Secretary determines that forgiving the re-
payments is appropriate in order to provide fair and
equitable treatment. This paragraph shall not void
the responsibilities of such an owner or operator
under the contract if the owner or operator continues
or resumes operation, or control, of the contract acre-
age. On the resumption of operation or control over
the contract acreage by the owner or operator, the
provisions of the contract in effect on the date of the
foreclosure shall apply.
(4) REVIEW.—A determination of the Secretary
under this subsection shall be considered to be an ad-
verse decision for purposes of the availability of ad-
ministrative review of the determination.
(i) TRANSFER OF INTEREST IN LANDS SUBJECT TO
CONTRACT.—
(1) EFFECT OF TRANSFER.—Except as provided
in paragraph (2), the transfer by an owner or opera-
tor subject to a contract of the right and interest of
the owner or operator in the contract acreage shall re-
sult in the termination of the contract with respect to
the acreage, effective on the date of the transfer, unless
the transferee of the acreage agrees with the Secretary
to assume all obligations of the contract. At the re-
quest of the transferee, the Secretary may modify the
contract if the modifications are consistent with the
objectives of this section as determined by the Sec-
retary.
(2) EXCEPTION.—If an owner or operator who is
entitled to a contract payment dies, becomes incom-
petent, or is otherwise unable to receive the contract
payment, the Secretary shall make the payment, in
accordance with regulations prescribed by the Sec-
retary.
(j) PLANTING FLEXIBILITY.—
(1) PERMITTED CROPS.—Subject to paragraph
(2), any commodity or crop may be planted on con-
tract acreage on a farm.
(2) LIMITATIONS.—
(A) HAYING AND GRAZING.—
(i) TIME
LIMITATIONS.—Haying and
grazing on land exceeding 15 percent of the
contract acreage on a farm as provided in
clause (iii) shall be permitted, except during
any consecutive 5-month period between
April 1 and October 31 that is determined
by the State committee established under
section 8(b) of the Soil Conservation and
Domestic Allotment Act (6 U.S.C. 590h(b))
for a State. In the case of a natural disas-
ter, the Secretary may permit unlimited
haying and grazing on the contract acreage
of a farm.
(ii) CONTRACT
COMMODITIES.—Con-
tract acreage planted to a contract commod-
ity for harvest may be hayed or grazed at
any time without limitation.
(iii) HAYING AND GRAZING LIMITATION
ON PORTION OR CONTRACT ACREAGE.—Un-
limited haying and grazing shall be per-
mitted on not more than 15 percent of the
contract acreage on a farm.
(B) ALFALFA.—Alfalfa may be grown on
contract acreage in excess of the acreage limita-
tion in subparagraph (A)(iii) and without re-
gard to the time limitation in subparagraph
(A)(i), except that each contract acre on a farm
that is planted for harvest to alfalfa in excess of
15 percent of the total contract acreage on the
farm shall be ineligible for contract payments.
(C) FRUITS AND VEGETABLES.—
(i) IN
GENERAL.—The planting for
harvest of fruits and vegetables shall be pro-
hibited on contract acreage, except in any
region in which there is a history of double-
cropping, as determined by the Secretary.
(ii) UNRESTRICTED
VEGETABLES.—
Notwithstanding clause (i), lentils, mung
beans, and dry peas may be planted for
harvest without limitation on contract acre-
age.
SEC. 104. NONRECOURSE MARKETING ASSISTANCE LOANS
AND LOAN DEFICIENCY PAYMENTS.
(a) 
AVAILABILITY
OF
MARKETING
ASSISTANCE
LOANS.—
(1) NONRECOURSE LOANS AVAILABLE.—For each
of the 1996 through 2002 crops of each loan commod-
ity, 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 es-
tablished under subsection (b) for the loan commodity.
(2) ELIGIBLE PRODUCTION.—The following pro-
duction shall be eligible for a marketing assistance
loan under paragraph (1):
(A) In the case of a marketing assistance
loan for a contract commodity, any production
by a producer who has entered into a production
flexibility contract.
(B) In the case of a marketing assistance
loan for extra long staple cotton and oilseeds,
any production.
(3) RECOURSE
LOANS
FOR
HIGH
MOISTURE
FEED GRAINS.—
(A) RECOURSE
LOANS
AVAILABLE.—For
each of the 1996 through 2002 crops of corn and
grain sorghum, the Secretary shall make avail-
able recourse loans, as determined by the Sec-
retary, to producers on a farm who—
(i) normally harvest all or a portion of
their crop of corn or grain sorghum in a
high moisture state;
(ii) present—
(I) certified scale tickets from an
inspected, certified commercial scale,
including licensed warehouses, feedlots,
feed mills, distilleries, or other similar
entities approved by the Secretary,
pursuant to regulations issued by the
Secretary; or
(II) present field or other physical
measurements of the standing or stored
crop in regions of the country, as de-
termined by the Secretary, that do not
have certified commercial scales from
which certified scale tickets may be ob-
tained within reasonable proximity of
harvest operation;
(iii) certify that they were the owners
of the feed grain at the time of delivery to,
and that the quantity to be placed under
loan under this paragraph was in fact har-
vested on the farm and delivered to, a feed-
lot, feed mill, or commercial or on-farm
high-moisture storage facility, or to such fa-
cilities maintained by the users of corn and
grain sorghum in a high moisture state;
and
(iv) comply with deadlines established
by the Secretary for harvesting the corn or
grain sorghum and submit applications for
loans under this paragraph within dead-
lines established by the Secretary.
(B) 
ELIGIBILITY
OF
ACQUIRED
FEED
GRAINS.—Loans under this paragraph shall be
made on a quantity of corn or grain sorghum of
the same crop acquired by the producer equiva-
lent to a quantity determined by multiplying—
(i) the acreage of the corn or grain sor-
ghum in a high moisture state harvested on
the producer’s farm; by
(ii) the lower of the farm program
payment yield or the actual yield on a field,
as determined by the Secretary, that is
similar to the field from which the corn or
grain sorghum was obtained.
(C) HIGH MOISTURE STATE DEFINED.—In
this paragraph, the term ‘‘high moisture state’’
means corn or grain sorghum having a moisture
content in excess of Commodity Credit Corpora-
tion standards for marketing assistance loans
made by the Secretary under paragraph (1).
(b) LOAN RATES.—
(1) WHEAT.—
(A) LOAN RATE.—Subject to subparagraph
(B), the loan rate for a marketing assistance
loan under subsection (a)(1) for wheat shall be—
(i) not less than 85 percent of the sim-
ple average price received by producers of
wheat, as determined by the Secretary, dur-
ing the marketing years for the immediately
preceding 5 crops of wheat, excluding the
year in which the average price was the
highest and the year in which the average
price was the lowest in the period; but
(ii) not more than $2.58 per bushel.
(B) STOCKS TO USE RATIO ADJUSTMENT.—
If the Secretary estimates for any marketing
year that the ratio of ending stocks of wheat to
total use for the marketing year will be—
(i) equal to or greater than 30 percent,
the Secretary may reduce the loan rate for
wheat for the corresponding crop by an
amount not to exceed 10 percent in any
year;
(ii) less than 30 percent but not less
than 15 percent, the Secretary may reduce
the loan rate for wheat for the correspond-
ing crop by an amount not to exceed 5 per-
cent in any year; or
(iii) less than 15 percent, the Secretary
may not reduce the loan rate for wheat for
the corresponding crop.
(C) NO EFFECT ON FUTURE YEARS.—Any
reduction in the loan rate for wheat under sub-
paragraph (B) shall not be considered in deter-
mining the loan rate for wheat for subsequent
years.
(2) FEED GRAINS.—
(A) LOAN RATE FOR CORN.—Subject to sub-
paragraph (B), the loan rate for a marketing as-
sistance loan under subsection (a)(1) for corn
shall be—
(i) not less than 85 percent of the sim-
ple average price received by producers of
corn, as determined by the Secretary, dur-
ing the marketing years for the immediately
preceding 5 crops of corn, excluding the
year in which the average price was the
highest and the year in which the average
price was the lowest in the period; but
(ii) not more than $1.89 per bushel.
(B) STOCKS TO USE RATIO ADJUSTMENT.—
If the Secretary estimates for any marketing
year that the ratio of ending stocks of corn to
total use for the marketing year will be—
(i) equal to or greater than 25 percent,
the Secretary may reduce the loan rate for
corn for the corresponding crop by an
amount not to exceed 10 percent in any
year;
such quality of cotton and the market
quotations in the designated United States
spot markets for the base quality of upland
cotton), as determined by the Secretary.
(B) LIMITATIONS.—The loan rate for a
marketing assistance loan for upland cotton shall
not be less than $0.50 per pound or more than
$0.5192 per pound.
(4) EXTRA
LONG
STAPLE
COTTON.—The loan
rate for a marketing assistance loan under subsection
(a)(1) for extra long staple cotton shall be—
(A) not less than 85 percent of the simple
average price received by producers of extra long
staple cotton, as determined by the Secretary,
during 3 years of the 5 previous marketing
years, excluding the year in which the average
price was the highest and the year in which the
average price was the lowest in the period; but
(B) not more than $0.7965 per pound.
(5) RICE.—The loan rate for a marketing assist-
ance loan under subsection (a)(1) for rice shall be
$6.50 per hundredweight.
(6) OILSEEDS.—
(A) SOYBEANS.—The loan rate for a mar-
keting assistance loan under subsection (a)(1) for
soybeans shall be $4.92 per bushel.
(B) SUNFLOWER SEED, CANOLA, RAPESEED,
SAFFLOWER, MUSTARD SEED, AND FLAXSEED.—
The loan rates for a marketing assistance loan
under subsection (a)(1) for sunflower seed,
canola, rapeseed, safflower, mustard seed, and
flaxseed, individually, shall be $0.087 per pound.
(C) OTHER OILSEEDS.—The loan rates for
a marketing assistance loan under subsection
(a)(1) for other oilseeds shall be established at
such level as the Secretary determines is fair and
reasonable in relation to the loan rate available
for soybeans, except in no event shall the rate for
the oilseeds (other than cottonseed) be less than
the rate established for soybeans on a per-pound
basis for the same crop.
(c) TERM OF LOAN.—In the case of each loan commod-
ity (other than upland cotton or extra long staple cotton),
a marketing assistance loan under subsection (a)(1) 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. 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 first month after the month in which
the loan is made. The Secretary may not extend the term
of a marketing assistance loan for any loan commodity.
(d) REPAYMENT.—
(1) REPAYMENT RATES GENERALLY.—The Sec-
retary shall permit producers to repay a marketing
assistance loan under subsection (a)(1) for a loan
commodity (other than extra long staple cotton) at a
level that is the lesser of—
(A) the loan rate established for the com-
modity under subsection (b); or
(B) the prevailing world market price for
the commodity (adjusted to United States qual-
ity and location), as determined by the Sec-
retary.
(2) ADDITIONAL REPAYMENT RATES FOR WHEAT,
FEED GRAINS, AND OILSEEDS.—In the case of a mar-
keting assistance loan under subsection (a)(1) for
wheat, corn, grain sorghum, barley, oats, or oilseeds,
the Secretary shall also permit a producer to repay
the loan at such level as the Secretary determines
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 Fed-
eral Government in storing the commodity; and
(D) allow the commodity produced in the
United States to be marketed freely and competi-
tively, both domestically and internationally.
(3) 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 subsection (b),
plus interest (as determined by the Secretary).
(4) PREVAILING
WORLD
MARKET
PRICE.—For
purposes of paragraph (1) and subsection (f), the Sec-
retary shall prescribe by regulation—
(A) a formula to determine the prevailing
world market price for each loan commodity, ad-
justed to United States quality and location; and
(B) a mechanism by which the Secretary
shall announce periodically the prevailing world
market price for each loan commodity.
(5) ADJUSTMENT OF PREVAILING WORLD MAR-
KET PRICE FOR UPLAND COTTON.—
(A) IN GENERAL.—During the period end-
ing July 31, 2003, the prevailing world market
price for upland cotton (adjusted to United
States quality and location) established under
paragraph (4) shall be further adjusted if—
(i) the adjusted prevailing world mar-
ket price is less than 115 percent of the loan
rate for upland cotton established under
subsection (b), as determined by the Sec-
retary; and
(ii) the Friday through Thursday aver-
age price quotation for the lowest-priced
United States growth as quoted for Mid-
dling (M) 13⁄32-inch cotton delivered C.I.F.
Northern Europe is greater than the Friday
through Thursday average price of the 5
lowest-priced growths of upland cotton, as
quoted for Middling (M) 13⁄32-inch cotton,
delivered C.I.F. Northern Europe (referred
to in this subsection as the ‘‘Northern Eu-
rope price’’).
(B) FURTHER
ADJUSTMENT.—Except as
provided in subparagraph (C), the adjusted pre-
vailing world market price for upland cotton
shall be further adjusted on the basis of some or
all of the following data, as available:
(i) The United States share of world
exports.
(ii) The current level of cotton export
sales and cotton export shipments.
(iii) Other data determined by the Sec-
retary to be relevant in establishing an ac-
curate prevailing world market price for
upland cotton (adjusted to United States
quality and location).
(C) LIMITATION
ON
FURTHER
ADJUST-
MENT.—The adjustment under subparagraph (B)
may not exceed the difference between—
(i) the Friday through Thursday aver-
age price for the lowest-priced United States
growth as quoted for Middling 13⁄32-inch
cotton delivered C.I.F. Northern Europe;
and
(ii) the Northern Europe price.
(e) LOAN DEFICIENCY PAYMENTS.—
(1) AVAILABILITY.—Except as provided in para-
graph (4), the Secretary may make loan deficiency
payments available to producers who, although eligi-
ble to obtain a marketing assistance loan under sub-
section (a)(1) with respect to a loan commodity, agree
to forgo obtaining the loan for the commodity in re-
turn for payments under this subsection.
(2) COMPUTATION.—A loan deficiency payment
under this subsection shall be computed by multiply-
ing—
(A) the loan payment rate determined
under paragraph (3) for the loan commodity; by
(B) the quantity of the loan commodity that
the producers on a farm are eligible to place
under loan but for which the producers forgo ob-
taining the loan in return for payments under
this subsection.
(3) LOAN PAYMENT RATE.—For purposes of this
subsection, the loan payment rate shall be the amount
by which—
(A) the loan rate established under sub-
section (b) for the loan commodity; exceeds
(B) the rate at which a loan for the com-
modity may be repaid under subsection (d).
(4) EXCEPTION FOR EXTRA LONG STAPLE COT-
TON.—This subsection shall not apply with respect to
extra long staple cotton.
(f) SPECIAL MARKETING LOAN PROVISIONS FOR UP-
LAND COTTON.—
(1) COTTON USER MARKETING CERTIFICATES.—
(A) ISSUANCE.—Subject to subparagraph
(D), during the period ending July 31, 2003, the
Secretary shall issue marketing certificates or
cash payments to domestic users and exporters
for documented purchases by domestic users and
sales for export by exporters made in the week
following a consecutive 4-week period in which—
(i) the Friday through Thursday aver-
age price quotation for the lowest-priced
United States growth, as quoted for Mid-
dling (M) 13⁄32-inch cotton, delivered C.I.F.
Northern Europe exceeds the Northern Eu-
rope price by more than 1.25 cents per
pound; and
(ii) the prevailing world market price
for upland cotton (adjusted to United States
quality and location) does not exceed 130
percent of the loan rate for upland cotton
established under subsection (b).
(B) VALUE
OF
CERTIFICATES
OR
PAY-
MENTS.—The value of the marketing certificates
or cash payments shall be based on the amount
of the difference (reduced by 1.25 cents per
pound) in the prices during the 4th week of the
consecutive 4-week period multiplied by the
quantity of upland cotton included in the docu-
mented sales.
(C) REDEMPTION, 
MARKETING, 
OR
EX-
CHANGE.—The Secretary shall establish proce-
dures to assist persons receiving marketing cer-
tificates under this paragraph in the redemption
of certificates for cash, or in the marketing or ex-
change of certificates for agricultural commod-
ities owned by the Commodity Credit Corpora-
tion, in such manner and at such price levels as
the Secretary determines will best effectuate the
purposes of the marketing certificates. Any price
restrictions that may otherwise apply to the dis-
position of agricultural commodities by the Com-
modity Credit Corporation shall not apply to the
redemption of certificates under this paragraph.
(D) EXCEPTION.—The Secretary shall not
issue marketing certificates or cash payments
under subparagraph (A) if, for the immediately
preceding consecutive 10-week period, the Friday
through Thursday average price quotation for the
lowest priced United States growth, as quoted for
Middling (M) 13⁄32-inch cotton, delivered C.I.F.
Northern Europe, adjusted for the value of any
certificate issued under this paragraph, exceeds
the Northern Europe price by more than 1.25
cents per pound.
(E) LIMITATION ON EXPENDITURES.—Total
expenditures under this paragraph shall not ex-
ceed $701,000,000 during fiscal years 1996
through 2002.
(2) SPECIAL IMPORT QUOTA.—
(A) ESTABLISHMENT.—The President shall
carry out an import quota program that pro-
vides that, during the period ending July 31,
2003, whenever the Secretary determines and an-
nounces that for any consecutive 10-week period,
the Friday through Thursday average price
quotation for the lowest-priced United States
growth, as quoted for Middling (M) 13⁄32-inch
cotton, delivered C.I.F. Northern Europe, ad-
justed for the value of any certificates issued
under paragraph (1), exceeds the Northern Eu-
rope price by more than 1.25 cents per pound,
there shall immediately be in effect a special im-
port quota.
(B) QUANTITY.—The quota shall be equal to
1 week’s consumption of upland cotton by domes-
tic mills at the seasonally adjusted average rate
of the most recent 3 months for which data are
available.
(C) APPLICATION.—The quota shall apply
to upland cotton purchased not later than 90
days after the date of the Secretary’s announce-
ment under subparagraph (A) and entered into
the United States not later than 180 days after
the date.
(D) OVERLAP.—A special quota period may
be established that overlaps any existing quota
period if required by subparagraph (A), except
that a special quota period may not be estab-
lished under this paragraph if a quota period
has been established under subsection (g).
(E) PREFERENTIAL TARIFF TREATMENT.—
The quantity under a special import quota shall
be considered to be an in-quota quantity for pur-
poses of—
(i) section 213(d) of the Caribbean
Basin Economic Recovery Act (19 U.S.C.
2703(d));
(ii) section 204 of the Andean Trade
Preference Act (19 U.S.C. 3203);
(iii) section 503(d) of the Trade Act of
1974 (19 U.S.C. 2463(d)); and
(iv) General Note 3(a)(iv) to the Har-
monized Tariff Schedule.
(F) DEFINITION.—In this paragraph, the
term ‘‘special import quota’’ means a quantity of
imports that is not subject to the over-quota tar-
iff rate of a tariff-rate quota.
(g) LIMITED GLOBAL IMPORT QUOTA FOR UPLAND
COTTON.—
(1) IN GENERAL.—The President shall carry out
an import quota program that provides that whenever
the Secretary determines and announces that the av-
erage price of the base quality of upland cotton, as de-
termined by the Secretary, in the designated spot
markets for a month exceeded 130 percent of the aver-
age price of such quality of cotton in the markets for
the preceding 36 months, notwithstanding any other
provision of law, there shall immediately be in effect
a limited global import quota subject to the following
conditions:
(A) QUANTITY.—The quantity of the quota
shall be equal to 21 days of domestic mill con-
sumption of upland cotton at the seasonally ad-
justed average rate of the most recent 3 months
for which data are available.
(B) QUANTITY IF PRIOR QUOTA.—If a quota
has been established under this subsection during
the preceding 12 months, the quantity of the
quota next established under this subsection shall
be the smaller of 21 days of domestic mill con-
sumption calculated under subparagraph (A) or
the quantity required to increase the supply to
130 percent of the demand.
(C) PREFERENTIAL TARIFF TREATMENT.—
The quantity under a limited global import
quota shall be considered to be an in-quota quan-
tity for purposes of—
(i) section 213(d) of the Caribbean
Basin Economic Recovery Act (19 U.S.C.
2703(d));
(ii) section 204 of the Andean Trade
Preference Act (19 U.S.C. 3203);
(iii) section 503(d) of the Trade Act of
1974 (19 U.S.C. 2463(d)); and
(iv) General Note 3(a)(iv) to the Har-
monized Tariff Schedule.
(D) DEFINITIONS.—In this subsection:
(i) 
SUPPLY.—The 
term 
‘‘supply’’
means, using the latest official data of the
Bureau of the Census, the Department of
Agriculture, and the Department of the
Treasury—
(I) the carry-over of upland cotton
at the beginning of the marketing year
(adjusted to 480-pound bales) in which
the quota is established;
(II) production of the current
crop; and
(III) imports to the latest date
available during the marketing year.
(ii) DEMAND.—The term ‘‘demand’’
means—
(I) the average seasonally adjusted
annual rate of domestic mill consump-
tion in the most recent 3 months for
which data are available; and
(II) the larger of—
(aa) average exports of up-
land cotton during the preceding
6 marketing years; or
(bb) cumulative exports of
upland cotton plus outstanding
export sales for the marketing
year in which the quota is estab-
lished.
(iii) 
LIMITED
GLOBAL
IMPORT
QUOTA.—The term ‘‘limited global import
quota’’ means a quantity of imports that is
not subject to the over-quota tariff rate of a
tariff-rate quota.
(E) QUOTA ENTRY PERIOD.—When a quota
is established under this subsection, cotton may
be entered under the quota during the 90-day pe-
riod beginning on the date the quota is estab-
lished by the Secretary.
(2) NO OVERLAP.—Notwithstanding paragraph
(1), a quota period may not be established that over-
laps an existing quota period or a special quota pe-
riod established under subsection (f)(2).
(h) SOURCE OF LOANS.—
(1) IN GENERAL.—The Secretary shall provide
the loans authorized by this section and the Agricul-
tural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.)
through the Commodity Credit Corporation and other
means available to the Secretary.
(2) PROCESSORS.—Whenever any loan or sur-
plus removal operation for any agricultural commod-
ity is carried out through purchases from or loans or
payments to processors, the Secretary shall, to the ex-
tent practicable, obtain from the processors such as-
surances as the Secretary considers adequate that the
producers of the commodity have received or will re-
ceive maximum benefits from the loan or surplus re-
moval operation.
(i) ADJUSTMENTS OF LOANS.—
(1) IN GENERAL.—The Secretary may make ap-
propriate adjustments in the loan levels for any com-
modity for differences in grade, type, quality, loca-
tion, and other factors.
(2) LOAN LEVEL.—The adjustments shall, to the
maximum extent practicable, be made in such man-
ner that the average loan level for the commodity will,
on the basis of the anticipated incidence of the factors,
be equal to the level of support determined as pro-
vided in this section or the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1281 et seq.).
(j) PERSONAL LIABILITY OF PRODUCERS FOR DEFI-
CIENCIES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), no producer shall be personally liable for
any deficiency arising from the sale of the collateral
securing any nonrecourse loan made under this sec-
tion or the Agricultural Adjustment Act of 1938 (7
U.S.C. 1281 et seq.) unless the loan was obtained
through a fraudulent representation by the producer.
(2) LIMITATIONS.—Paragraph (1) shall not pre-
vent the Commodity Credit Corporation or the Sec-
retary from requiring a producer to assume liability
for—
(A) a deficiency in the grade, quality, or
quantity of a commodity stored on a farm or de-
livered by the producer;
(B) a failure to properly care for and pre-
serve a commodity; or
(C) a failure or refusal to deliver a com-
modity in accordance with a program estab-
lished under this section or the Agricultural Ad-
justment Act of 1938.
(3) ACQUISITION
OF
COLLATERAL.—The Sec-
retary may include in a contract for a nonrecourse
loan made under this section or the Agricultural Ad-
justment Act of 1938 a provision that permits the
Commodity Credit Corporation, on and after the ma-
turity of the loan, to acquire title to the unredeemed
collateral without obligation to pay for any market
value that the collateral may have in excess of the
loan indebtedness.
(4) SUGARCANE AND SUGAR BEETS.—A security
interest obtained by the Commodity Credit Corpora-
tion as a result of the execution of a security agree-
ment by the processor of sugarcane or sugar beets
shall be superior to all statutory and common law
liens on raw cane sugar and refined beet sugar in
favor of the producers of sugarcane and sugar beets
and all prior recorded and unrecorded liens on the
crops of sugarcane and sugar beets from which the
sugar was derived.
(k) COMMODITY CREDIT CORPORATION SALES PRICE
RESTRICTIONS.—
(1) IN GENERAL.—The Commodity Credit Cor-
poration may sell any commodity owned or controlled
by the Corporation at any price that the Secretary
determines will maximize returns to the Corporation.
(2) NONAPPLICATION OF SALES PRICE RESTRIC-
TIONS.—Paragraph (1) shall not apply to—
(A) a sale for a new or byproduct use;
(B) a sale of peanuts or oilseeds for the ex-
traction of oil;
(C) a sale for seed or feed if the sale will
not substantially impair any loan program;
(D) a sale of a commodity that has substan-
tially deteriorated in quality or as to which
there is a danger of loss or waste through deterio-
ration or spoilage;
(E) a sale for the purpose of establishing a
claim arising out of a contract or against a per-
son who has committed fraud, misrepresentation,
or other wrongful act with respect to the com-
modity;
(F) a sale for export, as determined by the
Corporation; and
(G) a sale for other than a primary use.
(3) PRESIDENTIAL DISASTER AREAS.—
(A) IN
GENERAL.—Notwithstanding para-
graph (1), on such terms and conditions as the
Secretary may consider in the public interest,
the Corporation may make available any com-
modity or product owned or controlled by the
Corporation for use in relieving distress—
(i) in any area in the United States
(including the Virgin Islands) declared by
the President to be an acute distress area
because of unemployment or other economic
cause, if the President finds that the use
will not displace or interfere with normal
marketing of agricultural commodities; and
(ii) in connection with any major dis-
aster determined by the President to war-
rant assistance by the Federal Government
under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C.
5121 et seq.).
(B) COSTS.—Except on a reimbursable
basis, the Corporation shall not bear any costs in
connection with making a commodity available
under subparagraph (A) beyond the cost of the
commodity to the Corporation incurred in—
(i) the storage of the commodity; and
(ii) the handling and transportation
costs in making delivery of the commodity
to designated agencies at 1 or more central
locations in each State or other area.
(4) EFFICIENT
OPERATIONS.—Paragraph (1)
shall not apply to the sale of a commodity the dis-
position of which is desirable in the interest of the ef-
fective and efficient conduct of the operations of the
Corporation because of the small quantity of the com-
modity involved, or because of the age, location, or
questionable continued storability of the commodity.
SEC. 105. PAYMENT LIMITATIONS.
(a) IN GENERAL.—Section 1001 of the Food Security
Act of 1985 (7 U.S.C. 1308) is amended by striking para-
graphs (1) through (4) and inserting the following:
‘‘(1) LIMITATION ON PAYMENTS UNDER PRODUC-
TION FLEXIBILITY CONTRACTS.—The total amount of
contract payments made under section 103 of the Ag-
ricultural Market Transition Act to a person under 1
or more production flexibility contracts entered into
under the section during any fiscal year may not ex-
ceed $40,000.
‘‘(2) LIMITATION
ON
MARKETING
LOAN
GAINS
AND LOAN DEFICIENCY PAYMENTS.—For each of the
1996 through 2002 crops of loan commodities, the
total amount of payments specified in paragraph (3)
that a person shall be entitled to receive under section
104 of the Agricultural Market Transition Act for one
or more loan commodities may not exceed $75,000.
‘‘(3) DESCRIPTION
OF
PAYMENTS
SUBJECT
TO
LIMITATION.—The payments referred to in paragraph
(2) are the following:
‘‘(A) Any gain realized by a producer from
repaying a marketing assistance loan for a crop
of any loan commodity at a lower level than the
original loan rate established for the loan com-
modity under section 104(b) of the Agricultural
Market Transition Act.
‘‘(B) Any loan deficiency payment received
for a loan commodity under section 104(e) of the
Act.
‘‘(4) DEFINITIONS.—In this title, the terms ‘con-
tract payment’ and ‘loan commodity’ have the mean-
ing given those terms in section 102 of the Agricul-
tural Market Transition Act.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1001A of the Food Security Act of
1985 (7 U.S.C. 1308–1) is amended—
(A) in subsection (a)(1), by striking ‘‘under
the Agricultural Act of 1949 (7 U.S.C. 1421 et
seq.)’’; and
(B) in subsection (b)(1), by striking ‘‘under
the Agricultural Act of 1949’’.
(2) Section 1001C(a) of the Act (7 U.S.C. 1308–
3(a)) is amended—
(A) by striking ‘‘For each of the 1991
through 1997 crops, any’’ and inserting ‘‘Any’’;
(B) by striking ‘‘production adjustment
payments, price support program loans, pay-
ments, or benefits made available under the Ag-
ricultural Act of 1949 (7 U.S.C. 1421 et seq.),’’
and inserting ‘‘loans or payments made avail-
able under title I of the Agricultural Market
Transition Act,’’; and
(C) by striking ‘‘during the 1989 through
1997 crop years’’.
SEC. 106. PEANUT PROGRAM.
(a) QUOTA PEANUTS.—
(1) AVAILABILITY
OF
LOANS.—The Secretary
shall make nonrecourse loans available to producers of
quota peanuts.
(2) LOAN
RATE.—The national average quota
loan rate for quota peanuts shall be $610 per ton.
(3) INSPECTION, HANDLING, OR STORAGE.—The
loan amount may not be reduced by the Secretary by
any deductions for inspection, handling, or storage.
(4) LOCATION AND OTHER FACTORS.—The Sec-
retary may make adjustments in the loan rate for
quota peanuts for location of peanuts and such other
factors as are authorized by section 411 of the Agri-
cultural Adjustment Act of 1938.
(5) OFFERS FROM HANDLERS.—In the case of
any producer who had an offer available from a han-
dler to purchase quota peanuts, for delivery within
the same county or a contiguous county, at a price
equal to or greater than the applicable quota support
rate, the Secretary shall reduce the support rate by 5
percent for the peanuts that were subject to the offer.
(b) ADDITIONAL PEANUTS.—
(1) IN
GENERAL.—The Secretary shall make
nonrecourse loans available to producers of additional
peanuts at such rates as the Secretary finds appro-
priate, taking into consideration the demand for pea-
nut oil and peanut meal, expected prices of other veg-
etable oils and protein meals, and the demand for
peanuts in foreign markets.
(2) ANNOUNCEMENT.—The Secretary shall an-
nounce the loan rate for additional peanuts of each
crop not later than February 15 preceding the mar-
keting year for the crop for which the loan rate is
being determined.
(c) AREA MARKETING ASSOCIATIONS.—
(1) WAREHOUSE STORAGE LOANS.—
(A) IN
GENERAL.—In carrying out sub-
sections (a) and (b), the Secretary shall make
warehouse storage loans available in each of the
producing areas (described in section 1446.95 of
title 7 of the Code of Federal Regulations (Janu-
ary 1, 1989)) to a designated area marketing as-
sociation of peanut producers that is selected and
approved by the Secretary and that is operated
primarily for the purpose of conducting the loan
activities. The Secretary may not make ware-
house storage loans available to any cooperative
that is engaged in operations or activities con-
cerning peanuts other than those operations and
activities specified in this section and section
358e of the Agricultural Adjustment Act of 1938
(7 U.S.C. 1359a).
(B) ADMINISTRATIVE AND SUPERVISORY AC-
TIVITIES.—An area marketing association shall
be used in administrative and supervisory ac-
tivities relating to loans and marketing activities
under this section and section 358e of the Agri-
cultural Adjustment Act of 1938 (7 U.S.C.
1359a).
(C) ASSOCIATION COSTS.—Loans made to
the association under this paragraph shall in-
clude such costs as the area marketing associa-
tion reasonably may incur in carrying out the
responsibilities, operations, and activities of the
association under this section and section 358e of
the Agricultural Adjustment Act of 1938 (7
U.S.C. 1359a).
(2) POOLS FOR QUOTA AND ADDITIONAL PEA-
NUTS.—
(A) IN GENERAL.—The Secretary shall re-
quire that each area marketing association estab-
lish pools and maintain complete and accurate
records by area and segregation for quota pea-
nuts handled under loan and for additional pea-
nuts placed under loan, except that separate
pools shall be established for Valencia peanuts
produced in New Mexico. Bright hull and dark
hull Valencia peanuts shall be considered as sep-
arate types for the purpose of establishing the
pools.
(B) NET GAINS.—Net gains on peanuts in
each pool, unless otherwise approved by the Sec-
retary, shall be distributed only to producers who
placed peanuts in the pool and shall be distrib-
uted in proportion to the value of the peanuts
placed in the pool by each producer. Net gains
for peanuts in each pool shall consist of the fol-
lowing:
(i) QUOTA PEANUTS.—For quota pea-
nuts, the net gains over and above the loan
indebtedness and other costs or losses in-
curred on peanuts placed in the pool.
(ii) ADDITIONAL PEANUTS.—For addi-
tional peanuts, the net gains over and above
the loan indebtedness and other costs or
losses incurred on peanuts placed in the
pool for additional peanuts.
(d) LOSSES.—Losses in quota area pools shall be cov-
ered using the following sources in the following order of
priority:
(1) 
TRANSFERS
FROM
ADDITIONAL
LOAN
POOLS.—The proceeds due any producer from any
pool shall be reduced by the amount of any loss that
is incurred with respect to peanuts transferred from
an additional loan pool to a quota loan pool by the
producer under section 358–1(b)(8) of the Agricul-
tural Adjustment Act of 1938 (7 U.S.C. 1358–
1(b)(8)).
(2) OTHER PRODUCERS IN SAME POOL.—Further
losses in an area quota pool shall be offset by reduc-
ing the gain of any producer in the pool by the
amount of pool gains attributed to the same producer
from the sale of additional peanuts for domestic and
export edible use.
(3) BUY-BACK
GAINS
WITHIN
AREA.—Further
losses in an area quota pool shall be offset by gains
or profits attributable to sales of additional peanuts
in that area pursuant to the provisions of section
358e(g)(1)(A) of the Agricultural Adjustment Act of
1938 (7 U.S.C. 1359a(g)(1)(A)).
(4) USE
OF
MARKETING
ASSESSMENTS.—The
Secretary shall use funds collected under subsection
(g) (except funds attributable to handlers) to offset
further losses in area quota pools. The Secretary shall
transfer to the Treasury those funds collected under
subsection (g) and available for use under this sub-
section that the Secretary determines are not required
to cover losses in area quota pools.
(5) CROSS COMPLIANCE.—Further losses in area
quota pools, other than losses incurred as a result of
transfers from additional loan pools to quota loan
pools under section 358–1(b)(8) of the Agricultural
Adjustment Act of 1938 (7 U.S.C. 1358–1(b)(8)), shall
be offset by any gains or profits from quota pools in
other production areas (other than separate type pools
established under subsection (c)(2)(A) for Valencia
peanuts produced in New Mexico) in such manner as
the Secretary shall by regulation prescribe. If losses in
area quota pools have not been entirely offset through
use of the preceding sentence, then further losses shall
be offset by gains or profits attributable to sales of ad-
ditional peanuts in other areas pursuant to section
358e(g)(1)(A) of such Act (7 U.S.C. 1359a(g)(1)(A)).
(6) INCREASED ASSESSMENTS.—If use of the au-
thorities provided in the preceding paragraphs is not
sufficient to cover losses in an area quota pool, the
Secretary shall increase the marketing assessment es-
tablished under subsection (g) by such an amount as
the Secretary considers necessary to cover the losses.
The increased assessment shall apply only to quota
peanuts covered by that pool. Amounts collected under
subsection (g) as a result of the increased assessment
shall be retained by the Secretary to cover losses in
that pool.
(e) DISAPPROVAL OF QUOTAS.—Notwithstanding any
other provision of law, no loan for quota peanuts may be
made available by the Secretary for any crop of peanuts
with respect to which poundage quotas have been dis-
approved by producers, as provided for in section 358–1(d)
of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358–
1(d)).
(f) QUALITY IMPROVEMENT.—
(1) IN GENERAL.—With respect to peanuts under
loan, the Secretary shall—
(A) promote the crushing of peanuts at a
greater risk of deterioration before peanuts of a
lesser risk of deterioration;
(B) ensure that all Commodity Credit Cor-
poration inventories of peanuts sold for domestic
edible use must be shown to have been officially
inspected by licensed Department inspectors both
as farmer stock and shelled or cleaned in-shell
peanuts;
(C) continue to endeavor to operate the pea-
nut program so as to improve the quality of do-
mestic peanuts and ensure the coordination of
activities under the Peanut Administrative Com-
mittee established under Marketing Agreement
No. 146, regulating the quality of domestically
produced peanuts (under the Agricultural Ad-
justment Act (7 U.S.C. 601 et seq.), reenacted
with amendments by the Agricultural Marketing
Agreement Act of 1937); and
(D) ensure that any changes made in the
peanut program as a result of this subsection re-
quiring additional production or handling at the
farm level shall be reflected as an upward adjust-
ment in the Department loan schedule.
(2) EXPORTS AND OTHER PEANUTS.—The Sec-
retary shall require that all peanuts in the domestic
and export markets fully comply with all quality
standards under Marketing Agreement No. 146.
(g) MARKETING ASSESSMENT.—
(1) IN GENERAL.—The Secretary shall provide
for a nonrefundable marketing assessment. The assess-
ment shall be made on a per pound basis in an
amount equal to 1.1 percent for each of the 1994 and
1995 crops, 1.15 percent for the 1996 crop, and 1.2
percent for each of the 1997 through 2002 crops, of the
national average quota or additional peanut loan rate
for the applicable crop.
(2) FIRST PURCHASERS.—
(A) IN
GENERAL.—Except as provided
under paragraphs (3) and (4), the first pur-
chaser of peanuts shall—
(i) collect from the producer a market-
ing assessment equal to the quantity of pea-
nuts acquired multiplied by—
(I) in the case of each of the 1994
and 1995 crops, .55 percent of the ap-
plicable national average loan rate;
(II) in the case of the 1996 crop,
.6 percent of the applicable national
average loan rate; and
(III) in the case of each of the
1997 through 2002 crops, .65 percent
of the applicable national average loan
rate;
(ii) pay, in addition to the amount
collected under clause (i), a marketing as-
sessment in an amount equal to the quan-
tity of peanuts acquired multiplied by .55
percent of the applicable national average
loan rate; and
to the value of the loan received by the processor for
sugar beets and sugarcane delivered by producers
served by the processor. The Secretary may establish
appropriate minimum payments for purposes of this
paragraph.
(f) MARKETING ASSESSMENT.—
(1) SUGARCANE.—Effective for marketings of
raw cane sugar during the 1996 through 2003 fiscal
years, the first processor of sugarcane shall remit to
the Commodity Credit Corporation a nonrefundable
marketing assessment in an amount equal to—
(A) in the case of marketings during fiscal
year 1996, 1.1 percent of the loan rate estab-
lished under subsection (a) per pound of raw
cane sugar, processed by the processor from do-
mestically produced sugarcane or sugarcane mo-
lasses, that has been marketed (including the
transfer or delivery of the sugar to a refinery for
further processing or marketing); and
(B) in the case of marketings during each
of fiscal years 1997 through 2003, 1.375 percent
of the loan rate established under subsection (a)
per pound of raw cane sugar, processed by the
processor from domestically produced sugarcane
or sugarcane molasses, that has been marketed