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commodity for a crop year shall be equal to the product
of the following:
(1) The payment rate specified in subsection (b).
(2) The payment acres of the covered commodity
on the farm.
(3) The payment yield for the covered commodity
for the farm.
(d) TIME FOR PAYMENT.—
(1) IN GENERAL.—In the case of each of the 2008
through 2012 crop years, the Secretary shall make di-
rect payments under this section not earlier than Oc-
tober 1 of the calendar year in which the crop of the
covered commodity is harvested.
(2) ADVANCE PAYMENTS.—
(A) OPTION.—At the option of the producers
on a farm, the Secretary shall pay in advance
up to 22 percent of the direct payment for a cov-
ered commodity for any of the 2008 through
2011 crop years to the producers on a farm.
(B) MONTH.—
(i) SELECTION.—Subject to clauses (ii)
and (iii), the producers on a farm shall se-
lect the month during which the advance
payment for a crop year will be made.
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(ii) OPTIONS.—The month selected
may be any month during the period—
(I) beginning on December 1 of
the calendar year before the calendar
year in which the crop of the covered
commodity is harvested; and
(II) ending during the month
within which the direct payment would
otherwise be made.
(iii) CHANGE.—The producers on a
farm may change the selected month for a
subsequent advance payment by providing
advance notice to the Secretary.
(3) REPAYMENT OF ADVANCE PAYMENTS.—If a
producer on a farm that receives an advance direct
payment for a crop year ceases to be a producer on
that farm, or the extent to which the producer shares
in the risk of producing a crop changes, before the
date the remainder of the direct payment is made, the
producer shall be responsible for repaying the Sec-
retary the applicable amount of the advance payment,
as determined by the Secretary.
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SEC. 1104. AVAILABILITY OF COUNTER-CYCLICAL PAY-
MENTS.
(a) PAYMENT REQUIRED.—Subject to sections 1107
and 1401, for each of the 2008 through 2012 crop years
for each covered commodity, the Secretary shall make
counter-cyclical payments to producers on farms for which
payment yields and base acres are established with respect
to the covered commodity if the Secretary determines that
the effective price for the covered commodity is less than
the target price for the covered commodity.
(b) EFFECTIVE PRICE.—
(1) 
COVERED
COMMODITIES
OTHER
THAN
RICE.—Except as provided in paragraph (2), for pur-
poses of subsection (a), the effective price for a covered
commodity is equal to the sum of the following:
(A) The higher of the following:
(i) The national average market price
received by producers during the 12-month
marketing year for the covered commodity,
as determined by the Secretary.
(ii) The national average loan rate for
a marketing assistance loan for the covered
commodity in effect for the applicable pe-
riod under part II.
(B) The payment rate in effect for the cov-
ered commodity under section 1103 for the pur-
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pose of making direct payments with respect to
the covered commodity.
(2) RICE.—In the case of long grain rice and
medium grain rice, for purposes of subsection (a), the
effective price for each type or class of rice is equal
to the sum of the following:
(A) The higher of the following:
(i) The national average market price
received by producers during the 12-month
marketing year for the type or class of rice,
as determined by the Secretary.
(ii) The national average loan rate for
a marketing assistance loan for the type or
class of rice in effect for the applicable pe-
riod under part II.
(B) The payment rate in effect for the type
or class of rice under section 1103 for the pur-
pose of making direct payments with respect to
the type or class of rice.
(c) TARGET PRICE.—
(1) IN GENERAL.—For purposes of each of the
2008 through 2012 crop years, the target prices for
covered commodities shall be as follows:
(A) Wheat, $4.20 per bushel.
(B) Corn, $2.63 per bushel.
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(C) Grain sorghum, $2.63 per bushel.
(D) Barley, $2.63 per bushel.
(E) Oats, $1.83 per bushel.
(F) Upland cotton, $0.7225 per pound.
(G) Long grain rice, $10.50 per hundred-
weight.
(H) Medium grain rice, $10.50 per hun-
dredweight.
(I) Soybeans, $6.00 per bushel.
(J) Other oilseeds, $12.74 per hundred-
weight.
(K) Dry peas, $8.33 per hundredweight.
(L) Lentils, $12.82 per hundredweight.
(M) Small chickpeas, $10.36 per hundred-
weight.
(N) Large chickpeas, $12.82 per hundred-
weight.
(2) SEPARATE
TARGET
PRICE.—The Secretary
may not establish a target price for a covered com-
modity that is different from the target price specified
in paragraph (1) for the covered commodity.
(d) PAYMENT RATE.—The payment rate used to make
counter-cyclical payments with respect to a covered com-
modity for a crop year shall be equal to the difference
between—
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(1) the target price for the covered commodity;
and
(2) the effective price determined under sub-
section (b) for the covered commodity.
(e) PAYMENT AMOUNT.—If counter-cyclical payments
are required to be paid for any of the 2008 through 2012
crop years of a covered commodity, the amount of the
counter-cyclical payment to be paid to the producers on a
farm for that crop year shall be equal to the product of
the following:
(1) The payment rate specified in subsection (d).
(2) The payment acres of the covered commodity
on the farm.
(3) The payment yield for the covered commodity
for the farm.
(f) TIME FOR PAYMENTS.—
(1) GENERAL
RULE.—If the Secretary deter-
mines under subsection (a) that counter-cyclical pay-
ments are required to be made under this section for
the crop of a covered commodity, the Secretary shall
make the counter-cyclical payments for the crop be-
ginning October 1, or as soon as practicable there-
after, after the end of the applicable marketing year
for the covered commodity.
(2) AVAILABILITY OF PARTIAL PAYMENTS.—
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(A) IN GENERAL.—If, before the end of the
12-month marketing year for a covered com-
modity, the Secretary estimates that counter-cy-
clical payments will be required for the crop of
the covered commodity, the Secretary shall give
producers on a farm the option to receive partial
payments of the counter-cyclical payment pro-
jected to be made for that crop of the covered
commodity.
(B) ELECTION.—
(i) IN GENERAL.—The Secretary shall
allow producers on a farm to make an elec-
tion to receive partial payments for a cov-
ered commodity under subparagraph (A) at
any time but not later than 30 days prior
to the end of the marketing year for that
covered commodity.
(ii) DATE
OF
ISSUANCE.—The Sec-
retary shall issue the partial payment after
the date of an announcement by the Sec-
retary but not later than 30 days prior to
the end of the marketing year.
(3) TIME FOR PARTIAL PAYMENTS.—When the
Secretary makes partial payments for a covered com-
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modity for any of the 2008 through 2010 crop
years—
(A) the first partial payment shall be made
after completion of the first 180 days of the mar-
keting year for the covered commodity; and
(B) the final partial payment shall be made
beginning October 1, or as soon as practicable
thereafter, after the end of the applicable mar-
keting year for the covered commodity.
(4) AMOUNT OF PARTIAL PAYMENT.—
(A) FIRST PARTIAL PAYMENT.—For each of
the 2008 through 2010 crops of a covered com-
modity, the first partial payment under para-
graph (3) to the producers on a farm may not
exceed 40 percent of the projected counter-cyclical
payment for the covered commodity for the crop
year, as determined by the Secretary.
(B) FINAL PAYMENT.—The final payment
for a covered commodity for a crop year shall be
equal to the difference between—
(i) the actual counter-cyclical payment
to be made to the producers for the covered
commodity for that crop year; and
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(ii) the amount of the partial payment
made to the producers under subparagraph
(A).
(5) REPAYMENT.—The producers on a farm that
receive a partial payment under this subsection for a
crop year shall repay to the Secretary the amount, if
any, by which the total of the partial payments exceed
the actual counter-cyclical payment to be made for
the covered commodity for that crop year.
SEC. 1105. PRODUCER AGREEMENT REQUIRED AS CONDI-
TION OF PROVISION OF DIRECT PAYMENTS
AND COUNTER-CYCLICAL PAYMENTS.
(a) COMPLIANCE WITH CERTAIN REQUIREMENTS.—
(1) REQUIREMENTS.—Before the producers on a
farm may receive direct payments or counter-cyclical
payments with respect to the farm, the producers shall
agree, during the crop year for which the payments
are made and in exchange for the payments—
(A) to comply with applicable conservation
requirements under subtitle B of title XII of the
Food Security Act of 1985 (16 U.S.C. 3811 et
seq.);
(B) to comply with applicable wetland pro-
tection requirements under subtitle C of title XII
of that Act (16 U.S.C. 3821 et seq.);
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(C) to comply with the planting flexibility
requirements of section 1106;
(D) to use the land on the farm, in a quan-
tity equal to the attributable base acres for the
farm and any base acres for peanuts for the
farm under part III, for an agricultural or con-
serving use, and not for a nonagricultural com-
mercial, industrial, or residential use (including
land subdivided and developed into residential
units or other nonfarming uses, or that is other-
wise no longer intended to be used in conjunction
with a farming operation), as determined by the
Secretary; and
(E) to effectively control noxious weeds and
otherwise maintain the land in accordance with
sound agricultural practices, as determined by
the Secretary, if the agricultural or conserving
use involves the noncultivation of any portion of
the land referred to in subparagraph (D).
(2) COMPLIANCE.—The Secretary may issue such
rules as the Secretary considers necessary to ensure
producer compliance with the requirements of para-
graph (1).
(3) MODIFICATION.—At the request of the trans-
feree or owner, the Secretary may modify the require-
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ments of this subsection if the modifications are con-
sistent with the objectives of this subsection, as deter-
mined by the Secretary.
(b) TRANSFER OR CHANGE OF INTEREST IN FARM.—
(1) TERMINATION.—
(A) IN GENERAL.—Except as provided in
paragraph (2), a transfer of (or change in) the
interest of the producers on a farm in base acres
for which direct payments or counter-cyclical
payments are made shall result in the termi-
nation of the payments with respect to the base
acres, unless the transferee or owner of the acre-
age agrees to assume all obligations under sub-
section (a).
(B) EFFECTIVE
DATE.—The termination
shall take effect on the date determined by the
Secretary.
(2) EXCEPTION.—If a producer entitled to a di-
rect payment or counter-cyclical payment dies, be-
comes incompetent, or is otherwise unable to receive
the payment, the Secretary shall make the payment,
in accordance with rules issued by the Secretary.
(c) ACREAGE REPORTS.—
(1) IN GENERAL.—As a condition on the receipt
of any benefits under this part or part II, the Sec-
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retary shall require producers on a farm to submit to
the Secretary annual acreage reports with respect to
all cropland on the farm.
(2) PENALTIES.—No penalty with respect to ben-
efits under this part or part II shall be assessed
against the producers on a farm for an inaccurate
acreage report unless the producers on the farm know-
ingly and willfully falsified the acreage report.
(d) TENANTS AND SHARECROPPERS.—In carrying out
this subtitle, the Secretary shall provide adequate safe-
guards to protect the interests of tenants and sharecroppers.
(e) SHARING OF PAYMENTS.—The Secretary shall pro-
vide for the sharing of direct payments and counter-cyclical
payments among the producers on a farm on a fair and
equitable basis.
SEC. 1106. PLANTING FLEXIBILITY.
(a) PERMITTED CROPS.—Subject to subsection (b),
any commodity or crop may be planted on base acres on
a farm.
(b) LIMITATIONS
REGARDING
CERTAIN
COMMOD-
ITIES.—
(1) GENERAL LIMITATION.—The planting of an
agricultural commodity specified in paragraph (3)
shall be prohibited on base acres unless the com-
modity, if planted, is destroyed before harvest.
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(2) 
TREATMENT
OF
TREES
AND
OTHER
PERENNIALS.—The planting of an agricultural com-
modity specified in paragraph (3) that is produced
on a tree or other perennial plant shall be prohibited
on base acres.
(3) COVERED
AGRICULTURAL
COMMODITIES.—
Paragraphs (1) and (2) apply to the following agri-
cultural commodities:
(A) Fruits.
(B) Vegetables (other than mung beans and
pulse crops).
(C) Wild rice.
(c) EXCEPTIONS.—Paragraphs (1) and (2) of sub-
section (b) shall not limit the planting of an agricultural
commodity specified in paragraph (3) of that subsection—
(1) in any region in which there is a history of
double-cropping of covered commodities with agricul-
tural commodities specified in subsection (b)(3), as
determined by the Secretary, in which case the dou-
ble-cropping shall be permitted;
(2) on a farm that the Secretary determines has
a history of planting agricultural commodities speci-
fied in subsection (b)(3) on base acres, except that di-
rect payments and counter-cyclical payments shall be
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reduced by an acre for each acre planted to such an
agricultural commodity; or
(3) by the producers on a farm that the Sec-
retary determines has an established planting history
of a specific agricultural commodity specified in sub-
section (b)(3), except that—
(A) the quantity planted may not exceed the
average annual planting history of such agricul-
tural commodity by the producers on the farm in
the 1991 through 1995 or 1998 through 2001
crop years (excluding any crop year in which no
plantings were made), as determined by the Sec-
retary; and
(B) direct payments and counter-cyclical
payments shall be reduced by an acre for each
acre planted to such agricultural commodity.
(d) PLANTING TRANSFERABILITY PILOT PROJECT.—
(1) PILOT PROJECT AUTHORIZED.—In addition
to the exceptions provided in subsection (c), the Sec-
retary shall carry out a pilot project in the State of
Indiana under which paragraphs (1) and (2) of sub-
section (b) shall not limit the planting of tomatoes
grown for processing on up to 10,000 base acres dur-
ing each of the 2008 through 2009 crop years.
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(2) CONTRACT
AND
MANAGEMENT
REQUIRE-
MENTS.—To be eligible for selection to participate in
the pilot project, the producers on a farm shall—
(A) have entered into a contract to produce
tomatoes for processing; and
(B) agree to produce the tomatoes as part of
a program of crop rotation on the farm to
achieve agronomic and pest and disease manage-
ment benefits.
(3) TEMPORARY REDUCTION IN BASE ACRES.—
The base acres on a farm participating in the pilot
program for a crop year shall be reduced by an acre
for each acre planted to tomatoes under the pilot pro-
gram.
(4) RECALCULATION OF BASE ACRES.—
(A) IN GENERAL.—If the Secretary recal-
culates base acres for a farm while the farm is
included in the pilot project, the planting and
production of tomatoes on base acres for which
a temporary reduction was made under this sec-
tion shall be considered to be the same as the
planting and production of a covered com-
modity.
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(B) PROHIBITION.—Nothing in this para-
graph provides authority for the Secretary to re-
calculate base acres for a farm.
SEC. 1107. SPECIAL RULE FOR LONG GRAIN AND MEDIUM
GRAIN RICE.
(a) CALCULATION METHOD.—Subject to subsections
(b) and (c), for the purposes of determining the amount of
the counter-cyclical payments to be paid to the producers
on a farm for long grain rice and medium grain rice under
section 1104, the base acres of rice on the farm shall be
apportioned using the 4-year average of the percentages of
acreage planted in the applicable State to long grain rice
and medium grain rice during the 2003 through 2006 crop
years, as determined by the Secretary.
(b) PRODUCER ELECTION.—As an alternative to the
calculation method described in subsection (a), the Sec-
retary shall provide producers on a farm the opportunity
to elect to apportion rice base acres on the farm using the
4-year average of—
(1) the percentages of acreage planted on the
farm to long grain rice and medium grain rice dur-
ing the 2003 through 2006 crop years;
(2) the percentages of any acreage on the farm
that the producers were prevented from planting to
long grain rice and medium grain rice during the
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2003 through 2006 crop years because of drought,
flood, other natural disaster, or other condition be-
yond the control of the producers, as determined by
the Secretary; and
(3) in the case of a crop year for which a pro-
ducer on a farm elected not to plant to long grain
and medium grain rice during the 2003 through 2006
crop years, the percentages of acreage planted in the
applicable State to long grain rice and medium grain
rice, as determined by the Secretary.
(c) LIMITATION.—In carrying out this section, the Sec-
retary shall use the same total base acres, payment acres,
and payment yields established with respect to rice under
sections 1101 and 1102 of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 7911, 7912), as in effect
on the day before the date of enactment of this Act, subject
to any adjustment under section 1101 of this Act.
SEC. 1108. PERIOD OF EFFECTIVENESS.
This part shall be effective beginning with the 2008
crop year of each covered commodity through the 2012 crop
year.
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PART II—MARKETING ASSISTANCE LOANS AND
LOAN DEFICIENCY PAYMENTS
SEC. 1201. AVAILABILITY OF NONRECOURSE MARKETING
ASSISTANCE LOANS FOR LOAN COMMOD-
ITIES.
(a) NONRECOURSE LOANS AVAILABLE.—
(1) AVAILABILITY.—Except as provided in sec-
tion 1401, for each of the 2008 through 2012 crops of
each loan commodity, the Secretary shall make avail-
able to producers on a farm nonrecourse marketing
assistance loans for loan commodities produced on the
farm.
(2) TERMS AND CONDITIONS.—The marketing as-
sistance loans shall be made under terms and condi-
tions that are prescribed by the Secretary and at the
loan rate established under section 1202 for the loan
commodity.
(b) ELIGIBLE PRODUCTION.—The producers on a farm
shall be eligible for a marketing assistance loan under sub-
section (a) for any quantity of a loan commodity produced
on the farm.
(c) TREATMENT OF CERTAIN COMMINGLED COMMOD-
ITIES.—In carrying out this part, the Secretary shall make
loans to producers on a farm that would be eligible to obtain
a marketing assistance loan, but for the fact the loan com-
modity owned by the producers on the farm is commingled
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with loan commodities of other producers in facilities unli-
censed for the storage of agricultural commodities by the
Secretary or a State licensing authority, if the producers
obtaining the loan agree to immediately redeem the loan
collateral in accordance with section 166 of the Federal Ag-
riculture Improvement and Reform Act of 1996 (7 U.S.C.
7286).
(d) COMPLIANCE WITH CONSERVATION
AND WET-
LANDS REQUIREMENTS.—As a condition of the receipt of
a marketing assistance loan under subsection (a), the pro-
ducer shall comply with applicable conservation require-
ments under subtitle B of title XII of the Food Security
Act of 1985 (16 U.S.C. 3811 et seq.) and applicable wetland
protection requirements under subtitle C of title XII of the
Act (16 U.S.C. 3821 et seq.) during the term of the loan.
SEC. 1202. LOAN RATES FOR NONRECOURSE MARKETING
ASSISTANCE LOANS.
(a) LOAN RATES.—For each of the 2008 through 2012
crop years, the loan rate for a marketing assistance loan
under section 1201 for a loan commodity shall be equal to
the following:
(1) In the case of wheat, $2.94 per bushel.
(2) In the case of corn, $1.95 per bushel.
(3) In the case of grain sorghum, $1.95 per bush-
el.
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(4) In the case of barley, $1.95 per bushel.
(5) In the case of oats, $1.39 per bushel.
(6) In the case of the base quality of upland cot-
ton, $0.52 per pound.
(7) In the case of extra long staple cotton,
$0.7977 per pound.
(8) In the case of long grain rice, $6.50 per hun-
dredweight.
(9) in the case of medium grain rice, $6.50 per
hundredweight.
(10) In the case of soybeans, $5.00 per bushel.
(11) In the case of other oilseeds, $10.09 per hun-
dredweight.
(12) In the case of dry peas, $5.40 per hundred-
weight.
(13) In the case of lentils, $11.28 per hundred-
weight.
(14) In the case of small chickpeas, $7.43 per
hundredweight.
(15) In the case of large chickpeas, $11.28 per
hundredweight.
(16) In the case of graded wool, $1.20 per pound.
(17) In the case of nongraded wool, $0.40 per
pound.
(18) In the case of mohair, $4.20 per pound.
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(19) In the case of honey, $0.72 per pound.
(b) SINGLE COUNTY LOAN RATE FOR OTHER OIL-
SEEDS.—The Secretary shall establish a single loan rate in
each county for each kind of other oilseeds described in sub-
section (a)(10).
(c) GRADING BASIS
FOR MARKETING LOANS
FOR
PULSE CROPS.—The loan rate for pulse crops—
(1) shall be based on a grade not less than grade
number 2 or other grade factors, including the fair
and average quality of the 1 or more crops in any
year; and
(2) may be adjusted by the Secretary to reflect
the normal market discounts for grades less than
number 2 quality.
(d) CORN
AND GRAIN SORGHUM.—The Secretary
shall—
(1) establish a single county loan rate for corn
and grain sorghum in each county;
(2) establish a single national average loan rate
for corn and grain sorghum; and
(3) determine each county loan rate and the na-
tional average loan rate for corn and grain sorghum,
and any and all other program loan rates applicable
to corn and grain sorghum, from a data set that in-
cludes prices for both corn and grain sorghum.
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SEC. 1203. TERM OF LOANS.
(a) TERM OF LOAN.—In the case of each loan com-
modity, a marketing assistance loan under section 1201
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.
(b) EXTENSIONS PROHIBITED.—The Secretary may
not extend the term of a marketing assistance loan for any
loan commodity.
SEC. 1204. REPAYMENT OF LOANS.
(a) GENERAL RULE.—The Secretary shall permit the
producers on a farm to repay a marketing assistance loan
under section 1201 for a loan commodity (other than up-
land cotton, long grain rice, medium grain rice, extra long
staple cotton, and confectionery and each other kind of sun-
flower seed (other than oil sunflower seed)) at a rate that
is the lesser of—
(1) the loan rate established for the commodity
under section 1202, plus interest (determined in ac-
cordance with section 163 of the Federal Agriculture
Improvement and Reform Act of 1996 (7 U.S.C.
7283)); or
(2) a rate that the Secretary determines will—
(A) minimize potential loan forfeitures;
(B) minimize the accumulation of stocks of
the commodity by the Federal Government;
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(C) minimize the cost incurred by the Fed-
eral Government in storing the commodity;
(D) allow the commodity produced in the
United States to be marketed freely and competi-
tively, both domestically and internationally;
and
(E) minimize discrepancies in marketing
loan benefits across State boundaries and across
county boundaries.
(b) REPAYMENT RATES FOR UPLAND COTTON, LONG
GRAIN RICE, AND MEDIUM GRAIN RICE.—The Secretary
shall permit producers to repay a marketing assistance loan
under section 1201 for upland cotton, long grain rice, and
medium grain rice at a rate that is the lesser of—
(1) the loan rate established for the commodity
under section 1202, plus interest (determined in ac-
cordance with section 163 of the Federal Agriculture
Improvement and Reform Act of 1996 (7 U.S.C.
7283)); or
(2) the prevailing world market price for the
commodity (adjusted to United States quality and lo-
cation), as determined by the Secretary.
(c) 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
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for the commodity under section 1202, plus interest (deter-
mined in accordance with section 163 of the Federal Agri-
culture Improvement and Reform Act of 1996 (7 U.S.C.
7283)).
(d) PREVAILING WORLD MARKET PRICE.—For pur-
poses of this section and section 1207, the Secretary shall
prescribe by regulation—
(1) a formula to determine—
(A) the prevailing world market price for
upland cotton (adjusted to United States quality
and location); and
(B) the prevailing world market price for
long grain rice and medium grain rice, adjusted
to United States quality and location; and
(2) a mechanism by which the Secretary shall
announce periodically the prevailing world market
price for upland cotton, long grain rice, and medium
grain rice.
(e) ADJUSTMENT
OF PREVAILING WORLD MARKET
PRICE FOR UPLAND COTTON.—
(1) IN GENERAL.—During the period beginning
on the date of enactment of this Act and ending July
31, 2013, the Secretary may further adjust the pre-
vailing world market price for upland cotton (ad-
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justed to United States quality and location) if the
Secretary determines the adjustment is necessary—
(A) to minimize potential loan forfeitures;
(B) to minimize the accumulation of stocks
of upland cotton by the Federal Government;
(C) to allow upland cotton produced in the
United States to be marketed freely and competi-
tively, both domestically and internationally;
(D) to ensure that upland cotton produced
in the United States is competitive in world
markets; and
(E) to ensure an appropriate transition be-
tween current-crop and forward-crop price
quotations, except that the Secretary may use
forward-crop price quotations prior to July 31 of
a marketing year only if—
(i) there are insufficient current-crop
price quotations; and
(ii) the forward-crop price quotation is
the lowest such quotation available.
(2) GUIDELINES
FOR
ADDITIONAL
ADJUST-
MENTS.—In making adjustments under this sub-
section, the Secretary shall establish a mechanism for
determining and announcing the adjustments in
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order to avoid undue disruption in the United States
market.
(f) REPAYMENT RATES
FOR CONFECTIONERY
AND
OTHER KINDS
OF SUNFLOWER SEEDS.—The Secretary
shall permit the producers on a farm to repay a marketing
assistance loan under section 1201 for confectionery and
each other kind of sunflower seed (other than oil sunflower
seed) at a rate that is the lesser of—
(1) the loan rate established for the commodity
under section 1202, plus interest (determined in ac-
cordance with section 163 of the Federal Agriculture
Improvement and Reform Act of 1996 (7 U.S.C.
7283)); or
(2) the repayment rate established for oil sun-
flower seed.
(g) QUALITY GRADES FOR PULSE CROPS.—The loan
repayment rate for pulse crops shall be based on the quality
grades for the applicable commodity specified in section
1202(c).
(h) PAYMENT OF COTTON STORAGE COSTS.—Effective
for the 2008 through 2012 crop years, the Secretary shall
use the funds of the Commodity Credit Corporation to pro-
vide cotton storage payments in the same manner, and at
the same rates, as the Secretary provided those payments
for the 2006 crop of cotton.
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SEC. 1205. LOAN DEFICIENCY PAYMENTS.
(a) AVAILABILITY OF LOAN DEFICIENCY PAYMENTS.—
(1) IN GENERAL.—Except as provided in sub-
section (d) and section 1401, the Secretary may make
loan deficiency payments available to producers on a
farm that, although eligible to obtain a marketing as-
sistance loan under section 1201 with respect to a
loan commodity, agree to forgo obtaining the loan for
the commodity in return for loan deficiency payments
under this section.
(2) UNSHORN PELTS, HAY, AND SILAGE.—
(A) MARKETING ASSISTANCE LOANS.—Sub-
ject to subparagraph (B), nongraded wool in the
form of unshorn pelts and hay and silage derived
from a loan commodity are not eligible for a
marketing assistance loan under section 1201.
(B) LOAN DEFICIENCY PAYMENT.—Effective
for the 2008 through 2012 crop years, the Sec-
retary may make loan deficiency payments
available under this section to producers on a
farm that produce unshorn pelts or hay and si-
lage derived from a loan commodity.
(b) COMPUTATION.—A loan deficiency payment for a
loan commodity or commodity referred to in subsection
(a)(2) shall be computed by multiplying—
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(1) the payment rate determined under sub-
section (c) for the commodity; by
(2) the quantity of the commodity produced by
the eligible producers, excluding any quantity for
which the producers obtain a marketing assistance
loan under section 1201.
(c) PAYMENT RATE.—
(1) IN GENERAL.—In the case of a loan com-
modity, the payment rate shall be the amount by
which—
(A) the loan rate established under section
1202 for the loan commodity; exceeds
(B) the rate at which a marketing assist-
ance loan for the loan commodity may be repaid
under section 1204.
(2) UNSHORN PELTS.—In the case of unshorn
pelts, the payment rate shall be the amount by
which—
(A) the loan rate established under section
1202 for ungraded wool; exceeds
(B) the rate at which a marketing assist-
ance loan for ungraded wool may be repaid
under section 1204.
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(3) HAY AND SILAGE.—In the case of hay or si-
lage derived from a loan commodity, the payment
rate shall be the amount by which—
(A) the loan rate established under section
1202 for the loan commodity from which the hay
or silage is derived; exceeds
(B) the rate at which a marketing assist-
ance loan for the loan commodity may be repaid
under section 1204.
(d) EXCEPTION FOR EXTRA LONG STAPLE COTTON.—
This section shall not apply with respect to extra long staple
cotton.
(e) EFFECTIVE DATE FOR PAYMENT RATE DETER-
MINATION.—
(1) LOSS OF BENEFICIAL INTEREST.—The Sec-
retary shall determine the amount of the loan defi-
ciency payment to be made under this section to the
producers on a farm with respect to a quantity of a
loan commodity or commodity referred to in sub-
section (a)(2) using the payment rate in effect under
subsection (c) as soon as practicable after the date on
which the producers on the farm lose beneficial inter-
est.
(2) ON-FARM CONSUMPTION.—For the quantity
of a loan commodity or commodity referred to in sub-
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section (a)(2) consumed on a farm, the Secretary
shall provide procedures to determine a date on which
the producers on the farm lose beneficial interest.
(3) APPLICABILITY.—This subsection does not
apply for the 2009 through 2012 crop years.
SEC. 1206. PAYMENTS IN LIEU OF LOAN DEFICIENCY PAY-
MENTS FOR GRAZED ACREAGE.
(a) ELIGIBLE PRODUCERS.—
(1) IN GENERAL.—Except as provided in section
1401, effective for the 2008 through 2012 crop years,
in the case of a producer that would be eligible for a
loan deficiency payment under section 1205 for
wheat, barley, or oats, but that elects to use acreage
planted to the wheat, barley, or oats for the grazing
of livestock, the Secretary shall make a payment to
the producer under this section if the producer enters
into an agreement with the Secretary to forgo any
other harvesting of the wheat, barley, or oats on that
acreage.
(2) GRAZING OF TRITICALE ACREAGE.—Effective
for the 2008 through 2012 crop years, with respect to
a producer on a farm that uses acreage planted to
triticale for the grazing of livestock, the Secretary
shall make a payment to the producer under this sec-
tion if the producer enters into an agreement with the