The loan rate schedule was one of several features of the new peanut program announced by Agriculture Secretary Ann M. Veneman. Those included: Marketing loan rates, the weekly national posted price and disposition of last year’s crop still in storage.
“The Farm Security and Rural Investment Act of 2002 makes significant changes in the peanut program by replacing the peanut marketing system that was established over 60 years ago,” she said. “USDA employees have worked hard in a short amount of time to implement these new measures.
“While many of the changes are complex, this is an important transition period as these changes are intended to make the program more market oriented and to help the industry become more competitive in local and international markets.”
Veneman noted the new farm bill institutes a marketing loan program and loan deficiency payments (LDPs) that will treat peanuts in a manner similar to other commodities such as corn, soybeans and cotton. The law sets a national average loan rate of $355 per ton. The loan rates for each of the four types are:
- Runner Peanuts: $355.72 per ton
- Spanish Peanuts: $337.20 per ton
- Valencia Peanuts: $353.66 per ton
- Virginia Peanuts: $353.66 per ton.
Premiums and discounts will be applied for quality factors similar to their use for other crops.
Because of the former program and marketing structure, there is no widely reported cash price for peanuts as for other crops, thus necessitating that USDA establish a price.
Veneman said that as peanuts now will be marketed freely, some time will be required for prices to fully reflect the new market structure. USDA will report a “national posted price,” which will determine loan repayment amounts when the price is below the loan rate. In developing the posted price, USDA will utilize a variety of sources to report peanut sales transactions for all uses (both domestic and foreign sales) in various locations throughout the producing areas.
USDA will devote resources necessary to ensure the posted price is an accurate representation of the sales value of farmers’ peanuts, she said.
The “national posted price” applicable immediately to the four types of 2002 crop peanuts is:
- Runner Peanuts: $373.72 per ton
- Spanish Peanuts: $355.20 per ton
- Valencia Peanuts: $371.66 per ton
- Virginia Peanuts: $371.66 per ton.
The price for each of the four types will be updated each Tuesday at 3:00 p.m. Eastern Standard Time to reflect new transactions information available from the previous week. This process will continue until such time as market reported prices are more freely available.
Repayments for the 2002 crop peanut loans will then be handled the same as any other commodity. Peanut producers may repay the loan prior to maturity at a rate equal to the smaller of: (1) principal plus interest; or (2) the announced national posted price. The LDPs when available are the difference between the loan rate and the national posted price.
Veneman also announced new provisions for monitoring the disposition of the 2001 crop of peanuts that remain in storage. Each year under the previous program, large quantities of domestic peanuts were placed under loan, and USDA was charged with ensuring their disposal in a manner that prevents price disruption in the domestic and international markets.
Traditionally, three peanut associations entered into contracts with USDA to oversee the disposal of these peanuts. For the final disposition under the old program, USDA will assume this oversight role of verifying export transactions after Oct. 31, 2002.
Due to the large quantity of peanuts that remain in storage to be exported, Veneman also extended the export disposition date to March 28, 2003, when all exports of the 2001 crop must be completed.