Report from Meeting with USDA Regarding Sequestration of Marketing Assistance Loans and Delays in Loan Processing

October 7, 2013


Producer, Merchant and Cooperative Interest Organizations

From:        Mark Lange

President and CEO

Subject:    Report from Meeting with USDA Regarding Sequestration of Marketing

Assistance Loans and Delays in Loan Processing

Earlier today, the National Cotton Council joined other commodity organizations for a meeting with USDA officials regarding the recent announcement (see attached USDA release) that sequestration of 5.1% would apply to 2013-crop marketing assistance loans (MAL) distributed after October 1.

USDA attendees were:   Deputy Secretary Krysta Harden, Under Secretary Michael Scuse, David Grahn from Office of General Counsel, Candy Thompson of FSA Price Support Division; Deputy Chief of Staff Anne McMillian, and FSA Administrator Juan Garcia (by telephone).

A representative of American Cotton Shippers Association also participated in the session, along with staff from peanuts, rice and sugar organizations.

The group thanked USDA officials for meeting during the government shutdown and conveyed the serious concerns regarding the impact on producer income resulting from reduced loan proceeds and the detrimental constraints on cash flow due to the combination of lowering proceeds and delays in loan processing. The group also reminded USDA that sequestration did not apply to 2012 crop MALs and that sequester on DPs was actually increased to 8.5% to avoid having to “claw back” SURE payments. USDA was asked to consider using similar discretionary authority to make adjustments so that they would not have to apply sequestration to 2013 crop MALs beginning Oct. 1, and as result, loan software would not have to be rewritten, which further delays loan processing beyond the delay that occurs due to the shutdown.

OGC David Grahn explained that under the statute, MALs are defined as payments, and therefore must be subject to sequestration. It is not a matter of finding an alternative way to save an equivalent amount of money. Grahn did confirm that any 2013 crop loans made before Oct. 1 would not be retroactively reduced. When asked about the redemption process, he could not confirm whether redemptions of 2013 crop loans will be adjusted by sequestration, but understands an answer is needed as soon as possible.

FSA official Candy Thompson confirmed that loan entries and redemptions will both be suspended while software changes are being made. Under Secretary Scuse pledged to get the loan process running as soon as possible once government is reopened, but added that the 14-day estimate for software updating referenced in the Sept. 30 announcement was probably accurate. The 14-day delay would be measured from the date the government reopens.

The NCC and the other groups briefed the House and Senate Republican Agriculture Committee staff on the USDA discussions. Staff were asked to contact the USDA OGC to seek further clarification of the statutory authority being used and the reasons for 2012 and 2013 MALs being treated differently. A possible legislative fix was discussed, but it was acknowledged that no legislation is likely to move through Congress in time to change the process for 2013-crop loans. The more likely solution is for new farm legislation to be enacted that turns off future sequestration.

It should be noted that if sequestration is applied to the 2014 crop MALs, the reduction factor is projected to be 7.2%.


13 USDA FSA Loan Announcement

More Advocacy Issues

Reconciliation Package Update

September 14th, 2021

See the update below for a comprehensive review of the reconciliation process. Update Here

Read More

On August 11th, ACSA leaders including Buddy Allen of American Cotton Shippers Association, Michael Symonanis of Allenberg Cotton Co., Donna Lemm of IMC Companies, and Neely Mallory of Mallory Alexander International Logistics participated in a Federal Maritime Commission Memphis Supply Chain Stakeholder Meeting led by Commissioner Rebecca Dye. Over 100 stakeholders participated in the meeting […]

Read More

Yesterday, ACSA co-signed a letter to Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) endorsing the Ocean Shipping Reform Act of 2021 (OSRA21). The Act focuses on unreasonable detention and demurrage charges, and carrier rejection of U.S. export cargo. We believe that addressing these concerns will assist U.S. exports such as cotton to remain competitive […]

Read More

On July 23rd, Representatives Jim Costa, Salud Carbajal, Jimmy Panetta, Tom O’Halleran, John Garamendi, and Ann Kirkpatrick wrote a letter to Secretary Vilsack asking him to assistant cotton merchandisers who have experienced significant losses due to the COVID-19 pandemic. The letter states that not only did cotton experience a huge downturn in consumption during the […]

Read More

Yesterday, Representative David Scott (D-GA), Chairman of the House Committee on Agriculture, Representative Sanford Bishop (D-GA), Chairman of the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, and Senator Raphael Warnock (D-GA), the sole cotton state Democrat on the Senate Committee on Agriculture, Nutrition, and Forestry wrote a letter to Secretary […]

Read More

Yesterday, the House Transportation Subcommittee on Coast Guard and Maritime Transportation held a hearing entitled “Impacts of Shipping Container Shortages, Delays, and Increased Demand on the North American Supply Chain.”  The hearing featured two panels: the first panel included Federal Maritime Commission (FMC or Commission) Chairman Daniel Maffei and Commissioner Rebecca Dye, and the second […]

Read More