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Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Rules and Regulations
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developing a removal plan and may provide cost share assistance to help with proper disposal and permanent removal through the Environmental Quality Incentives Program.
Once approved for cow indemnification, the affected farmers will dry the affected lactating dairy cows to stop further milk production.
Affected farmers approved for indemnification of cows that subsequently restock the original farm with new dairy cows and commercially market milk at the original location of contamination, are not eligible for DIPP
indemnification for any future contamination from the same loss.
FSA is also amending 7 CFR 760.6i to include the requirement that all milk indemnification applicants provide monthly milk testing results detailing the chemical residue levels in the milk to align with current procedure. In addition, FSA is amending 7 CFR 760.2
to add definitions for contaminated milk, depopulation, not marketable, and violating substance in 7 CFR 760.2 and FSA is amending 760.7 to apply to both milk and cow indemnification.
Marketing Assistance Loans and Loan Deficiency Payment Programs FSA administers the MAL and LDP
Programs for CCC. The 2018 Farm Bill extends the existing MAL and LDP
programs for the 2019 through 2023
crop years with minor changes implemented by this rule. Sections 1201
through 1205 and 1301 of the 2018 Farm Bill authorize the continuation of the MAL and LDP programs, the Economic Adjustment Assistance for Textile Mills, the Extra Long Staple ELS Cotton Competitiveness Payment Program, and the Sugar Program. The changes required by the 2018 Farm Bill include:
Revising the loan rates for wheat, feed grains, soybeans, and pulse crops;
providing the ability to pledge contaminated commodities for recourse loans at 100 percent of the loan rate if merchantable; removing payment limitation and other payment eligibility criteria for MAL and LDP for all commodities; providing a new formula for upland cotton base loan rates;
revising the name of the Economic Adjustment Assistance for Users of Upland Cotton Program to Economic Adjustment Assistance for Textile Mills, and adjusting the trigger point for payment under the ELS Cotton Competitiveness Payment Program. The 2018 Farm Bill also established the loan rates for raw cane sugar and refined beet sugar. This rule also makes discretionary changes to include provisions for Commodity Certificate
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Exchanges, to clarify the regulations and to remove expired provisions.
This rule updates 7 CFR parts 1421, 1425, 1427, 1434, and 1435 to implement the mandatory changes required by the 2018 Farm Bill and the discretionary clarifying changes and technical corrections. All applicable handbooks and forms are also being updated with conforming changes.
The 2018 Farm Bill changes in this rule have already been implemented administratively for the 2019 and subsequent crop year.
Existing MAL and LDP Programs Producers of eligible commodities can apply for MALs or LDPs, subject to terms and conditions as specified in applicable regulations. MALs are 9month loans with the commodity pledged as collateral for the loan. A
producer who is eligible for MAL may choose to receive LDP in lieu of receiving a MAL. LDPs allow the producer to receive a payment when the alternative repayment rate for that commodity is below the loan rate, instead of pledging the commodity as collateral for MAL. The general structure of the MAL and LDP Programs are not changing with this rule. The 2018 Farm Bill changes eligibility requirements for producers, as well as the loan rates for many commodities.
MALs and LDPs are available beginning with harvest or shearing season for each commodity and extend through the marketing year for that particular commodity. Nearly all MALs are nonrecourse loans, meaning that the commodity is collateral for MALs and may be delivered at maturity as full payment for an outstanding MAL.
Recourse loans are available for a few commodities for which long term storage is not readily available, meaning that the collateral cannot be delivered as full payment for MALs. With the 2018
Farm Bill, recourse loans will now be available for contaminated commodities that are merchantable. MALs and LDPs must be requested on or before the final loan availability date for the applicable commodity. Producers may repay the MAL at a rate that is the lesser of the loan rate plus interest or an alternative repayment rate as determined and announced by the USDA. The repayment rate is based on average market prices for the preceding 30 days, or an alternative rate set by a similar method established by the Secretary. If the market price as reflected in the repayment rate falls below a loan rate specified in the 2018 Farm Bill for that commodity, producers can redeem a MAL at the posted repayment rate, deliver the MAL commodity to CCC, or
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use Commodity Certificates to exchange the commodity.
As an alternative to receiving a MAL, a producer can forgo a MAL, and instead, may obtain an LDP on their crop, if an LDP is currently available for the applicable commodity and the producer is eligible for the MAL. LDPs allow the producer to receive a payment when the repayment rate for a commodity is below the loan rate for that commodity.
Upland Cotton National Loan Rate Calculation and ELS Loan Rate Change Section 1202 of the 2018 Farm Bill specifies the national loan rates for the 2019 through 2023 crop years for the eligible loan commodities.
Section 1202a3 of the 2018 Farm Bill amended 7 U.S.C. 9032 to add subsection b6 and sets the base loan rate for upland cotton at no less than $0.45 per pound or more than $0.52 per pound based on the average of the adjusted prevailing world price for the two immediately preceding marketing years, as determined by the Secretary, and may not equal less than 98 percent of the loan rate for the preceding year.
This change is designed to make the loan rate more reflective of prevailing market prices, and serves to limit the impact of decreased market prices on the loan rate while allowing any price changes to the established loan rate to be reflected in future base loan rates.
Payment Limitations and Adjusted Gross Income Section 1703a2 of the 2018 Farm Bill removed references to market loan gains and loan deficiency payments in 7 U.S.C. 1308, and as a result, payment limitations no longer apply to market loan gains and LDPs. Additionally, by removing market loan gains and loan deficiency payments, payment limitations, actively engaged in farming requirements, and the cash rent tenant provisions no longer apply to market loan gains and LDPs as well.
The average Adjusted Gross Income AGI limit for most FSA and CCC
programs is $900,000 and remains unchanged. The $900,000 limit is for total average AGI, as opposed to the way AGI has operated previously, with multiple limits for farm and non-farm income, and the separate, different limit for conservation programs. Producers exceeding AGI can apply for and receive a MAL. Nonrecourse MALs must either be repaid at principal plus interest, exchanged with commodity certificates if the alternative repayment rate is below the established loan rate, or forfeited to the commodity to CCC in satisfaction of the loan debt. Producers
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