The U.S. Department of Agriculture's Commodity Credit Corporation recently announced interest rates for September 2011. The CCC borrowing rate-based charge for September 2011 is 0.125% unchanged from 0.125 in August 2011. For 1996 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during September 2011 is 1.125%, unchanged from 1.125 in August 2011.
In accordance with the 2008 Farm Bill, interest rates for Farm Storage Facility Loans approved for September 2011 are as follows, 1.875% with seven-year loan terms, down from 2.25 in August 2011; 2.5% with 10-year loan terms, down from 3 in August 2011 and; 2.875% with 12-year loan terms, down from 3.375% in August 2011. The interest rate for Sugar Storage Facility Loans for September 2011 is 3.125%, down from 3.625 in August 2011.
The maximum discount rate applicable for September 2011 for the Tobacco Transition Payment Program is 5%, unchanged from August 2011. This is based on the 3.250% prime rate plus 2%, rounded to the nearest whole number.
Past monthly releases announcing interest rates charged by CCC on commodity and marketing assistance loans disbursed for that particular month reflect the interest rate the U.S. Treasury charged CCC for that month. This was the interest rate specified by CCC since Jan. 1, 1982, but the process of establishing the interest rate was changed by a provision of the Federal Agriculture Improvement and Reform Act of 1996 (the Act), enacted on April 4, 1996.
Section 163 of the Act requires that monthly interest rates applicable to commodity and marketing assistance loans are to be 100 basis points — or 1% — greater than the rate determined under the applicable interest rate formula in effect on Oct. 1, 1995. This formula resulted in a rate equivalent to the amount the U.S. Treasury charged CCC for borrowing, for the month.
Further program information is available from USDA Farm Service Agency's (FSA) Financial Management Division at 202-772-6041.
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