How will Peanut Storage, How will Peanut Storage, In-handling and Associated In-handling and Associated

Cost Work in 2007?Cost Work in 2007?

2007 Summer Educational Conference2007 Summer Educational ConferenceNational Buying Point AssociationNational Buying Point Association

August 9, 2007August 9, 2007

QUESTIONS ???QUESTIONS ???

WHEN & WHY

WHO&

WHERE

HOW

WHEN & WHY THE WHEN & WHY THE CHANGE?CHANGE?

The Farm Security and Rural Investment The Farm Security and Rural Investment Act of 2002 (2002 Act), required CCC to Act of 2002 (2002 Act), required CCC to pay storage, handling, and other associated pay storage, handling, and other associated costs for all peanuts placed in the MAL costs for all peanuts placed in the MAL program through the 2006 crop year. program through the 2006 crop year.

This mandate was terminated with the This mandate was terminated with the 2007 crop year. 2007 crop year.

WHO DOES THIS CHANGE WHO DOES THIS CHANGE EFFECT?EFFECT?

Price SupportDivision

Price SupportDivision

NationalFSA

Division

NationalFSA

DivisionFSA State

Office

FSA StateOffice

ManufacturersManufacturers

US House ofRepresentatives

US House ofRepresentatives

BlanchersBlanchers

HandlersHandlers

Buying Points

Buying Points

ShellersShellers

Federal StateInspection Service

Federal StateInspection Service

Agriculture MarketingService

Agriculture MarketingService

FSA-County OfficesFSA-County Offices

ProducersProducers

Kansas CityManagement Office

Kansas CityManagement Office

Peanut EWRPeanut EWR

US SenateUS Senate

HOW WILL STORAGE HOW WILL STORAGE AND AND

IN-HANDLING POLICY IN-HANDLING POLICY WORK?WORK?

FSA issued policy in notice LP-2065 FSA issued policy in notice LP-2065 and 2007 Peanut Guidelines.and 2007 Peanut Guidelines.

HOW WILL STORAGE HOW WILL STORAGE AND AND

IN-HANDLING POLICY IN-HANDLING POLICY WORK?WORK?

Notice LP-2065 authorized offsets Notice LP-2065 authorized offsets for:for:

Peanut Storage Peanut Storage

In-handlingIn-handling

HOW WILL STORAGE HOW WILL STORAGE AND AND

IN-HANDLING POLICY IN-HANDLING POLICY WORK?WORK?

2007 Guidelines further provided:2007 Guidelines further provided:

Methodology for Calculating the MAL. Methodology for Calculating the MAL.

Required Documentation.Required Documentation.

Basic Peanut Storage Basic Peanut Storage Policy RequirementsPolicy Requirements

The warehouseman will issue a The warehouseman will issue a warehouse receipt notating on the warehouse receipt notating on the receipt if storage has been receipt if storage has been “PAID”“PAID” for or for or “PROVIDED”“PROVIDED” for through loan maturity. for through loan maturity.

FSA will not reduce the loan rate and FSA will not reduce the loan rate and issue the MAL with no adjustments.issue the MAL with no adjustments.

Note:Note: All regular MAL fees apply. All regular MAL fees apply.

Basic Peanut Storage Basic Peanut Storage Policy RequirementsPolicy Requirements

If the warehouse receipt is issued by the If the warehouse receipt is issued by the warehouseman indicating that storage warehouseman indicating that storage charges have charges have NOT BEENNOT BEEN paid or paid or PARTIALLYPARTIALLY paid through or provided for paid through or provided for through loan maturity then CCC will:through loan maturity then CCC will:

reduce the loan rate by the amount of unpaid reduce the loan rate by the amount of unpaid storage charges through loan maturity.storage charges through loan maturity.

Basic Peanut Storage & Basic Peanut Storage & In-handling Policy In-handling Policy

RequirementsRequirements For Storage and/or In-handling to be For Storage and/or In-handling to be

offset the producer must:offset the producer must:

Present a bill or a statement of unpaid Present a bill or a statement of unpaid charges with the warehouse receipt charges with the warehouse receipt when requesting a marketing assistance when requesting a marketing assistance loan (MAL). loan (MAL).

Complete a CCC-679. Complete a CCC-679. (similar to cleaning/drying)(similar to cleaning/drying)

Basic Peanut Storage & Basic Peanut Storage & In-Handling Policy In-Handling Policy

RequirementsRequirements Storage and/or In-handling will: Storage and/or In-handling will:

be deducted from the full MAL proceeds be deducted from the full MAL proceeds as directed by each producer.as directed by each producer.

NOTNOT be considered a be considered a LIENLIEN..

Note:Note: Storage charges can be offset Storage charges can be offset ONLYONLY if if the warehouse receipt indicates the warehouse receipt indicates storage storage has been has been PAIDPAID or or PROVIDEDPROVIDED for, as for, as applicable. applicable.

Full Storage Paid or Provided for Full Storage Paid or Provided for through Loan Maturity through Loan Maturity

ExampleExample2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate

• WAREHOUSE RECEIPT DATA DESCRIPTION FULL STORGE PAID

• 1 Crop Year 2007• 2 Total Tons (Loan Quantity) 143.80• 3 Net Tons 141.42• 4 LSK Tons 2.38• 5 Date Receipt Issued 11/13/2007• 6 Date Commodity Received 11/5/2007

• STORAGE CHARGES• 7 Storage Charge Per Ton (2007 CY rate) $2.71 $2.71• 8 Date Storage Paid Through 9/30/2008 9/30/2008 • 9 In-Charges Per Ton $30.00 $30.00 • 10 Prepaid In-Charges $8.00 $0.00• 11 Out-Charges (2007 CY rate) $8.00 $0.00• 12 Prepaid Out-Charges $8.00 $0.00

Full Storage Paid or Provided for Full Storage Paid or Provided for through Loan Maturity through Loan Maturity

ExampleExample2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate

• WAREHOUSE RECEIPT DATA DESCRIPTION FULL STORGE PAID

• GRADE FACTORS

• 13 Peanut Type Runner• 14 Segregation 1• 15 Foreign Material (FM) % 3.29• 16 Moisture (MOI) % 9.27 • 17 Sound Splits (SS) % 3.20• 18 Total Sound Mature Kernels (SMK) % 63.l0• 19 Damaged Kernels (DK) % 0.00• 20 Other Kernels (OK) % 8.30• 21 Hulls % 28.59• 22 Total Kernels & Hulls % 99.99• 23 Extra Large Kernels (ELK) N/A

Full Storage Paid or Provided for Full Storage Paid or Provided for through Loan Maturity through Loan Maturity

ExampleExample2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate

• WAREHOUSE RECEIPT DATA DESCRIPTION FULL STORGE PAID

• GRADE FACTORS

• LOAN MAKING – SEG. 1 PEANUTS

• 24 Disbursement Date/Approval 12/8/2007• 25 Date Documents Received 11/15/2007• 26 Loan Maturity Date 9/30/2008• 27 Basic Commodity Loan Rate (Line 18 x Total SMK) + (Line 20 x OK Rate) + $316.33

(Line 23 x ELK Rate, if applicable) • 28 LSK Rate $140.00 per ton $140.00• 29 Adjusted LSK Rate LSK Rate – Storage Deductions Per Ton $140.00

• 30 Net Loan Rate (less DK, FM, SS – Storage Deduct) • Line 27 - (DK, FM, SS from discount Table,• if applicable) – Storage Deductions Per Ton $316.33

• Note: Loan Maturity (Line 26) = Line 8, No Deduct• Line 8 earlier than Line 26 (Use Storage Calculation) •

• 31 Storage Deduction Per Ton $0.00• 32 Amt. of Net Tons Line 30 x Net Tons $44,735.39 • 33 Amt. of LSK Tons Line 28 x Line 4 – Storage Deductions $333.20• 34 Value of Receipt (Before Storage Deduct) $45,068.59

Line 27 – (DK<FM<SS from Discount Table) x Line 3 + (Line 28 x Line 4)

• 35 RCPT Loan Amount (After Storage Deduction) Line 32 +Line 4 $45,068.59

Partial Storage Paid or Provided for Partial Storage Paid or Provided for through Loan Maturity through Loan Maturity

ExampleExample2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate

• WAREHOUSE RECEIPT DATA DESCRIPTION PARTIAL STORGE PAID

• GRADE FACTORS

• LOAN MAKING – SEG. 1 PEANUTS

• 24 Disbursement Date/Approval 12/8/2007• 25 Date Documents Received 11/15/2007• 26 Loan Maturity Date 9/30/2008• 27 Basic Commodity Loan Rate (Line 18 x Total SMK) + (Line 20 x OK Rate) + $316.33

(Line 23 x ELK Rate, if applicable) • 28 LSK Rate $140.00 per ton $140.00• 29 Adjusted LSK Rate LSK Rate – Storage Deductions Per Ton

$130.5150 • 30 Net Loan Rate (less DK, FM, SS – Storage Deduct) • Line 27 - (DK, FM, SS from discount Table,• if applicable) – Storage Deductions Per Ton $306.8450

• Note: Loan Maturity (Line 26) = Line 8, No Deduct• Line 8 earlier than Line 26 (Use Storage Calculation) •

• 31 Storage Deduction Per Ton $9.4850• 32 Amt. of Net Tons Line 30 x Net Tons $43,394.02 • 33 Amt. of LSK Tons Line 28 x Line 4 – Storage Deductions $310.63• 34 Value of Receipt (Before Storage Deduct) $45,068.59

Line 27 – (DK<FM<SS from Discount Table) x Line 3 + (Line 28 x Line 4)

• 35 RCPT Loan Amount (After Storage Deduction) Line 32 +Line 33 $43,704.65

Additional Cash Additional Cash DisbursementDisbursement

BEFORE BEFORE loan repayment, if the MAL was loan repayment, if the MAL was REDUCEDREDUCED to pay storage, FSA will allow: to pay storage, FSA will allow:

the producer/agent to provide proof that the producer/agent to provide proof that warehouse storage charges have been paid or warehouse storage charges have been paid or provided for during the period for which the provided for during the period for which the storage was previously deducted. storage was previously deducted.

adjustments to the dates and the MAL amount to adjustments to the dates and the MAL amount to reflect the deducted storage amount and the reflect the deducted storage amount and the MAL will be adjusted to account for an additional MAL will be adjusted to account for an additional cash disbursement.cash disbursement.

Handling Storage at Handling Storage at ForfeitureForfeiture

If the MAL is not repaid within the If the MAL is not repaid within the

9-month period and the peanuts are 9-month period and the peanuts are subsequently forfeited to CCC, storage subsequently forfeited to CCC, storage charges will be handled as follows, if charges will be handled as follows, if charges were: charges were:

paid through maturity, then CCC will pay paid through maturity, then CCC will pay storage charges to the warehouse starting the storage charges to the warehouse starting the day after loan maturity through final day after loan maturity through final disposition.disposition.

Handling Storage at Handling Storage at ForfeitureForfeiture

not fully paid and the loan rate was reduced not fully paid and the loan rate was reduced by FSA, then CCC will pay storage charges by FSA, then CCC will pay storage charges to the warehouse from the later of the day to the warehouse from the later of the day after “Date Storage Paid Through” or the after “Date Storage Paid Through” or the “Date Documents Received” through final “Date Documents Received” through final disposition, when applicable.disposition, when applicable.

paid beyond maturity, then CCC will refund paid beyond maturity, then CCC will refund to the producer all storage charges paid to the producer all storage charges paid beyond the loan maturity date. beyond the loan maturity date.

In-handling at ForfeitureIn-handling at Forfeiture

If the MAL is not repaid within the If the MAL is not repaid within the

9-month period and the peanuts are 9-month period and the peanuts are subsequently forfeited to CCC, In-subsequently forfeited to CCC, In-handling charges will be handled as handling charges will be handled as follows: follows:

In-handling at ForfeitureIn-handling at Forfeiture

CCC will bring all in-handling CCC will bring all in-handling charges current and pay the storing charges current and pay the storing warehouse. Since the producer is warehouse. Since the producer is responsible he/she will be billed by responsible he/she will be billed by CCC for the CCC for the

in-handling charges. in-handling charges.

Note: Similar to Cotton PolicyNote: Similar to Cotton Policy

QuestionsQuestions Questions concerning this policy contact:Questions concerning this policy contact:

Tonye B. GrossTonye B. Gross

Peanut Program ManagerPeanut Program Manager

Farm Service AgencyFarm Service Agency

Price Support DivisionPrice Support Division

(202) 720-4319(202) 720-4319

(202) 690-1536(202) 690-1536

Tonye.Gross@wdc.usda.govTonye.Gross@wdc.usda.gov