A bipartisan group of Senators led by Senate Ag Committee Ranking Member Thad Cochran (R-Miss.) have sent a letter to USDA Secretary Tom Vilsack asking for explanation of his department's last minute (Sept. 30) decision to reduce all Marketing Assistance Loans (MAL) made after Oct. 1, 2013, by 5.1% and to delay loan processing to mid-October while the software is being updated. The 14-day software update slated to begin Oct. 1 was further delayed by the 16-day partial government shutdown.
The reduction in loans and delay in processing will have a "substantial impact on farmers and agribusinesses by: (1) substantially reducing cash flow during harvest which may require some to secure unanticipated loans from other, mostly costly credit sources (2) result in unrecoverable income losses for many growers who have forward contracted their crops using an option-to-purchase contract and (3) significantly alter the terms of future contracts, to the detriment of the producer," according to the senators.
Further, the senators say the timing of the decision was particularly poor as it was announced as harvest was gearing up across the Sunbelt and there was no warning, leaving farmers, cooperatives, merchandising firms and agribusiness without the option of making alternative plans to manage risk.
"The decision was especially surprising since sequestration was not applied to Marketing Assistance Loans made for the 2012 crop or for the 2013 crop entered into the loan before Oct. 1," the letter notes.
The senators also expressed disapproval as to the lack of details in the announcement. "Most notable is the fact that the news release did not specify whether loan redemptions would also be impacted by sequestration," the letter pointed out.
Senate Ag Committee Ranking Member Thad Cochran (R-Miss.) spearheaded the effort. Thirteen other members joined him in signing the letter, including:
- Senators Saxby Chambliss (R-Ga.), ranking member on the Agriculture Subcommittee on Commodities, Markets, Trade and Risk Management
- John Boozman (R-Ark.)
- Richard Burr (R-N.C.)
- John Cornyn (R-Texas)
- Lindsey Graham (R-S.C.)
- Kay Hagan (D-N.C.)
- James Inhofe (R-Okla.)
- Johnny Isakson (R-Ga.)
- Mary Landrieu (D-La.)
- Mark Pryor (D-Ark.)
- Richard Shelby (R-Ala.)
- David Vitter (R-La.)
- Roger Wicker (R-Miss.)
Click here for the full letter.