The U.S. Department of Agriculture's Commodity Credit Corporation (CCC) today announced interest rates for October 2011. The CCC borrowing rate-based charge for October 2011 is 0.125 percent, unchanged from 0.125 in September 2011. For 1996 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during October 2011 is 1.125 percent, unchanged from 1.125 in September 2011.
In accordance with the 2008 Farm Bill, interest rates for Farm Storage Facility Loans approved for October 2011 are as follows, 1.500 percent with seven-year loan terms, down from 1.875 in September 2011; 2.125 percent with 10-year loan terms, down from 2.500 in September 2011 and; 2.375 percent with 12-year loan terms, down from 2.875 percent in September 2011. The interest rate for Sugar Storage Facility Loans for October 2011 is 2.625 percent, down from 3.125 in September 2011.
The maximum discount rate applicable for October 2011 for the Tobacco Transition Payment Program is 5 percent, unchanged from September 2011. This is based on the 3.250 percent prime rate plus 2 percent, 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 percent — 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.