CCC Raises Commodity Loan Interest Rate

WASHINGTON - Apr 2/05 - SNS -- Interest rates changed on commodity loans disbursed by the USDA's Commodity Credit Corporation (CCC) will increase during April.

The rate for 1995 and prior crop year commodity loans will be 3.250% this month, up from 3.000% in March 2005. For 1996 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during April 2005 is 4.250%, up from 4.000% in March 2005.

The interest rate for farm storage facility loans approved in April 2005 is 4.250%, up from 3.875% in March 2005. The interest rate for sugar storage facility loans for April 2005 is 4.625%, up from 4.375% in March 2005.

Past monthly releases announcing interest rates charged by CCC on commodity and marketing assistance loans disbursed for that particular month reflected 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.

The provisions of Section 163 of the Act are not retroactive. Accordingly, this and subsequent monthly interest rate announcements will carry two sets of rates: one for 1995 and prior crop year commodity loans and one for 1996 and subsequent crop year commodity and marketing assistance loans.

Further program information is available from USDA Farm Service Agency's Financial Management Division at (703) 305-1386.