CCC Sets March Lending Rates

WASHINGTON - Mar 1/04 - SNS -- The USDA's Commodity Credit Corporation (CCC) set the interest rate for 1995 and prior crop year commodity loans it disbursed at 1.250% during March, unchanged from February 2004.

For 1996 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during March 2004 is 2.250%, unchanged from February 2004. The interest rate for farm storage facility loans approved in March 2004 is 3.625%, down from 3.750% in February 2004. The interest rate for sugar storage facility loans is 4.625% for March 2004, down from 4.750% in February 2004.

Past monthly releases announcing interest rates charged by CCC on commodity and marketing assistance loans disbursed for that particular month reflected the interest rate charged the CCC by the U.S. Treasury for that month. This was the interest rate specified by the 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 Apr. 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 the 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.

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