Hostname: page-component-76fb5796d-vvkck Total loading time: 0 Render date: 2024-04-29T16:19:34.062Z Has data issue: false hasContentIssue false
  • English
  • Français

Farmers' Response to the Commodity Credit Corporation's Loan Program

Published online by Cambridge University Press:  28 April 2015

Ronald R. Miller ,
William H. Meyers  and
Michael A. Lancaster
Ronald R. Miller
Affiliation:
Agricultural Policy Analysis Program Area
William H. Meyers
Affiliation:
Forecast Support Group, Commodity Economics Division, Economics, Statistics, and Cooperative Service, U. S. Department of Agriculture
Michael A. Lancaster
Affiliation:
Forecast Support Group, Commodity Economics Division, Economics, Statistics, and Cooperative Service, U. S. Department of Agriculture
Get access

Extract

The Commodity Credit Corporation (CCC), established by Executive Order in 1933 and granted a federal charter in 1948, is authorized to extend nonrecourse loans to farmers who use agricultural commodities from the most recent harvest as collateral. The loan program was designed to foster a more orderly marketing procedure and stabilize agricultural prices and income, but farmers also use this program as both a residual market and a speculation and marketing aid. The amount loaned to a farmer equals the quantity of the commodity pledged as collateral times a fixed per unit value (loan rate) which is announced prior to the production period. Eligibility of a farmer for a CCC loan may require compliance with USDA allotment or set-aside programs and storage of the commodity in a CCC approved facility. The CCC's commodity demand via the loan program is perfectly elastic at the loan rate and farmers can supply as much as they desire. When the loan matures the farmer can either repay it with interest or default on both principal and interest, in which case the CCC assumes ownership of the pledged commodity.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 10 , Issue 2 , December 1978 , pp. 157 - 164
Copyright
Copyright © Southern Agricultural Economics Association 1978

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

[1]Chennareddy, Venkareddy and Holmes, Lloyd I.. An Econometric Analysis of Volume of Various Commodities under Price Support Programs of the Agricultural Stabilization and Conservation Service, U.S. Department of Agriculture, 1950-75, ASCS Report, ASCS, USDA, Washington, D.C, June-August 1976.Google Scholar
[2]Chennareddy, Venkareddy and Holmes, Lloyd I.. “Wheat Farmers' Demand for Commodity Loans, 1950-75,” Agricultural Economics Research, Volume 29, Number 2, Economic Research Service, USDA, Washington, D.C, April 1977.Google Scholar
[3]Cochrane, Willard W. and Ryan, Mary E.. American Farm Policy, 1948-73. Minneapolis: University of Minnesota Press, 1976.Google Scholar
[4]Hadwiger, A.Federal Wheat Commodity Programs. Ames: Iowa State University Press, 1970.Google Scholar
[5]Houck, James P., Abel, Martin A., Ryan, Mary E., Gallagher, Paul W., Hoffman, Robert G., and Penn, J. B.. Analyzing the Impact of Government Programs on Crop Acreage, Technical Bulletin No. 1548, Economic Research Service U. S. Department of Agriculture, Washington, D.C, August 1976.Google Scholar
[6]Johnson, James and Ericksen, Milton H.. Commodity Program Provisions under the Food and Agriculture Act of 1977, Agricultural Economic Report No. 389, Economic Research Service, U.S. Department of Agriculture, Washington, D.C, October 1977.Google Scholar
[7]Johnston, J.Econometric Methods, second edition. New York: McGraw-Hill Book Company, 1972.Google Scholar
[8]U. S. Department of Agriculture. Agricultural Statistics, various issues, Washington, D.C.Google Scholar
[9]U. S. Department of Agriculture. “Price Support and Other Loan, Purchase, and Payment Programs,” ASCS, BI No. 4, August 1975.Google Scholar
[10]Womack, Abner W.The U. S. Demand for Corn, Sorghum, Oats, and Barley: An Econometric Analysis, Economic Report 76-5, Department of Agricultural and Applied Economics, University of Minnesota, August 1976.Google Scholar