TeachMeFinance.com - explain Peanut price support program
Peanut price support program The term 'Peanut price support program ' as it applies to the area of agriculture can be defined as 'The federal program that supports the farm price of peanuts by offering price support loans to peanut growers and by placing limits on the amount of peanuts allowed to be sold for domestic food use. Farmers may sell peanuts produced in excess of marketing limits (referred to as the peanut poundage quota - one example of a marketing quota), primarily for export and crushing into peanut oil and meal. Two nonrecourse loan levels are available to producers, depending on the end use and destination of the peanuts sold. Peanuts marketed for food use in the United States (quota peanuts) are eligible for a higher loan reflecting the historical price premium associated with selling into the high-value domestic market. The FAIR Act of 1996 freezes the quota loan rate for the 1996-2002 crops at $610 per ton. All other peanuts (called additional peanuts) are eligible for a lower level of support ($175/ton for the 1999 crop) to ensure that the Commodity Credit Corporation does not incur any losses on its peanut loan operations. The 1996 Act also requires that the national peanut poundage quota be set at an amount equal to projected "domestic edible" (food) and related uses (excluding seed). For the 1999 crop, the national quota is set at 1.18 million short tons. Other provisions are designed to make the peanut support program operate as a no cost program'.
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