How will Peanut Storage, In-handling and Associated Cost Work in 2007? 2007 Summer Educational Conference National Buying Point Association August 9, 2007

QUESTIONS ??? WHEN & WHY WHO & WHERE HOW

WHEN & WHY THE CHANGE?  The Farm Security and Rural Investment Act of 2002 (2002 Act), required CCC to pay storage, handling, and other associated costs for all peanuts placed in the MAL program through the 2006 crop year.  This mandate was terminated with the 2007 crop year.

WHO DOES THIS CHANGE EFFECT? Price Support Division Price Support Division National FSA Division National FSA Division FSA State Office FSA State Office Manufacturers US House of Representatives US House of Representatives Blanchers Handlers Buying Points Buying Points Shellers Federal State Inspection Service Federal State Inspection Service Agriculture Marketing Service Agriculture Marketing Service FSA-County Offices Producers Kansas City Management Office Kansas City Management Office Peanut EWR US Senate

HOW WILL STORAGE AND IN-HANDLING POLICY WORK?  FSA issued policy in notice LP-2065 and 2007 Peanut Guidelines.

HOW WILL STORAGE AND IN-HANDLING POLICY WORK?  Notice LP-2065 authorized offsets for:  Peanut Storage  In-handling

HOW WILL STORAGE AND IN-HANDLING POLICY WORK?  2007 Guidelines further provided:  Methodology for Calculating the MAL.  Required Documentation.

Basic Peanut Storage Policy Requirements  The warehouseman will issue a warehouse receipt notating on the receipt if storage has been “PAID” for or “PROVIDED” for through loan maturity.  FSA will not reduce the loan rate and issue the MAL with no adjustments. Note: All regular MAL fees apply.

Basic Peanut Storage Policy Requirements  If the warehouse receipt is issued by the warehouseman indicating that storage charges have NOT BEEN paid or PARTIALLY paid through or provided for through loan maturity then CCC will:  reduce the loan rate by the amount of unpaid storage charges through loan maturity.

Basic Peanut Storage & In-handling Policy Requirements  For Storage and/or In-handling to be offset the producer must:  Present a bill or a statement of unpaid charges with the warehouse receipt when requesting a marketing assistance loan (MAL).  Complete a CCC-679. (similar to cleaning/drying) (similar to cleaning/drying)

Basic Peanut Storage & In-Handling Policy Requirements  Storage and/or In-handling will:  be deducted from the full MAL proceeds as directed by each producer.  NOT be considered a LIEN. Note: Storage charges can be offset ONLY if the warehouse receipt indicates storage has been PAID or PROVIDED for, as applicable.

Full Storage Paid or Provided for through Loan Maturity Example 2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate WAREHOUSE RECEIPT DATA DESCRIPTION FULL STORGE PAID 1Crop Year Total Tons (Loan Quantity) Net Tons LSK Tons Date Receipt Issued 11/13/2007 6Date Commodity Received 11/5/2007 STORAGE CHARGES 7 Storage Charge Per Ton (2007 CY rate) $2.71 $ Date Storage Paid Through 9/30/2008 9/30/ In-Charges Per Ton $30.00 $ Prepaid In-Charges $8.00 $ Out-Charges (2007 CY rate) $8.00 $ Prepaid Out-Charges $8.00 $0.00

Full Storage Paid or Provided for through Loan Maturity Example 2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate WAREHOUSE RECEIPT DATA DESCRIPTION FULL STORGE PAID GRADE FACTORS 13Peanut Type Runner 14Segregation 1 15Foreign Material (FM) % Moisture (MOI) % Sound Splits (SS) % Total Sound Mature Kernels (SMK) % 63.l0 19 Damaged Kernels (DK) % Other Kernels (OK) % Hulls % Total Kernels & Hulls % Extra Large Kernels (ELK) N/A

Full Storage Paid or Provided for through Loan Maturity Example 2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate WAREHOUSE RECEIPT DATA DESCRIPTION FULL STORGE PAID GRADE FACTORS LOAN MAKING – SEG. 1 PEANUTS 24Disbursement Date/Approval 12/8/ Date Documents Received 11/15/ Loan Maturity Date 9/30/ Basic Commodity Loan Rate (Line 18 x Total SMK) + (Line 20 x OK Rate) + $ (Line 23 x ELK Rate, if applicable) 28 LSK Rate $ per ton $ Adjusted LSK Rate LSK Rate – Storage Deductions Per Ton $ Net Loan Rate (less DK, FM, SS – Storage Deduct) Line 27 - (DK, FM, SS from discount Table, if applicable) – Storage Deductions Per Ton $ Note: Loan Maturity (Line 26) = Line 8, No Deduct Line 8 earlier than Line 26 (Use Storage Calculation) 31Storage Deduction Per Ton $ Amt. of Net Tons Line 30 x Net Tons $44, Amt. of LSK Tons Line 28 x Line 4 – Storage Deductions $ Value of Receipt (Before Storage Deduct) $45, Line 27 – (DK<FM<SS from Discount Table) x Line 3 + (Line 28 x Line 4) 35 RCPT Loan Amount (After Storage Deduction) Line 32 +Line 4 $45,068.59

Partial Storage Paid or Provided for through Loan Maturity Example 2007 CROP YEAR LOAN CALCULATIONS: Assumptions: 2007 Loan Rates, Premiums & Discounts; 2007 CY Storage Rate WAREHOUSE RECEIPT DATA DESCRIPTION PARTIAL STORGE PAID GRADE FACTORS LOAN MAKING – SEG. 1 PEANUTS 24Disbursement Date/Approval 12/8/ Date Documents Received 11/15/ Loan Maturity Date 9/30/ Basic Commodity Loan Rate (Line 18 x Total SMK) + (Line 20 x OK Rate) + $ (Line 23 x ELK Rate, if applicable) 28 LSK Rate $ per ton $ Adjusted LSK Rate LSK Rate – Storage Deductions Per Ton $ Net Loan Rate (less DK, FM, SS – Storage Deduct) Line 27 - (DK, FM, SS from discount Table, if applicable) – Storage Deductions Per Ton $ Note: Loan Maturity (Line 26) = Line 8, No Deduct Line 8 earlier than Line 26 (Use Storage Calculation) 31Storage Deduction Per Ton $ Amt. of Net Tons Line 30 x Net Tons $43, Amt. of LSK Tons Line 28 x Line 4 – Storage Deductions $ Value of Receipt (Before Storage Deduct) $45, Line 27 – (DK<FM<SS from Discount Table) x Line 3 + (Line 28 x Line 4) 35 RCPT Loan Amount (After Storage Deduction) Line 32 +Line 33 $43,704.65

Additional Cash Disbursement  BEFORE loan repayment, if the MAL was REDUCED to pay storage, FSA will allow:  the producer/agent to provide proof that warehouse storage charges have been paid or provided for during the period for which the storage was previously deducted.  adjustments to the dates and the MAL amount to reflect the deducted storage amount and the MAL will be adjusted to account for an additional cash disbursement.

Handling Storage at Forfeiture  If the MAL is not repaid within the 9-month period and the peanuts are subsequently forfeited to CCC, storage charges will be handled as follows, if charges were:  paid through maturity, then CCC will pay storage charges to the warehouse starting the day after loan maturity through final disposition.

Handling Storage at Forfeiture  not fully paid and the loan rate was reduced by FSA, then CCC will pay storage charges to the warehouse from the later of the day after “Date Storage Paid Through” or the “Date Documents Received” through final disposition, when applicable.  paid beyond maturity, then CCC will refund to the producer all storage charges paid beyond the loan maturity date.

In-handling at Forfeiture In-handling at Forfeiture  If the MAL is not repaid within the 9-month period and the peanuts are subsequently forfeited to CCC, In- handling charges will be handled as follows:

In-handling at Forfeiture In-handling at Forfeiture  CCC will bring all in-handling charges current and pay the storing warehouse. Since the producer is responsible he/she will be billed by CCC for the in-handling charges. in-handling charges. Note: Similar to Cotton Policy

Questions  Questions concerning this policy contact: Tonye B. Gross Peanut Program Manager Peanut Program Manager Farm Service Agency Price Support Division (202) (202)