Senators 'unhappy' with USDA loan cut

Fourteen senators from both sides of the aisle are unhappy that the Obama administration instituted a cut to a loan program designed to help farmers when harvest prices are low.

This week, the lawmakers sent a letter to Agriculture Secretary Tom VilsackThomas James VilsackUSDA: Farm-to-school programs help schools serve healthier meals OVERNIGHT MONEY: House poised to pass debt-ceiling bill MORE expressing “serious concern” about cuts to the lending program, known as marketing assistance loans, as well as a decision to delay processing loans while the U.S. Department of Agriculture (USDA) updates its software.

The decision, they wrote in the letter, could force farmers to turn to more expensive sources of credit during harvest, change future contracts and hurt farmers’ profits.

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“The decision to apply sequestration and delay loan processing just as harvest across much of the Sunbelt is gearing up is particularly damaging because it was made without warning,” they wrote.

“This means growers, marketing cooperatives, private merchandizing firms, and agribusinesses were unable to make alternative plans to mitigate the financial hardship imposed by the decisions.”

On Sept. 30, the USDA decided to apply 5.1 percent cut to marketing assistance loans made after Oct. 1.

The department also announced that it would delay processing some loans by two weeks. That holdup was pushed back to this week because of the 16-day government shutdown.

“Without the predictable cash flow that Marketing Assistance Loans provide, producers will not be able to repay or extend their operating loans which will lead to additional interest charges if growers are unable to avoid defaulting on their financial obligations,” they added.

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