makes loans available to millers and
processors, which are generally corporations or
cooperatives, rather than directly to individual
farmers. Under a system of “non-recourse”
loans, processors agree to pay growers the government-
established minimum price based on
loan rates for cane and beet sugar, pledging the
sugar as collateral. When the loan matures,
processors must decide whether to pay off the
loan, plus interest, and sell the pledged sugar
on the domestic market, or forfeit the sugar
and keep the money paid to them by the U.S.
government. If domestic sugar prices fall below
the loan rate, sugar processors may forfeit up to
10 percent of their sugar to the U.S. government,
with a 1-cent per pound penalty, rather
than repay the loans.
makes loans available to millers andprocessors, which are generally corporations orcooperatives, rather than directly to individualfarmers. Under a system of “non-recourse”loans, processors agree to pay growers the government-established minimum price based onloan rates for cane and beet sugar, pledging thesugar as collateral. When the loan matures,processors must decide whether to pay off theloan, plus interest, and sell the pledged sugaron the domestic market, or forfeit the sugarand keep the money paid to them by the U.S.government. If domestic sugar prices fall belowthe loan rate, sugar processors may forfeit up to10 percent of their sugar to the U.S. government,with a 1-cent per pound penalty, ratherthan repay the loans.
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