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Peanut price support program: 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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