---
kind: "section"
citation: "7 U.S.C. § 7235"
title: "7"
title_heading: "Agriculture"
number: "7235"
heading: "Loan deficiency payments"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/7/7235"
units:
  - "Chapter 100 — Agricultural Market Transition"
  - "Subchapter III — Nonrecourse Marketing Assistance Loans and Loan Deficiency Payments"
---

# §7235. Loan deficiency payments

- (a) **Availability of loan deficiency payments—** Except as provided in [subsection (d)](#d), the [Secretary](/usc/7/7202.md?p=13) may make loan deficiency payments available to—
  - (1) [producers](/usc/7/7202.md?p=12) who, although eligible to obtain a marketing assistance loan under [section 7231 of this title](/usc/7/7231.md) with respect to a [loan commodity](/usc/7/7202.md?p=10), agree to forgo obtaining the loan for the commodity in return for payments under this section; and
  - (2) effective only for the 2000 and 2001 crop years, [producers](/usc/7/7202.md?p=12) that, although not eligible to obtain such a marketing assistance loan under [section 7231 of this title](/usc/7/7231.md), produce a [contract commodity](/usc/7/7202.md?p=5).
- (b) **Computation—** A loan deficiency payment under this section shall be computed by multiplying—
  - (1) the loan payment rate determined under [subsection (c)](#c) for the [loan commodity](/usc/7/7202.md?p=10); by
  - (2) the quantity of the [loan commodity](/usc/7/7202.md?p=10) produced by the eligible [producers](/usc/7/7202.md?p=12), excluding any quantity for which the [producers](/usc/7/7202.md?p=12) obtain a loan under [section 7231 of this title](/usc/7/7231.md).
- (c) **Loan payment rate—** For purposes of this section, the loan payment rate shall be the amount by which—
  - (1) the loan rate established under [section 7232 of this title](/usc/7/7232.md) for the [loan commodity](/usc/7/7202.md?p=10); exceeds
  - (2) the rate at which a loan for the commodity may be repaid under [section 7234 of this title](/usc/7/7234.md).
- (d) **Exception for extra long staple cotton—** This section shall not apply with respect to [extra long staple cotton](/usc/7/7202.md?p=8).
- (e) **Transition—** A payment to a [producer](/usc/7/7202.md?p=12) eligible for a payment under [subsection (a)(2)](#a-2) that harvested a commodity on or before the date that is 30 days after the promulgation of the regulations implementing [subsection (a)(2)](#a-2) shall be determined as the date the [producer](/usc/7/7202.md?p=12) lost beneficial interest in the commodity, as determined by the [Secretary](/usc/7/7202.md?p=13).
- (f) **Beneficial interest—** Subject to [subsection (e)](#e), a [producer](/usc/7/7202.md?p=12) shall be eligible for a payment under this section only if the [producer](/usc/7/7202.md?p=12) has a beneficial interest in the commodity, as determined by the [Secretary](/usc/7/7202.md?p=13).
- (g) **Effective date for payment rate determination—** For the 2001 crop year, the [Secretary](/usc/7/7202.md?p=13) shall determine the amount of the loan deficiency payment to be made under this section to the [producers](/usc/7/7202.md?p=12) on a farm with respect to a quantity of a [loan commodity](/usc/7/7202.md?p=10) using the payment rate in effect under [subsection (c)](#c) as of the earlier of the following:
  - (1) The date on which the [producers](/usc/7/7202.md?p=12) marketed or otherwise lost beneficial interest in the crop of the [loan commodity](/usc/7/7202.md?p=10), as determined by the [Secretary](/usc/7/7202.md?p=13).
  - (2) The date the [producers](/usc/7/7202.md?p=12) requested the payment.

## Source credit

(Pub. L. 104–127, title I, § 135, Apr. 4, 1996, 110 Stat. 909; Pub. L. 106–224, title II, § 206, June 20, 2000, 114 Stat. 405; Pub. L. 107–171, title I, § 1205(f)(2), May 13, 2002, 116 Stat. 159.)

## Notes

### Editorial Notes

### Amendments

2002—Subsec. (a)(2). Pub. L. 107–171, § 1205(f)(2)(A), substituted “2000 and 2001 crop years” for “2000 crop year”.

Subsec. (g). Pub. L. 107–171, § 1205(f)(2)(B), added subsec. (g).

2000—Subsec. (a). Pub. L. 106–224, § 206(a), designated existing provisions as par. (1) and added par. (2).

Subsec. (b)(2). Pub. L. 106–224, § 206(b), substituted “produced by the eligible producers, excluding any quantity for which the producers obtain a loan under section 7231 of this title.” for “that the producers on a farm are eligible to place under loan but for which the producers forgo obtaining the loan in return for payments under this section.”

Subsecs. (e), (f). Pub. L. 106–224, § 206(c), added subsecs. (e) and (f).