---
kind: "section"
citation: "7 U.S.C. § 8735"
title: "7"
title_heading: "Agriculture"
number: "8735"
heading: "Loan deficiency payments"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/7/8735"
units:
  - "Chapter 113 — Agricultural Commodity Support Programs"
  - "Subchapter II — Marketing Assistance Loans and Loan Deficiency Payments"
---

# §8735. Loan deficiency payments

- (a) **Availability of loan deficiency payments—**
  - (1) **In general—** Except as provided in [subsection (d)](#d), the [Secretary](/usc/7/499a.md?p=b-2) may make loan deficiency payments available to [producers](/usc/7/8702.md?p=13-A) on a farm that, although eligible to obtain a marketing assistance loan under [section 8731 of this title](/usc/7/8731.md) with respect to a [loan commodity](/usc/7/8702.md?p=8), agree to forgo obtaining the loan for the commodity in return for loan deficiency payments under this section.
  - (2) **Unshorn pelts, hay, and silage—**
    - (A) **Marketing assistance loans—** Subject to [subparagraph (B)](#a-2-B), nongraded wool in the form of unshorn pelts and hay and silage derived from a [loan commodity](/usc/7/8702.md?p=8) are not eligible for a marketing assistance loan under [section 8731 of this title](/usc/7/8731.md).
    - (B) **Loan deficiency payment—** Effective for the 2008 through 2012 crop years, the [Secretary](/usc/7/499a.md?p=b-2) may make loan deficiency payments available under this section to [producers](/usc/7/8702.md?p=13-A) on a farm that produce unshorn pelts or hay and silage derived from a [loan commodity](/usc/7/8702.md?p=8).
- (b) **Computation—** A loan deficiency payment for a [loan commodity](/usc/7/8702.md?p=8) or commodity referred to in [subsection (a)(2)](#a-2) shall be computed by multiplying—
  - (1) the payment rate determined under [subsection (c)](#c) for the commodity; by
  - (2) the quantity of the commodity produced by the eligible [producers](/usc/7/8702.md?p=13-A), excluding any quantity for which the [producers](/usc/7/8702.md?p=13-A) obtain a marketing assistance loan under [section 8731 of this title](/usc/7/8731.md).
- (c) **Payment rate—**
  - (1) **In general—** In the case of a [loan commodity](/usc/7/8702.md?p=8), the payment rate shall be the amount by which—
    - (A) the loan rate established under [section 8732 of this title](/usc/7/8732.md) for the [loan commodity](/usc/7/8702.md?p=8); exceeds
    - (B) the rate at which a marketing assistance loan for the [loan commodity](/usc/7/8702.md?p=8) may be repaid under [section 8734 of this title](/usc/7/8734.md).
  - (2) **Unshorn pelts—** In the case of unshorn pelts, the payment rate shall be the amount by which—
    - (A) the loan rate established under [section 8732 of this title](/usc/7/8732.md) for ungraded wool; exceeds
    - (B) the rate at which a marketing assistance loan for ungraded wool may be repaid under [section 8734 of this title](/usc/7/8734.md).
  - (3) **Hay and silage—** In the case of hay or silage derived from a [loan commodity](/usc/7/8702.md?p=8), the payment rate shall be the amount by which—
    - (A) the loan rate established under [section 8732 of this title](/usc/7/8732.md) for the [loan commodity](/usc/7/8702.md?p=8) from which the hay or silage is derived; exceeds
    - (B) the rate at which a marketing assistance loan for the [loan commodity](/usc/7/8702.md?p=8) may be repaid under [section 8734 of this title](/usc/7/8734.md).
- (d) **Exception for extra long staple cotton—** This section shall not apply with respect to [extra long staple cotton](/usc/7/8702.md?p=7).
- (e) **Effective date for payment rate determination—** The [Secretary](/usc/7/499a.md?p=b-2) shall determine the amount of the loan deficiency payment to be made under this section to the [producers](/usc/7/8702.md?p=13-A) on a farm with respect to a quantity of a [loan commodity](/usc/7/8702.md?p=8) or commodity referred to in [subsection (a)(2)](#a-2) using the payment rate in effect under [subsection (c)](#c) as of the date the [producers](/usc/7/8702.md?p=13-A) request the payment.

## Source credit

(Pub. L. 110–234, title I, § 1205, May 22, 2008, 122 Stat. 958; Pub. L. 110–246, § 4(a), title I, § 1205, June 18, 2008, 122 Stat. 1664, 1686.)

## Notes

### Editorial Notes

### Codification

Pub. L. 110–234 and Pub. L. 110–246 enacted identical sections. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246.

### Statutory Notes and Related Subsidiaries

### Effective Date

Enactment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as a note under section 8701 of this title.