---
kind: "section"
citation: "7 U.S.C. § 1308a"
title: "7"
title_heading: "Agriculture"
number: "1308a"
heading: "Cost reduction options"
release: "119-102"
url: "https://uscodex.org/usc/7/1308a"
units:
  - "Chapter 35 — Agricultural Adjustment Act of 1938"
  - "Subchapter II — Loans, Parity Payments, Consumer Safeguards, Marketing Quotas, and Marketing Certificates"
  - "Part A — Definitions, Loans, Parity Payments, and Consumer Safeguards"
---

# §1308a. Cost reduction options

- (a) **Authority of Secretary to take action—** Notwithstanding any other provision of law, whenever the [Secretary](/usc/7/1301.md?p=a-7) of Agriculture determines that an action authorized under subsection [(c)](#c), [(d)](#d), or [(e)](#e) will reduce the total of the direct and indirect costs to the Federal Government of a [commodity](/usc/7/1a.md?p=9) program administered by the [Secretary](/usc/7/1301.md?p=a-7) without adversely affecting income to small- and medium-sized [producers](/usc/7/6802.md?p=4-A-iii-III-bb) participating in such program, the [Secretary](/usc/7/1301.md?p=a-7) shall take such action with respect to the [commodity](/usc/7/1a.md?p=9) program involved.
- (b) **Reservation of Secretary’s right to reopen or change contracts if producer agrees—** In the announcement of the specific provisions of any [commodity](/usc/7/1a.md?p=9) program administered by the [Secretary](/usc/7/1301.md?p=a-7) of Agriculture, the [Secretary](/usc/7/1301.md?p=a-7) shall include a statement setting forth which, if any, of the actions are to be initially included in the program, and a statement that the [Secretary](/usc/7/1301.md?p=a-7) reserves the right to initiate at a later date any action not previously included but authorized by this section, including the right to reopen and change a [contract](/usc/7/518.md?p=4) entered into by a [producer](/usc/7/6802.md?p=4-A-iii-III-bb) under the program if the [producer](/usc/7/6802.md?p=4-A-iii-III-bb) voluntarily agrees to the change.
- (c) **Purchase from other sources of commodities covered by nonrecourse loans—** When a nonrecourse loan program is in effect for a crop of a [commodity](/usc/7/1a.md?p=9), the [Secretary](/usc/7/1301.md?p=a-7) may enter the commercial [market](/usc/7/1301.md?p=b-6-B) to purchase such [commodity](/usc/7/1a.md?p=9) if the [Secretary](/usc/7/1301.md?p=a-7) determines that the cost of such purchases plus appropriate carrying charges will probably be less than the comparable cost of later acquiring the [commodity](/usc/7/1a.md?p=9) through defaults on nonrecourse loans under the program.
- (d) **Reduction in settlement price of nonrecourse loans—** When the domestic [market](/usc/7/1301.md?p=b-6-B) price of a [commodity](/usc/7/1a.md?p=9) for which a nonrecourse loan program (including the program authorized by [section 1445e of this title](/usc/7/1445e.md)) is in effect is insufficient to cover the principal and accumulated interest on a loan made under such program, thereby encouraging default by a [producer](/usc/7/6802.md?p=4-A-iii-III-bb), the [Secretary](/usc/7/1301.md?p=a-7) may provide for settlement of such loan and redemption by the [producer](/usc/7/6802.md?p=4-A-iii-III-bb) of the [commodity](/usc/7/1a.md?p=9) securing such loan for less than the total of the principal and all interest accumulated thereon if the [Secretary](/usc/7/1301.md?p=a-7) determines that such reduction in the settlement price will yield benefits to the Federal Government due to—
  - (1) receipt by the Federal Government of a portion rather than none of the accumulated interest;
  - (2) avoidance of default; or
  - (3) elimination of storage, handling, and carrying charges on the forfeited [commodity](/usc/7/1a.md?p=9).
- (e) **Reopening of production control or loan programs to allow for payment in kind—** When a production control or loan program is in effect for a crop of a major [agricultural commodity](/usc/7/5602.md?p=1), the [Secretary](/usc/7/1301.md?p=a-7) may at any time prior to harvest reopen the program to participating [producers](/usc/7/6802.md?p=4-A-iii-III-bb) for the purpose of accepting bids from [producers](/usc/7/6802.md?p=4-A-iii-III-bb) for the conversion of acreage planted to such crop to diverted acres in return for payment in kind from [Commodity](/usc/7/1a.md?p=9) Credit [Corporation](/usc/7/1502.md?p=b-5) surplus stocks of the [commodity](/usc/7/1a.md?p=9) to which the acreage was planted, if the [Secretary](/usc/7/1301.md?p=a-7) determines that (1) changes in domestic or world supply or demand conditions have substantially changed after announcement of the program for that crop, and (2) without action to further adjust production, the Federal Government and [producers](/usc/7/6802.md?p=4-A-iii-III-bb) will be faced with a burdensome and costly surplus. Such payments in kind shall not be included within the payment limitation per [person](/usc/7/1301.md?p=a-8) established under [section 1308 of this title](/usc/7/1308.md), but shall be limited to a total $20,000 per year per [producer](/usc/7/6802.md?p=4-A-iii-III-bb) for any one [commodity](/usc/7/1a.md?p=9).
- (f) **Other authorities of Secretary not affected—** The [authority](/usc/7/2009aa.md?p=1) provided in this section shall be in addition to, and not in place of, any [authority](/usc/7/2009aa.md?p=1) granted to the [Secretary](/usc/7/1301.md?p=a-7) under any other provision of law.

## Source credit

(Pub. L. 99–198, title X, § 1009, Dec. 23, 1985, 99 Stat. 1453; Pub. L. 101–134, § 3, Oct. 30, 1989, 103 Stat. 781; Pub. L. 110–234, title I, § 1603(g)(1), May 22, 2008, 122 Stat. 1011; Pub. L. 110–246, § 4(a), title I, § 1603(g)(1), June 18, 2008, 122 Stat. 1664, 1739.)

## Notes

### Editorial Notes

### Codification

Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246.

Section was enacted as part of the Food Security Act of 1985, and not as part of the Agricultural Adjustment Act of 1938 which comprises this chapter.

### Amendments

2008—Subsec. (e). Pub. L. 110–246, § 1603(g)(1), struck out “of $50,000” before “per person” in second sentence.

1989—Subsec. (d). Pub. L. 101–134, in introductory provisions, inserted “(including the program authorized by section 1445e of this title)” after “nonrecourse loan program” and substituted “benefits” for “savings” and struck out concluding provisions which read as follows: “but the Secretary may not reduce the settlement price to less than the principal due on the loan”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2008 Amendment

Amendment 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 an Effective Date note under section 8701 of this title.