[Code of Federal Regulations]
[Title 7, Volume 10]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1435.104]

[Page 587-588]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE
 
PART 1435_SUGAR PROGRAM--Table of Contents
 
                         Subpart B_Loan Program
 
Sec. 1435.104  Loan maintenance.

    (a) All processors receiving loans shall:
    (1) Abide by the terms and conditions of the loan application, note 
and security agreement and storage agreement;
    (2) Pay interest on the principal at a rate determined in part 1405 
of this chapter.
    (b) The security interests CCC obtains as a result of the execution 
of security agreements by sugarcane and sugar beet processors shall be 
superior to all statutory and common law liens on raw cane sugar, 
refined beet sugar, and in-process sugar for the producers of sugarcane 
and sugar beets and all prior recorded and unrecorded liens on the crops 
of sugarcane and sugar beets from which the sugar was derived.
    (c) A processor receiving a loan under this part shall pay all 
eligible producers who have delivered or will deliver sugar beets or 
sugarcane to such processors for processing not less than the minimum 
payment levels CCC specifies for the applicable crop year.
    (1) In the case of sugar beets, the minimum payment shall not exceed 
the rate of payment provided for under the applicable contract between a 
sugar beet producer and a sugar beet processor.
    (2) CCC will not reject a loan application from a beet sugar 
processor from eligibility to obtain a loan under this section solely 
because of the failure of the processor to provide the appropriate 
minimum payment established under this subsection if the failure:
    (i) Occurred during a crop year before the date of enactment of the 
Farm Security and Rural Investment Act of 2002; and
    (ii) Was related, at least in part, to the effects of a natural 
disaster, including freeze damage.
    (3) In the case of sugarcane, CCC will annually determine and 
announce the annual grower minimum payment.
    (4) Processors are ineligible for loans for the crop year following 
their failure to meet the required minimum grower payment.
    (d)(1) A processor shall maintain eligible sugar or in-process sugar 
of sufficient quality and quantity as collateral to satisfy the 
processor's loan indebtedness to CCC. CCC shall not assume

[[Page 588]]

any loss in quantity or quality of the loan collateral.
    (2) The processor is responsible for storage costs through the loan 
maturity date or title transfer to CCC, whichever occurs later.
    (3) Sugar and in-process sugar pledged as loan collateral need not 
be stored identity preserved.
    (4) When the proceeds of the sale of loan collateral are needed to 
repay all or part of a sugar loan, the processor may request and obtain 
prior written approval from the loan making office by executing a loan 
collateral release request, as prescribed by CCC, to remove a specified 
quantity of the loan collateral from storage for the purpose of 
delivering it to a buyer before loan repayment. Any such approval shall 
be subject to the terms and conditions set forth in the applicable form. 
The loan making office shall not approve such a request unless the buyer 
of the sugar agrees to pay CCC an amount necessary to satisfy the 
processor's loan indebtedness regarding collateral being sold. Any such 
approval shall not:
    (i) Constitute a release of CCC's security interest in the loan 
collateral; or
    (ii) Relieve the processor of liability for the full amount of the 
loan indebtedness, including interest.