SECTION 1. REDUCTION IN LOAN RATES FOR PEANUTS.

    Section 155(a) of the Agricultural Market Transition Act (7 U.S.C. 
7271(a)(2)) is amended by striking paragraph (2) and inserting the 
following new paragraph:
            ``(2) Loan rate.--The national average quota loan rate for 
        quota peanuts shall be as follows:
                    ``(A) $610 per ton for the 1997 crop.
                    ``(B) $550 per ton for the 1998 crop.
                    ``(C) $515 per ton for the 1999 crop.
                    ``(D) $480 per ton for the 2000 crop.
                    ``(E) $445 per ton for the 2001 crop.''.

SEC. 2. FUTURE TERMINATION OF PRICE SUPPORT AND MARKETING QUOTA 
              PROGRAMS FOR PEANUTS.

    (a) Effective Date.--The amendments made by this section shall take 
effect October 1, 2001, and shall apply with respect to the 2002 and 
subsequent crops of peanuts.
    (b) Price Support.--Section 155 of the Agricultural Market 
Transition Act (7 U.S.C. 7271) is repealed.
    (c) Marketing Quota.--Part VI of subtitle B of title III of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1357-1359a), relating to 
peanuts, is repealed.
    (d) Conforming Amendments.--The Agricultural Act of 1949 (7 U.S.C. 
1441 et seq.) is amended--
            (1) in section 101(b) (7 U.S.C. 1441(b)), by striking ``and 
        peanuts''; and
            (2) in section 408(c) (7 U.S.C. 1428(c)), by striking 
        ``peanuts,''.
    (e) Prohibition on Subsequent Provision of Price Support.--
            (1) Prohibition.--After the effective date of this section, 
        except as provided in section 3, the Secretary of Agriculture 
        may not make price support available, whether in the form of 
        loans, purchases, or other operations, to peanut producers for 
        the 2002 and subsequent crops of peanuts by using the funds of 
        the Commodity Credit Corporation or under the authority of any 
        law.
            (2) Outstanding loans.--Notwithstanding paragraph (1), the 
        Secretary shall settle any outstanding loans under section 155 
        of the Agricultural Market Transition Act (title I of Public 
        Law 104-127; 7 U.S.C. 7271) made before the effective date of 
        this section with regard to the 2001 and previous crops of 
        peanuts.
    (f) Continued Liability of Producers.--An amendment made by this 
section shall not affect the liability of any person under any 
provision of law as in effect before the effective date of this 
section.

SEC. 3. NONRECOURSE LOANS FOR PEANUT PRODUCERS.

    (a) Nonrecourse Loans Available.--For each of the 2002 and 
subsequent crops of peanuts produced in the United States, the 
Secretary of Agriculture shall make available to producers on a farm a 
nonrecourse loan for peanuts produced on the farm. The loans shall be 
made under terms and conditions that are prescribed by the Secretary 
and at the loan rate established under subsection (b).
    (b) Loan Rate.--The loan rate for a nonrecourse loan under this 
section for peanuts shall be--
            (1) not less than 85 percent of the simple average price 
        received by producers of peanuts, as determined by the 
        Secretary, during the marketing years for the immediately 
        preceding five crops of peanuts, excluding the year in which 
        the average price was the highest and the year in which the 
        average price was the lowest in the period; but
            (2) not more than $350 per ton.
    (c) Term of Loan.--A nonrecourse loan for peanuts under this 
section shall have a term of 9 months beginning on the first day of the 
first month after the month in which the loan is made. The Secretary 
may not extend the term of the loan.
    (d) Repayment Rates.--The Secretary shall permit a producer to 
repay a nonrecourse loan for peanuts under this section at a rate that 
is the lesser of--
            (1) the loan rate established under subsection (b), plus 
        interest (as determined by the Secretary); or
            (2) a rate that the Secretary determines will--
                    (A) minimize potential loan forfeitures;
                    (B) minimize the accumulation of stocks of peanuts 
                by the Federal Government;
                    (C) minimize the cost incurred by the Federal 
                Government in storing the peanuts; and
                    (D) allow peanuts produced in the United States to 
                be marketed freely and competitively, both domestically 
                and internationally.
    (e) Loan Deficiency Payments.--
            (1) Availability.--The Secretary may make loan deficiency 
        payments available to peanut producers who, although eligible 
        to obtain a nonrecourse loan under this section, agree to forgo 
        obtaining the loan for the commodity in return for payments 
        under this subsection.
            (2) Computation.--A loan deficiency payment under this 
        subsection shall be computed by multiplying--
                    (A) the loan payment rate determined under 
                paragraph (3); by
                    (B) the quantity of peanuts 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 subsection.
            (3) Loan payment rate.--For purposes of this subsection, 
        the loan payment rate shall be the amount by which--
                    (A) the loan rate established under subsection (b); 
                exceeds
                    (B) the rate at which a loan for the peanuts may be 
                repaid under subsection (d).
Amends the Agricultural Market Transition Act to:  (1) reduce the loan rate for quota peanuts by specified amounts through crop year 2001; and (2) eliminate peanut price supports as of crop year 2002. Amends:  (1) the Agricultural Adjustment Act of 1938 to eliminate peanut marketing quota provisions as of crop year 2002; and (2) the Agricultural Act of 1949 to make conforming amendments. 
Prohibits the Secretary of Agriculture (Secretary) from providing any subsequent peanut price supports. 
Directs the Secretary to make nonrecourse loans and loan deficiency payments available to peanut producers beginning with crop year 2002.  Sets forth:  (1) loan rate, term, and repayment provisions; and (2) deficiency computation provisions.
To provide for a gradual reduction in the loan rate for peanuts, to repeal peanut quotas for the 2002 and subsequent crops, and to make nonrecourse loans available for peanut producers.