Final answer:
A Nonrecourse loan is provided to farmers allowing them to hold crops for later sale and prevents them from having to repay if the market price falls below the Commodity loan rate, which is the price per unit set by CCC.
Step-by-step explanation:
The correct term to describe this scenario is Nonrecourse loan. The concept is part of federal support for farmers, allowing them to use their upcoming harvests as collateral without the risk of having to repay the loan if the market price falls below the loan rate, effectively letting them forfeit the crops to the government instead of repaying the loan with money. This type of loan is favorable for farmers, as they have a financial safety net that protects them against market fluctuations and ensures that they have the necessary funds to continue their operations until the market is more favorable for selling crops.
The Commodity loan rate is the specific price per unit (such as pound, bushel) set by the Commodity Credit Corporation (CCC), which forms the basis for the nonrecourse loans provided to farmers. This rate is designed to stabilize the agricultural market and provide a form of price support, helping to ensure that farmers receive a minimum income for their produce, hence facilitating them to make decisions about selling their crops.