A bill to provide emergency disaster relief for 1986 to agricultural producers suffering drought disaster by utilizing surplus commodities owned by the Commodity Credit Corporation, and for other purposes.

Directs the Secretary of Agriculture to provide emergency disaster relief (commodity certificates redeemable from Commodity Credit Corporation stocks) to agricultural producers who are eligible for disaster or economic emergency assistance due to the 1986 drought . Sets forth assistance limits.

Directs the Secretary to: (1) provide in-kind cost-sharing assistance for reforestation and vegetative covering to prevent soil erosion; and (2) permit hay and grazing under acreage limitation programs.

Expresses the sense of the Congress, with respect to the 1986 drought, that the President should: (1) declare a drought emergency; (2) direct the Secretary to provide assistance for improving livestock wells; and (3) direct the Federal Emergency Management Agency to reimburse the Secretary for any expenses incurred in providing such assistance.

Directs the Secretary to implement the emergency feed program authorized by the Food and Agriculture Act of 1977 within a specified time. Provides for up to 50 percent reimbursement of feed costs.

Directs the Secretary for 1986 to make surplus commodities available for livestock and poultry in drought areas at a cost not to exceed 50 percent of local commercial rates.

Limits the value of surplus commodities available in 1986 to producers of nonprogram crops in drought areas.

Prohibits reduction in the price received by milk producers in drought areas for the period beginning October 1, 1986, and ending December 31, 1986. Increases such reductions during the period beginning January 1, 1987, and ending September 30, 1987, in order to make up for such prohibited price reductions.

Expresses the sense of the Congress, with respect to farm borrowers who are adversely affected by natural or economic disasters, that: (1) farm loan repayments and foreclosures should be deferred; (2) Farm Credit System and commercial institutions should adopt lenient lending and foreclosure policies; and (3) disaster and economic emergency loan funds should be used to help restructure loans so that the Farmers Home Administration would not have to service such accounts.