Challenging markets have generated increased producer interest in use of farm-stored Marketing Assistance Loans (MAL), administered by USDA’s Farm Service Agency (FSA). Farm-stored grain loans provide interim financing for producers to help meet cash flow needs without having to sell commodities when markets are at harvest lows. The MAL term is up to nine months and allows producers marketing flexibility until more favorable market conditions emerge.
Commodity Credit Corporation (CCC) interest rates for commodity loans disbursed in October is at 2.750 percent. The West Polk County FSA crop loan rates for 2019 are as follows: Wheat (HRS) $4.09, Wheat (HRW) $2.71, Soybeans $5.87, Corn $2.06, Barley $2.29, Dry Peas $6.10/cwt., and Sunflowers $10.42/cwt.
A producer may settle a non-recourse MAL prior to loan maturity through repayment or by forfeiture to CCC following loan maturity. Producers with grain under loan that will be sold prior to maturity can request a marketing authorization from FSA which gives them approval to deliver the mortgaged collateral to a designated buyer before the loan is repaid. When a marketing authorization is issued and grain is delivered to market under the authorization, repayment is required from the elevator. Mortgaged grain should not be moved without prior approval from the FSA county office.
Delivery of farm-stored commodities for forfeiture to CCC can only be made to an approved warehouse under UGRSA following loan maturity. FSA will work with producers to coordinate deliveries to warehouses at customary delivery points. CCC will determine the loan settlement value based upon the quantity and quality of grain delivered. CCC established premiums and discounts will be applied to grain forfeited for settlement. Should there be a deficiency on loan settlement due to quality or quantity repayment is required based upon the difference between the loan rate and determined settlement value. Interest would apply on all settlement deficiencies calculated from loan disbursement through the repayment date.
“Producers are encouraged to plan ahead when filing for a commodity loan as loan dispersal takes a few days to process and disburse,” said Nathan Johnson, County Executive Director in West Polk County.
To initiate a loan application, producers must certify stored quantities of commodities for which MALs are being requested, including storage location, bin number, bin circumference, height of grain, test weight, moisture, and any quality concerns. The quality of the commodity in farm storage must be maintained throughout the term of the loan. Producers are responsible for both the quantity and quality of the loan collateral while it is under loan.
For more information regarding Marketing Assistance Loans and FSA programs, contact the West Polk County FSA office at (218-281-2809) or visit fsa.usda.gov/pricesupport.