Ask FSA Andy about loans

Hello again,

One of the greatest challenges facing U.S. farmers is marketing their production at a profit. The last couple of years, corn and soybeans were selling near record highs and most farmers, even those with no marketing strategy, fared well.

The next few years, with crop prices falling, offer a different story.

The Farm Service Agency has two programs to help farmers better market their crops.

Storage loan

The Farm Storage Facility Loan (FSFL) provides low interest loans for new structures for grain storage and handling, hay storage, and fruit and vegetable storage. The purpose of these programs is to allow producers to construct storage on the farm so they are not forced to sell commodities at harvest when the prices are normally reduced.

The FSFL program also has a great benefit to the local economies by providing construction jobs and increasing profits for the farmer. My wife says the best stimulus program is to give a farmer a $1,000, because he’ll spend $1,500. Even in jest, there is a lot of truth to the statement — farmers re-invest in their farms, so added profits may mean a sale to a local equipment dealer or fence dealership, etc.

Marketing loan

The Marketing Assistance Loan (MAL) program is another program designed to help producers market their grains. The MAL program provides low interest loans on a portion of the harvested grain that is either stored on the farm or at a warehouse.

One reason many farmers sell at harvest is to pay bills incurred during the growing season. This program provides funds for stored grain to allow producers to hold their commodities until their grain contracts are due or until the market prices increase.

These nine-month non-recourse loans are often used by livestock producers that use their grain for feed, providing funds to use during the feeding period and allowing them to repay the loan as they need it for feed.

For more information concerning these programs, contact your local FSA office.

That’s all for now,
FSA Andy