Ask FSA Andy about commodity loans

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Hello again,

In 2016, the Northeast Ohio area FSA’s disbursed 119 commodity loans on 4,285,054 bushels of grain for $11,235,485.

We are gearing up to disburse 2017 crop year loans. Loan rates vary slightly by county but are around $1.97 for corn, $5.08 for soybeans, $2.66 for wheat, $1.71 for barley and $1.43 for oats.

The interest rate for loans disbursed in September is 2.25 percent. The interest rate is locked in for the length of the loan, except that it changes on Jan. 1 to the January announced rate.

Two types

FSA administers two types of crop loans, recourse, and non-recourse. Non-recourse means that you can deliver the commodity to FSA upon maturity of the loan if market prices are not higher than the loan rate.

Recourse means that the loan must be repaid at principle plus interest, regardless of market prices (crops that cannot be delivered).

The loans that are made on high moisture or cracked/rolled/crimped corn are at 75 percent of the loan rate since the grain cannot be measured or spot checked.

Loan length is 9 months but can be repaid at any time. If you will be feeding the grain, it must be repaid prior to feeding, and a repayment schedule must be set up.

If you will be selling the grain, you can get a release to haul it, with the agreement that the purchaser will then pay FSA for the bushels delivered.

Crops can be stored in your storage structures, structures you have a lease on with continual access to, or in an approved warehouse (check with your county office for a list of approved warehouses).

Speaking of storage structures, FSA also has low-interest loans on the commodity storage structures, equipment, and storage and handling trucks.

We will talk more about these loans in the upcoming weeks.

That’s all for now,

FSA Andy

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