Harvest is well under way and we are hearing yields are all over the place, some impressively high while others are at disaster level.
Market prices on the other hand, are far from impressive. If you are a producer that is not real enthused at the current market prices but feels pressured to sell your grain due to cash flow issues, then FSA has an option for you to consider.
Corn, soybeans and wheat are just a few of the crops available for a program called Marketing Assistance Loans.
Marketing Loans are marketing tools available beginning upon harvest. They provide interim financing at harvest time for producers to meet cash flow needs without having to sell their commodities when market prices are typically at harvest-time lows, allowing the producer to delay the sale of the commodity until more favorable market conditions emerge.
This allows producers to store production at harvest which provides for a more orderly marketing of commodities throughout the year. Marketing Assistance Loans are considered nonrecourse as they can either be redeemed by repayment paying back principle plus interest or by delivering the pledged collateral to the Commodity Credit Corporation as full payment for the Marketing Loan at maturity.
To be eligible for a Marketing Assistance Loan, the producer must comply with conservation and wetland protection requirements; submit an acreage report to account for all cropland on all farms; have and retain beneficial interest in the commodity until the Marketing Loan is repaid or the Commodity Credit Corporation takes title to the commodity, along with meeting adjusted gross income limitations.
Dates to remember
Requests for loans and LDP’s shall be made on or before the final availability date for the respective commodities. Corn and Soybean producers will have until May 31 or until they lose beneficial interest.
A producer retains beneficial interest in the commodity if the producer controls the commodity, having the ability to make all decisions affecting the commodity including movement and sale. The producer must retain title to the commodity it cannot be sold or in the warehouse under delayed pricing.
Nine months is the length of time you will have to watch the markets and make a decision to keep the money and forfeit the grain, or pay it back with interest. Interest changes each month, for September it is set at 1.375 percent. Grain can be farm stored or under a warehouse receipt. There is a $45.00 service fee plus an additional $3 a bin.
Stop into the Farm Service Agency and let the FSA team explain this cash flow tool in greater extent.
That’s all for now,
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