BUTLER, Pa. – Once the crop has been harvested, corn and soybean producers can choose from the Farm Service Agency’s commodity loans, loan deficiency payments or warehouse loans for assistance.
Corn. Some producers think they are ineligible for FSA benefits if their farm does not have a corn base and they have never participated in FSA programs. This is false; production from all farms is eligible.
The other common misconception is that corn production is not eligible if it is used for feed. This is false, too. Corn used for feed, including corn silage, is eligible for benefits.
Loan deficiency payments. Most corn producers choose loan deficiency payments, which are for harvested production. The current payment rate, which changes daily, is 46 cents per bushel.
Producers must remember to request payments prior to feeding or selling the production. Quantities fed or sold prior to signing at FSA are ineligible. For average production, a payment could be $50 per acre.
Loans. Corn producers may also choose commodity and warehouse loans. Loans often suit producers who do not want to sell or feed their crop now and need capital to operate.
For both farm-stored and warehouse-stored commodity loans, the loan rate is either at $2.14 per bushel or $2.09 per bushel, depending on the county where stored.
The grain is the collateral and no other lien is required. Balance sheets, tax records or other financial documents are not required.
With commodity loans, production that was pledged for loan deficiency payment purposes is ineligible for loans. The interest rate is at 4 percent for a nine-month term.
Commodity loans are disbursed within three working days after the request, and repayments are often made at the posted county price, which changes daily and mirrors the current cash bids. So, if the posted price is at or below the loan rate, there is no interest paid and the difference is considered a market gain.
Soybeans. Soybean producers have the same options as corn producers, but because the current market price exceeds the $5.06 loan rate, loan deficiency payments have not been applicable, except for just a few days. This could change, but in case not, soybean producers may need to consider a different strategy.
Soybean producers could request a loan on the beans and take a loan deficiency payment on corn. Then, around February or March, they could take a chance that South America’s harvest will weigh on the market and repay the loan for a market gain.
Repayments can be made any time for production that is to be sold. FSA will provide a marketing authorization. Although each farm has specific issues, some form of price support is often available, whether a combination of all options or just a loan deficiency payment.
Details. For more information, contact your local FSA office.
(Fritz is the county executive director of FSA in Butler County, Pa.)
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