Eastern Iowa Farmer Fall 2016

.
If you have
any questions,
please contact
your local
FSA Office.
Cedar County
205 W. South St.,
Ste 3, Tipton, IA
52772
(563) 886-6061
Clinton County
1212 17th Ave.,
DeWitt, IA 52742.
(563) 659-3456
FSA offering
marketing
loan program
ased
s.
Dubuque County
210 Bierman Road,
Epworth, IA 52045.
(563) 876-3328
Jackson County
601 E Platt Street,
Maquoketa, IA
52060.
(563) 652-3237
Jones County
300 Chamber Dr.,
Anamosa, IA
52205.
(563) 462-3517
By TOM LANE
District Director for SE Iowa
eastern Iowa farmer
As harvest draws near, I wish to raise producer
awareness of the Marketing Assistance
Loan (MAL) and Loan Deficiency Payment
(LDP) programs. Both the programs have been
around for many years; however, they have not
had much use for the last several. I will cover
only some of the highlights of the two programs.
If you have additional questions, do not hesitate
to contact your local FSA Office.
To be eligible for a MAL or LDP, producers
must comply with conservation compliance provisions,
file a full acreage report on all cropland
on all farms, have beneficial interest (title and
control) in the commodity, and meet adjusted
gross income limitations. Additionally, the commodity
must have been produced by an eligible
producer in the crop year it is placed under loan
or redeemed through the LDP program. Further,
the commodity must be merchantable as food,
feed, or other CCC determined eligible use.
Additionally, it must meet minimum grade and
quality standards.
To obtain a MAL, producers file a loan
application with their county office by providing
the location of the stored commodity (for warehouse
stored grain, bring in negotiable receipts)
along with measurement of the grain so that a
quantity can be determined. A lien search will be
completed and any required lien waivers must
be obtained. Once all the required paperwork
has been completed, the loan may be disbursed.
Further, a loan service fee will be charged, however,
it will be deducted from the loan proceeds.
The loan term is nine months from the end of the
disbursement month. Each county has a loan rate
established by FSA for each commodity.
Once disbursed, the loan may be repaid at
any time prior to maturity without penalty. The
repayment will be calculated at the smaller of the
posted county price (PCP) or principal and interest.
The PCP is a FSA calculated price by means
of a formula that uses prices from many grain
merchandizers across the nation and is posted
in the local office daily. When the PCP is below
the principal and interest figure, the producer
benefits by the loan interest being waived. When
the PCP is below the loan rate, the producer not
only benefits from waived interest, the producer
also earns a marketing loan gain (MLG). As an
example, if the county has a loan rate of $2.00/
bushel on corn and the PCP is $1.95, the producer
would earn a $0.05 MLG. Producers have
an option to repay their loan with cash, or when
the PCP is below the loan rate, use a commodity
certificate.
LDP’s work like the MLG portion of the
Marketing Assistance Loan program. When the
PCP is below the county loan rate, producers can
opt to forgo a loan and request a LDP on the difference.
There is an application process that must
be completed by producers to claim the LDP.
LDP’s and MLG’s, along with any money
paid under the ARC-CO, ARC-IC, or PLC programs
(the annual farm programs), are subject to
a $125,000 limitation. MLG’s realized using the
commodity certificate process are not subject to
any limitation.
It is important for producers to keep in mind
that the 2016 corn and soybean MAL/LDP program
runs from this fall’s harvest through May
2017. Any payments that would be earned under
the 2016 ARC-CO, ARC-IC, or PLC programs
will not be made until October 2017. So, theoretically,
a producer could use up their payment
limitation on LDP’s and MAL’s. Exploring the
use of commodity certificates may be in a producer’s
best interest.
Although the policy described above
provides a basic overview of the Marketing
Assistance Loan and Loan Deficiency Payment
program rules, I hope the information has raised
your awareness of the programs enough for you
to contact your local office and seek further
information.
fall 2016 | Eastern Iowa Farmer 111