Farmers may get loan deficiency payments

 

Last updated 8/1/2016 at 4:29pm



Davenport, Wash., July 18, 2016 – Current low prices mean Washington’s grain farmers may be eligible for a price support program available through the U.S. Department of Agriculture’s Farm Service Agency. Farmers need to sign a form at their local agency office before delivering their harvested crop to a warehouse or buyer, according to Judy Olson, Washington State Executive Director of the Farm Service Agency.

The 2014 Farm Bill authorizes the Agency to offer nonrecourse marketing assistance loans and loan deficiency payments to farmers who raise certain crops. With these marketing tools, farmers have interim financing while raising the crops. The tools also allow farmers to sell at a more opportune time than immediately following harvest.

Loan deficiency payments are direct payments made in lieu of a marketing assistance loan. They are available when local county prices for a crop fall below an established county loan rate. A payment can be made based on the difference between the prices. The amount can be significant depending on the crop yield, according to Olson. Farmers must fill out an Agreement and Request form with the Agency prior to losing beneficial interest in a crop.

The following crops may be eligible for such a payment: barley, canola, chickpeas, corn, crambe, dry peas, flaxseed, grain sorghum, honey, lentils, mohair, mustard seed, oats, rapeseed, safflower, sesame seeds, soybeans, sunflower, unshorn pelts, wheat and wool.

“As farmers prepare for the 2016 crop harvest, crop prices are continuing to fall, particularly for hard red winter wheat. Recently, the price of hard red winter wheat was within five cents of the loan rate in several counties. So it is vital that farmers ensure they retain eligibility for a loan deficiency payment if a rate is announced between harvest and selling their crops,” said Olson. “It has been a while since a payment rate was in effect for crops grown in our state. Many farmers may not be thinking about it during the busy harvest season,” she added.

Payment provisions are intended to minimize potential delivery, storage and related costs of agricultural commodities to the government when prices fall and crops used as loan collateral are forfeited to the government.

 

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