With the completion of the harvest season, wheat producers that are in the 1996-2002 federal farm program are now exercising their Farm Service Agency marketing options on their crop through the use of either the Commodity Credit Corp. (CCC) market repayment loan or Loan Deficiency Payment (LDP) program.

The most popular choice among producers in crop year 2000 has been the LDP. An LDP allows a producer to receive a direct payment at a rate determined by taking the difference between the loan rate at the county where the crop is stored and the Posted County Price (PCP) for that day the LDP request is made. Whenever the daily PCP rate is below the county loan rate, an LDP is earned.

To be eligible for standard LDP consideration, producers need to apply for their LDP after harvest of the crop and before the sale or otherwise lose beneficial interest in the crop.

Producers have beneficial interest in a commodity when they have ownership title, control, and are at “risk of loss” for that crop.

When applying for their LDP, producers may choose to submit production evidence, either in the form of storing warehouse account ledgers or scale weight tickets with the proper required information recorded, but it is not required.

Some producers may instead elect to self-certify their firm LDP production amounts, but they will be subject to spotcheck. If selected, an acceptable form of production evidence must be submitted for review.

Producers may request a new LDP on those additional amounts resulting from a spotcheck provided the producer has maintained their beneficial interests in the commodity. In addition, producers can have their production that is farm stored measured by FSA at cost.

Producers should remember during the LDP season that as grain market prices drop, LDP payment rates rise. So market strategies should be planned accordingly.

Producers may also choose to pledge their production under the traditional CCC nonrecourse marketing assistance loan. Loans can be issued on farm or warehouse stored quantities for a term not to exceed nine months. Unlike LDPs, CCC crop loans require a lien search, calling for a waiver to be obtained from any applicable lienholder of the intended loan quantity.

Producers must hold beneficial interest in the crop during the loan term. Because the loan is a marketing assistance loan, producers are authorized to repay the loan at the PCP level, instead of the loan rate, without interest charges being collected. The dollars saved in this transaction are labeled as a “market gain,” similar to the earnings received under an LDP.

The 2000 year loan rates for crops grown in Marion County are: wheat $2.62/bu., barley $1.72, oats $1.15, corn $1.98, soybeans $5.12, grain sorghum $2.96/cwt., sunflowers $9.21/cwt., cotton $51.90/cwt.

A loan and LDP cannot be requested on the same production. Producers must determine which program is most advantageous for them. 2000 commodity loans and LDPs are available for about 10 months following harvest. Therefore, requests must be filed by March 31, 2001, for wheat, oats & barley, and May 31, 2001, for all other grains.

All loan and LDP payments are issued by electronic funds transfer or direct deposit means to the identified payee’s financial institution.

As a result of a congressional mandate, FSA is now required to implement an important provision of the Debt Collection Improvement Act of 1996, which makes any person owing a delinquent non-tax debt or claim amount to the federal government ineligible for payment benefits under direct loan or LDP programs until all outstanding liabilities are settled or otherwise fully satisfied. Potential loan and LDP payments can not be used to offset these kinds of debts.

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