ORIGINALLY WRITTEN BILL HARMON, FARM SERVICE AGENCY
The U.S. Department of Agriculture has announced that producers of wool and mohair are now eligible to apply for either a nine-month, nonrecourse marketing assistance loan, or a loan deficiency payment (LDP).
Under the new wool and mohair program, producers have until Jan. 31 to request LDPs for 2002 crop wool and mohair that have not yet been marketed and remain in storage.
If LDPs are not requested, producers have until Jan. 31 to request loans for 2002 crop wool or mohair. Each year thereafter, the period to request loans and LDPs will extend until Jan. 31 of the year following the crop year in which the applicable commodity is sheared.
Wool and mohair nonrecourse marketing assistance loans provide eligible producers with interim financing on their production, and facilitate the orderly marketing of the commodity throughout the year.
Instead of selling the wool and mohair immediately after shearing, a nonrecourse loan allows a producer to store the production, pledging the commodity itself as collateral.
To be eligible for a nine-month marketing assistance loan or LDP for wool and mohair, producers must demonstrate compliance with wetland and highly erodible land conservation requirements.
Ungraded wool offered as loan collateral will secure a nonrecourse loan made at a rate of 40 cents per pound. The repayment amount, per pound, for ungraded wool, without regard to quality, will be announced each Tuesday.
Instead of obtaining a loan, producers may request LDPs on ungraded wool, with the LDP rate being the difference between 40 cents per pound and the announced repayment amount applicable during the week.
Producers who desire a nonrecourse loan for mohair will receive the statutory rate of $4.20 per pound. Like wool, the repayment amount will be announced each Tuesday and will reflect prices being offered in the current market.
At loan maturity, if producers wish to forfeit the loan collateral, they must have the mohair core tested, and the loan amount will be adjusted-based on a schedule of premiums and discounts applicable to the 2002 marketing year.
Although special provisions have been made for 2002 crop wool or mohair for which producers lost beneficial interest before program implementation, producers must maintain beneficial interests in their wool and mohair in order to receive program benefits for the 2003 and subsequent marketing years.
Wool and mohair marketing loan gains and LDPs received by producers for each crop year, along with other program crops are subject to one $75,000 payment limitation per crop year.
Bill Harmon is the executive director of the Farm Service Agency office in Marion County.
