With big fall crop, producers could earn loan deficiency payments

Expectations of high, even record, yields for fall-harvested crops of corn, sorghum and soybeans could likely produce lower market prices, which might mean possibilities for producers to earn loan deficiency payments (LDP) through their county Farm Service Agency office.

With this in mind-and as it has been a few years since possibilities of feed grain LDP availability has occurred-it would seem appropriate to provide a thorough explanation of the general provisions and producer-application responsibilities associated with LDPs.

LDPs are payments issued to producers who, although eligible to obtain a Commodity Credit Corp. loan, agree to forgo the loan in return for a payment that represents the price difference between an established county loan rate and an adjustable daily CCC determined value.

Only on days when a crop’s determined value or posted county price (PCP) is below the loan rate is an LDP payment rate generated.

Producers can request two unique types of LDP applications.

A field direct LDP request, recorded on form CCC-709, has been adapted to be used by producers intending to sell loads of grain immediately as it crosses the warehouse scale, haul quantities to livestock feeders or process/feed quantities in their own operations, ensile rather than grain harvest a crop, or haul and store grain in unlicensed warehouse facilities.

Since producers would be losing “beneficial interests.” or ownership title, in the crop in these instances, the actual harvest date of the crop is the date a field direct LDP payment rate is determined.

So producers must be sure they are filing any and all field-direct LDP applications before harvesting begins on acreage where LDP production will be come from.

If it should happen that day’s LDP payment rate is zero, producers cannot refile their field direct requests later or reapply as a loan.

The standard or basic LDP request, recorded on form CCC-633 (LDP), is used when harvest is completed, grain quantities will be stored, and the producer maintains his or her control and ownership to it.

This type of LDP allows the flexibility for producers to choose favorable LDP rate days since the producer’s chosen date of request is the LDP rate setting date.

Certain eligibility requirements are essential for any LDP request to be filed and they include:

— reporting all cropland acreage on farms where LDP production shall exist. You do not have to be enrolled in the current Direct & Counter-cyclical Program (DCP) having “beneficial interests”-recognized as control, title and risk of loss to a commodity-in the LDP quantity complying with conservation/wetland protection requirements and farm operating plan reporting.

Producers have until March 31, 2005 to make 2004 crop small grain LDP requests and may apply for corn, sorghum, soybean and other 2004 crop LDPs up until May 31, 2005.

Finally, it is critical that producers understand that should the convenience of facsimile (fax) services be employed to transmit LDP requests into their local offices, they must agree to bear the total responsibility for submitting accurate, complete and legible information on the application form and all accompanying documents.

FSA cannot be held accountable for any producer transmission failures or any other malfunctions or problems that prevent the successful and timely receipt of information being provided.

Faxed documents can only be deemed effective when actually received at the appropriate FSA office.

In addition, FSA is unable to guarantee the availability of fax services at all times. Producers must first request and be granted advance authority on form FSA-237 prior to initiating fax communications.

Bill Harmon is executive director of the Farm Service Agency office for Marion County.

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