Government offers low-cost financing options as wheat harvest approaches

With the wheat harvest season approaching, some producers may wish to explore their options for obtaining low-cost financing needed to pay upcoming expenses.

Producers may want to seriously consider the Commodity Credit Corp. administered commodity loan program as an option.

This program is a nine-month term loan disbursed to eligible producers for grain quantities that are harvested and stored on the farm or in warehouse elevators.

Producers interested in a farm-stored type loan must agree to comply with specific Kansas farm loan policies. The quality of farm-stored crop loans must be maintained during the entire term of the loan as the producer is held responsible for any value losses because of quality reasons.

Producers applying for elevator-stored loans can only receive assistance on those quantities secured by a warehouse receipt.

The 2009 base loan rates for crops in Marion County are: wheat $2.69 per bushel; barley $1.75 per bushel; oats $1.37 per bushel; corn $2.04 per bushel; grain sorghum $3.39 per cut weight; soybeans $4.92 per bushel.

Since these loans are nonrecourse or market-assistance loans, producers have the option of delivering or forfeiting to CCC the crops that were pledged as collateral at loan maturity in satisfaction of the indebtedness.

Producers with loan intentions should carefully analyze the Posted County Price, which is the government?s daily market price assumption, levels during the course of their loan term.

When a PCP goes below a county loan rate, producers can repay the loan at PCP rates, instead of the higher original loan rate, and have all interest charges incurred up to that time waived.

The other option available to producers is to settle loans by loan principal cash repayment plus interest expense.

Since wheat and feed grain crops are considered contract crops, in order to qualify for CCC loan, they must be produced on farms under a current Direct & Counter-cyclical Program. Producers must also assure that they are holding ?beneficial interest? or controlling title to their loan collateral.

For details about marketing loans, producers should contact the Marion County FSA Office, 301 Eisenhower Drive in Marion; 620-382-3714.

Bill Harmon is executive director of the Marion County FSA office.

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