Low-cost loans available for on-farm grain storage

With the wheat harvest season upon us, some producers may wish to explore their options for obtaining low-cost financing needed for their farm-related expenses. The Commod?ity Credit Corp. administered commodity loan program is an option producers may want to seriously consider.

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; the producer is held responsible for any value losses due to quality reasons.

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

The 2011 base loan rates for crops produced in Marion County are: wheat $3.13 per bushel; barley $1.84 per bushel; oats $1.43 per bushel; corn $2.05 per bushel; grain sorghum $3.39 per hundred pounds; 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 to satisfy 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 because 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 accrual.

Since wheat and feed grains are considered contract crops in order to qualify for CCC loans, 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 further details about marketing loans, producers should contact the Marion County FSA Office, 301 Eisenhower Drive, Marion; 620-382-3714.


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

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