Most producers who have worked with the Farm Service Agency are aware that low interest loans are available on grain they harvest once it is stored in the bin or at an approved warehouse.
These loans are for a nine month period and offer the producer an opportunity to use the funds disbursed under the loan for operating capital or other needed purposes. The current interest rate on loans is 5.125 percent. This will be the rate used for any loans disbursed in November. In January all outstanding loans will have the interest rate adjusted to whatever the rate is on Jan. 1. The process for obtaining a loan is very simple. You just stop into the FSA Office and fill out a CCC-666 to start the process.
The form can be faxed to you if you wish and you can complete, sign, and fax it back to the office. Measurements are available but will cost a producer a minimum of $46, but the producer then has a guaranteed number of bushels in his bin. If a producer wishes to certify his loan he can do so and avoid measurement costs. When filling out the CCC-666 the producer will need to tell us the location of the bins. Is the grain stored at your home farm, someone else’s farm, Huron County or another county. The loan rate will be the rate in the county where the grain is stored. Next we need the diameter of the bin and the height of the grain. The COC will calculate the grain in the bin and the producer can then decide if he wants to put all of the grain under loan or if he wishes to take a lesser amount. Keep in mind on a certified loan test weight and pack factors are not taken into consideration. If the test weight of the grain is low it could make a difference in the number of bushels you actually end up delivering to the elevator which would be considered an incorrect certification. Accuracy is important in making a loan request. Shortages result in loan violations that can become expensive. With a certified loan the county office should be able to issue your loan within three to five days.
A measured loan will take additional time due to the necessity of the field reporter visiting your farm. Producers are required to maintain the quality and the quantity of the loan throughout the nine-month period. Prior to feeding grain the producer must pay off the amount of collateral he plans to feed prior to feeding. When the producer is ready to move grain to a buyer he needs to call the office and request an authorization to do so before he starts to haul. To move the grain without the authorization in place would be considered an unauthorized disposition. Again, this situation results in penalties and immediate repayments for the producer.
When requesting a loan be sure to list any alternate storage sites you may be using in the process of drying or maintaining the grain. If you list such bins when you take the loan you do not need a release to move the grain to an alternate bin during the life of the loan. Loans are repaid at principle plus interest. If we should get into a situation where Loan Deficiency Payments come into play producers could end up repaying less than they borrowed and avoid interest on the loan as well. If prices stay at the current level, LDP’s will not be available for 2007 grain. Don’t wait until the last minute to request your loan. If you have a payment coming up and want to use the funds from a loan to pay it, get the process started as soon as possible. Loans are issued by direct deposit and will take one to three days to actually arrive in your account.
Diana Strouse is the county executive director for the Huron and Erie County Farm Service Agency. For more information, call the agency at (419) 668-4113.