Clock Ticking for Loan Deadlines
Producers have until May 31, 2006 to apply for loans and LDP's for 2005 crop year corn, grain sorghum and soybeans.
Compiled by staff
Published: May 30, 2006
Marketing Assistance Loans and Loan Deficiency Payments can be critical to the success of a farming operation, so agricultural producers should take note of the May 31, 2006 deadline to apply for 2005 crop year loans and LDPs, according to Derryl McLaren, State Executive Director of the Iowa USDA Farm Service Agency.
"Producers have until May 31, 2006 to apply for loans and LDP's for 2005 crop year corn, grain sorghum and soybeans," states McLaren.
To be eligible for loans and LDPs, McLaren says farmers must comply with conservation and wetland protection requirements; beneficial interest requirements; report how cropland acreage on the farm is used and ensure that the commodity meets Commodity Credit Corporation minimum grade and quality standards.
Requesting LDPs has been made easier with the introduction last year of the CCC-633 EZ form. Producers must complete page 1 of the EZ form before losing beneficial interest in the commodity. The producer then completes page 2 of the form to request an LDP.
When it comes to loans, producers must have beneficial interest in the commodity on the date they request the loan, and must retain beneficial interest while the loan is outstanding.
Beneficial interest means the ability to control the commodity; have risk of loss for the commodity; and title to the commodity. Once beneficial interest in a commodity is lost, the commodity is ineligible for loan - even if it's regained.
Eligible loan and LDP commodities must have been produced by an eligible producer, in a storable condition and be merchantable for food, feed or other uses as determined by Commodity Credit Corporation. Producers must maintain the quality of the commodity held in farm storage throughout the term of the loan.
Individuals and entities whose previous three-year average adjusted gross income, or AGI, exceeds $2.5 million are ineligible for LDPs and market loan gains unless they can show that at least 75% of their AGI comes from agriculture.
The total of LDPs and market loan gains that may be received is limited to $75,000 for each crop year. That means $75,000 for wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, other oilseeds, dry peas, lentils and small chickpeas; and, $75,000 for peanuts, wool, mohair and honey.
Producers do not have to participate in the Direct and Counter-cyclical Payment Program to be eligible for loans or LDPs.
McLaren cautioned that violating provisions of the loan and LDP program may trigger administrative actions, such as assessing liquidated damages, calling the loan and denial of future farm-stored loans and LDPs. The most common violations are removing or disposing of a commodity being used as loan collateral without prior authorization or providing an incorrect quantity certification.
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Tagged: farm, soybeans, sorghum, usda, wheat
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