Loan deficiency payments available to help farmers combat low grain prices

As reports of a bountiful harvest come in from western portions of the county, the Farm Service Agency in Colfax is reminding farmers of a price support program which aids farmers in case prices fall low.

The 2014 Farm Bill authorizes the Farm Service Agency to offer loan deficiency payments (LDPs), direct payments made in lieu of a marketing assistance loan that are available when local county prices fall below an established county loan rate, according to the FSA news release from Patrick Lewis, county executive director at the office.

“When the posted county price drops below the loan rate the FSA will pay to bring it back up to the loan rate,” said Jonelle Olson, program technician at the FSA office.

Olson said the posted county price can change daily, and farmers should keep an eye on the posted prices in order to get the best deal if initializing an LDP.

“Farmers should watch the website to watch the posted county price every day to see if there’s an LDP and decide if you should take it,” she said. “Your hope is that you sell high.”

According to the FSA website, hard red winter wheat was at a $3.46 loan rate, which is different for each crop and set yearly. If the posted county price (PCP) falls below that, then an LDP would be in place. The PCP as of Tuesday afternoon was at $3.53, and this is the crop in the county currently closest to an LDP.

Olson said LDP’s can only be taken out on harvested crops, and they do not have to be taken out immediately.

“Watch the LDP as you harvest,” she said. “As you go through the winter you need to keep checking the website to see if there’s an LDP.”

She added that farmers lose title to the crop once it is harvested and an LDP has been initialized, so that LDP rate would be locked in for harvested crop.

“As farmers prepare for the 2016 crop harvest, crop prices are continuing to fall particularly for hard red winter wheat. Recently, the price of hard red winter wheat was within five cents of the loan rate in several counties. So it is vital that farmers ensure they retain eligibility for a Loan Deficiency Payment if a rate is announced between harvest and selling their crops,” Lewis said in the news release statement. “It has been a while since an LDP rate was in effect for crops grown in our state. Many farmers may not be thinking about it during the busy harvest season.”

Crops which may be eligible for an LDP include barley, canola, chickpeas, corn, crambe, dry peas, flaxseed, grain sorghum, honey, lentils, mohair, mustard seed, oats, rapeseed, safflower, sesame seeds, soybeans, sunflower, unshorn pelts, wheat and wool.

The link to the LDP information is http://www.fsa.usda.gov/programs-and-services/price-support/Index. From this page, users should click “Daily LDP rates” and then select their state, county and the crop year to proceed.