Commodity Loans and Loan Deficiency Payments

To improve and stabilize farm income, to assist in bringing about a better balance between supply and demand of the commodities, and to assist farmers in the orderly marketing of their crops. Marketing assistance loans provide producers interim finan

Commodity Loans are typically 9-month loans offered to producers of eligible commodities. This programs consists of Marketing Assistance Loans and Sugar loans. MALs and LDPs may be issued to producers through USDA Service Centers or through or alternative delivery partners. Sugar loans are issued to sugar processors. Loan Deficiency Payments are issued in lieu of a MAL and are direct payments that do not have to be repaid. Additionally, Graze-out payments are available for producers who qualify for an LDP however, have chosen to forgo harvesting and have allowed livestock to graze.

Owner, landlord, tenant, or sharecropper on an eligible farm that has produced the eligible commodities or, in the case of sugar, a processor or refiner who meets program requirements as announced by the Secretary.

Owner, landlord, tenant, or sharecropper on a farm that has produced the eligible commodities, meets program requirements as announced by the Secretary, and maintains beneficial interest in the commodity. State and County governments may be eligible for MAL's and LDP's when they have a share in produced and harvested eligible commodities on land they own, if the benefits or payments are used to support public schools.

Commodity loans and loan deficiency payments (LDP's) give farmers a means of promoting more orderly marketing. Loans to producers may be "nonrecourse" which means that producers have the option of forfeiting the collateral to CCC at loan maturity in full satisfaction of the loan obligation; or "recourse" for low quality grain, or non-ginned seed cotton, which means that producers must repay the loans by maturity." If market prices are above the support level, producers may repay their loans at the original loan principal plus interest and market their commodities. When market prices are low, most nonrecourse commodity loan repayments are less than the original loan principal plus interest. Eligible commodities for loans are produced and harvested wheat, corn, grain sorghum, oats, barley, rice, peanuts, upland cotton, extra-long staple cotton, soybeans, crambe, canola, flaxseed, mustard seed, rapeseed, safflower, sunflower seed, sesame seed, dry peas, lentils, small and large chickpeas, graded and ungraded wool, honey, and sugar. LDP's are offered for produced and harvested wheat, corn, grain sorghum, oats, barley, upland cotton, rice, soybeans, crambe, canola, flaxseed, mustard seed, rapeseed, safflower, sunflower seed, sesame seed, peanuts, dry peas, lentils, small and large chickpeas, graded and ungraded wool, unshorn pelts, honey, hay, and silage. If the loan repayment rates for these commodities are less than the established loan levels, producers may, for most commodities that are eligible for a nonrecourse loan, agree to forego such loan and elect to receive an LDP. The LDP payment rate equals the amount by which the loan rate exceeds the loan repayment rate in effect at the time the LDP application is approved, or the delivery date, or date sold or date beneficial interest is lost, as applicable. The 2016 Consolidated Appropriations Act authorized producers the option of a commodity certificate exchange as a nonrecourse loan repayment mechanism. In situations when the loan rate exceeds the exchange rate, producers may opt to purchase a commodity certificate from the local FSA office and immediately exchange that certificate for their outstanding loan collateral.

Assistance is generally available for 9 months or less, and is normally disbursed on a lump-sum basis.

Producers must contact their local USDA service center to apply.

Applications are approved by the FSA upon determination that applicant and commodity are eligible.

Deadline for the year following year in which crop is normally harvested is as follows: January 31st -- the last day to request, MALs and LDPs for peanuts, mohair, and wool (including unshorn pelt LDPs). March 31st -- last day to MALs and LDPs for wheat, barley, oats, canola, flaxseed, crambe, rapeseed, sesame seed, and honey; May 31st -- last day to request MALs and LDPs for rice, corn, grain sorghum, cotton, soybeans, safflower, sunflower seed, mustard seed, small and large chickpeas, lentils, dry peas , and cotton; and September 30th -- last day to request sugar loans.

Approximately 3 days but could take from 15 to 30 days.

Applications may be reviewed by county, State, or national offices.