2016 Loan Deficiency Payments Now In Effect

2016 LDP Updates from Kansas Farm Service Agency

USDA Farm Service Agency sent this bulletin at 07/06/2016 05:29 PM EDT

As cash commodity prices have dropped recently, producers have been watching for LDP’s to go into effect, which happened this week.  Loan Deficiency Payments (LDP’s) were first utilized in the 1990’s as a way to provide commodity producers price protection up to the USDA-established commodity loan rate without obtaining a grain commodity Marketing Assistance Loan (MAL).  The 2014 Farm Bill re-authorized LDP’s and MAL’s. 

To be eligible for LDP’s, producers must file FSA Form CCC-633EZ (page 1) with their FSA county office BEFORE losing beneficial interest in the commodity.  Form CCC-633EZ can be found here: Form CCC-633EZ (page 1) 

The LDP payment rate will be the rate in effect on the date: 

  • Of the request, if beneficial interest is still maintained on the date of the request, OR
  • Beneficial interest is lost, according to acceptable production evidence submitted to the county office, OR
  • Of delivery, if producer requests the date-of-delivery option on Form CCC-633EZ (page 2) before delivery

Beneficial interest is defined as having both CONTROL and TITLE to the commodity.  Control of the commodity means the producer retains the ability to make all decisions affecting the commodity, including movement, sale and request for LDP.  Title to the commodity means the producer has not sold or delivered the commodity or warehouse receipt to the buyer.  Commodity acreage and individual producer shares are required to have been timely reported to FSA on Form FSA-578. Producers also must also be in compliance with the following rules:

  • Conservation Compliance
  • Foreign Person
  • Controlled Substance
  • Delinquent Federal Nontax Debt
  • Adjusted Gross Income
  • Actively Engaged

The above requirements also apply to Marketing Assistance Loans.

LDP rates are determined by the amount the applicable commodity loan rate exceeds the CCC-determined value, which is the lesser of either:

  • 30-calendar day Posted County Price (PCP)
  • Alternative PCP, which is a 5-calendar day rolling average.

Both the 30-day and 5-day PCP rates are calculated using a “moving average” over the number of days, using two terminal markets and location differentials for each county.   LDP rates are in effect until the next business day, 7:00am EST.  To check your county’s daily LDP rates online, use Daily LDP Rates.  For assistance or more information, contact your local County FSA Office here, and review the LDP Fact Sheet.

Questions? 
Please contact your local FSA Office.

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