Marketing Assistance Loans (MALs) and Loan Deficiency Payments (LDPs)
The Farm Service Agency has provided the following information about the availability of MALs and LDPs in hard red winter wheat regions, which has been tribbered by low prices.
Marketing Assistance Loans
MALs are available to producers at harvest time and are intended to provide interim financing for farmers to help them meet cash flow needs without having to sell their commodities. This enables farmers to delay selling the commodity until there are more favorable market conditions. With an MAL, a farmer can repay the loan at less than the loan rate (plus accrued interest). A farmer can also get an LDP in lieu of securing a MAL.
If the MAL is repaid at less than the loan principal, that difference is called a marketing loan gain (MLG), which is subject to the aggregate $125,000 payment limit (ARC, PLC, and MLGs are now all combined into a single limit) and AGI provisions. However, a farmer also has the option of purchasing a Commodity Certificate which they can exchange for their outstanding loan collateral instead of forfeiting that loan collateral to the Commodity Credit Corporation (CCC) at loan maturity. Gains realized through the use of a Commodity Certificate are not subject to the payment limitation.
Loan Deficiency Payments
As prices change every day, the LDP status can change every day. This level for wheat is based on the Posted County Price, which is based on the Terminal Market. This figure is updated every morning on FSA’s website.
Of particular importance: In order to be eligible for MALs and LDPs, a farmer must retain beneficial interest in the commodity, which requires both the farmer’s control of the commodity as well as title to the commodity. A farmer should fill out a form from FSA (CCC633-EZ) specifying they retain beneficial interest even before they seek an MAL or LDP.
More information about MALs and LDPs can be found in this fact sheet from FSA.
And more information about Commodity Certificates can be found in this fact sheet.
FSA is working with their communications team and informing FSA state directors. State and local offices should be prepared to answer producers’ questions.
Contact the Kansas office:
Kansas FSA State Office
3600 Anderson Ave
Manhattan, KS 66503-2511
(855) 782-9609 - Fax