Similar to Farm Service Agency (FSA) Price Support Options - Marketing Assistance Loans/Loan Deficiency Payments/Commodity Certificate Exchanges - Carla Wikoff
Farm Service Agency (FSA) Price Support Options - Marketing Assistance Loans/Loan Deficiency Payments/Commodity Certificate Exchanges - Carla Wikoff
1. Farm Service Agency
United States Department of Agriculture
Women Managing
the Farm
2017 Conference
Our mission is to deliver timely, effective programs and
services to America’s farmers and ranchers to support them
in sustaining our Nation’s vibrant agricultural economy, as
well as provide first-rate support for domestic and
international food aid efforts.
3. Requirements Applying to All Three Price
Support Options
Commodity Eligibility
Producer Eligibility
Payment Limitation
Final Availability Dates
4. Commodity Eligibility Requirements
To be eligible for loan or LDP, the commodity must:
Be produced by eligible producer on a farm
Be in existence and in storable condition
Be merchantable for food, feed, or other per
Commodity Credit Corporation (CCC)
Not contain mercurial compounds, toxin producing
molds or other poisonous substances
Meet definition for commodity according to Official
US Standards
Not be substituted, purchased, bartered, or a gift
7. Loan and LDP Provisions
Payment Limitation Provisions
Annual payment limitation of $125,000 per person
or legal entity, includes all payments and benefits
from Agricultural Risk Coverage (ARC), Price Loss
Coverage (PLC), Loan Deficiency Payment (LDP),
and Marketing Loan Gain (MLG)
8. Final Availability Dates
Final Availability Dates:
January 31 – Peanuts, Wool, Mohair & LDP only for
Unshorn Pelts
March 31 – Barley, Canola, Crambe, Flaxseed,
Honey, Oats, Rapeseed, Sesame Seed & Wheat
May 31 – Corn, Dry Peas, Grain Sorghum, Lentils,
Mustard Seed, Long & Medium grain Rice,
Safflower, Small & Large Chickpeas, Cotton,
Soybeans, Sunflower Seed
9. MARKETING ASSISTANCE LOANS (MALs)
Available for wheat, corn, grain sorghum, barley,
oats, soybeans, sunflowers, etc.
A marketing tool available beginning with harvest
Provides interim financing at harvest time without
having to sell the commodity
Allow storage of production at harvest
10. MARKETING ASSISTANCE LOANS (MALs)
“Nonrecourse” loans can be redeemed by repayment
or delivered to Commodity Credit Corporation (CCC)
as full payment for the loan upon maturity
Interest rate is the rate in effect for the month in
which loan is disbursed, adjusted on January 1 to
January’s interest rate.
*Current Interest Rate for February 2017 is 1.875%
Loan matures on demand but no later than last day of
the 9th month after month of disbursement
11. MARKETING ASSISTANCE LOANS (MALs)
Loan Service Fee – nonrefundable, deducted from
loan
Farm Stored Loan Service Fee: $45 per loan plus
$3 for each storage structure over 1
Warehouse Stored Loan Service Fee: $45 per loan
plus $3 for each warehouse receipt over 1
12. MARKETING ASSISTANCE LOANS (MALs)
Loan Assessment Fees:
Kansas Assessment Fees are deducted from
proceeds of MAL – Wheat $.02 per bushel and Corn
$.01 per bushel
National Assessment Fees – Soybeans 0.5% of the
settlement value if delivered or forfeited to
Commodity Credit Corporation (CCC), Sorghum
0.6% of net market value deducted at loan making
14. MARKETING ASSISTANCE LOANS (MALs)
Producer eligibility requirements:
Comply with conservation & wetland protection
requirements by completing form AD-1026
File acreage report on all cropland
Have & retain Beneficial interest (control & title
of the commodity) through loan repayment or
forfeiture
Meet adjusted gross income (AGI) limitations
15. MARKETING ASSISTANCE LOANS (MALs)
Commodity Eligibility requirements:
Have been produced, mechanically harvested by
eligible producer and be in storable condition
Be merchantable for food, feed or other uses, as
determined by CCC
Meet CCC minimum grade & quality standards
16. MARKETING ASSISTANCE LOANS (MALs)
Loan Settlements:
Repay at principal plus interest at any time
before loan maturity
Repay at the posted county price (PCP). PCP’s are
posted at the local service center or website:
https://www.fsa.usda.gov/programs-and-
services/price-support/pcp-rates/index
Upon maturity, forfeit grain to Commodity Credit
Corporation (CCC)
17. MARKETING ASSISTANCE LOANS (MALs)
Market Gains are Reported to IRS
Market gain is the difference between the loan
principal that is liquidated and the amount
needed for the marketing loan repayment
(NOTE: only considered a market gain when
marketing loan repayment amount is less than
loan principal)
18. LOAN DEFICIENCY PAYMENTS (LDP)
LDP’s are payments made to producers who are
eligible to obtain a loan but agree to forgo the
loan in return for a payment on the eligible
commodity
LDP rates are determined by amount the
commodity loan rate exceeds the CCC-determined
value.
EXAMPLE for 2,000 bushels of wheat harvested:
Wheat Loan Rate - $3.02
Posted County Price (PCP) - $2.90
Effective LDP Rate - $.12
$.12 X 2,000 bushels = $240.00 LDP Payment
19. LOAN DEFICIENCY PAYMENTS (LDP)
Form CCC-633EZ, page 1 must be completed, filed,
and approved at the FSA County office to indicate
intention to request LDP before beneficial interest
has been lost for the eligible commodity
Page 1 includes all eligible commodities for the crop
year
Page 1 only needs to be filed in 1 County office for all
Counties in which the producer or entity has an
interest
20. LOAN DEFICIENCY PAYMENTS (LDP)
CCC-633EZ, page 1 AND page 2, 3, or 4 must be
filed before applicable final availability date to
be eligible for the LDP benefit
CCC-633EZ page 1 - Intention to file LDP
*Must be filed before beneficial interest (maintain title & control of
commodity) is lost
CCC-633EZ page 2 – Request for LDP
CCC-633EZ page 3 – Request for Cotton LDP
CCC-633EZ page 4 – Request for Wool, Mohair, or Unshorn Pelt LDP
CCC-633EZ page 5 – Continuation Sheet
21. LOAN DEFICIENCY PAYMENTS (LDP)
LDP can be either:
Farm-Stored quantity
Warehouse-Stored quantity
Eligible Producer may request LDP quantity by:
Certifying the quantity
Requesting a measurement service
Certifying date of delivery
Providing delivery evidence
22. LOAN DEFICIENCY PAYMENTS (LDP)
Certified LDP – quantity for LDP is based on producer
certification, commodity is subject to random spot
check which would require acceptable production
evidence to be provided
Measurement Service – quantity for LDP is based on
completed measurement service & producer
identifying specific quantity or all
Production Evidence – quantity for LDP is based on
acceptable production evidence provided at the time
the LDP is requested
23. LOAN DEFICIENCY PAYMENTS (LDP)
BENEFICIAL INTEREST – Maintaining Title & Control
of the Commodity
The date beneficial interest is lost is the date the
producer loses control of the commodity through
sale, feeding to livestock, or delivery to an
unauthorized warehouse, livestock feeder,
processor, ethanol or bio diesel plant or wool pool.
24. LOAN DEFICIENCY PAYMENTS (LDP)
EFFECTIVE LDP RATE is the rate in effect on the date:
Of request, if beneficial interest is maintained
Beneficial interest is lost according to production
evidence
Of delivery if producer requests on CCC-633EZ, page 2
before grain is delivered on requested quantity
IMPORTANT NOTE: CCC-633EZ, PAGE 1 must be filed
before beneficial interest is lost to be eligible for LDP
payment.
25. LOAN DEFICIENCY PAYMENTS (LDP)
Payments will be issued when:
CCC-633EZ, page 1 is filed and page 2, 3, or 4
have been approved
All production evidence has been received, if
required
County office completes second party review and
checklist
26. LOAN DEFICIENCY PAYMENTS (LDP)
CCC-633EZ, page 2, 3, or 4 cannot be cancelled at
any time after producer signature
Payments cannot be delayed or deferred
27. COMMODITY CERTIFICATE EXCHANGE
(CCE)
Commodity certificates are available to exchange
collateral pledged to Commodity Credit
Corporation (CCC) for a Marketing Assistance Loan
(MAL)
Producer must have an outstanding nonrecourse
loan
28. COMMODITY CERTIFICATE EXCHANGE
(CCE)
CCE Options:
Turn Around Loan – Requested by producer at
servicing office to purchase a commodity
certificate for immediate exchange for entire
loan quantity
Commodity Certificate Purchase – Producer
requests immediate exchange of all or part of the
loan collateral before loan maturity
29. COMMODITY CERTIFICATE EXCHANGE
(CCE)
Exchange rate will be the Posted County Price
(PCP) for most commodities, applicable on the
date the commodity certificate is purchased
CCE Gains are reported to IRS on an IRS-1099-G
statement – Commodity loan gain is the difference
between loan principal and CCC-determined value
of commodity certificate used
30. COMMODITY CERTIFICATE EXCHANGE
(CCE)
Commodity loan gains from CCE are not subject to:
Payment Limitation ($125,000 ARC, PLC, LDP,
MLG)
Actively Engaged, Member Contribution, and Cash
Rent Tenant Provisions
AGI Provisions ($900,000 average over 3 taxable
years)
31. COMMODITY CERTIFICATE EXCHANGE
(CCE)
Producer provides a check, completes and signs
CCC-694-2, Acknowledgment of Commodity
Certificate Purchase (Note: this form cannot leave the County
office, cannot be copied or faxed)
County office will then release the loan collateral
32. COMMODITY CERTIFICATE EXCHANGE
(CCE)
Example
5,000 bushels, Wheat, County Posted County Price (PCP)
Loan Rate - $3.02 PCP - $2.90
Loan Principal - $15,100 (5,000 bushels X $3.02)
Check for CCE - $14,500 (5,000 bushels X $2.90)
Equals a Market Gain of $600 (Does not count toward Payment Limitation)
Note: the actual loan disbursement will have a nonrefundable service fee & loan
assessment fee deducted
