Storage facility loan program to be discussed during Ag Show
WILLMAR -- During this year's Willmar Ag Show, farmers and representatives from businesses that sell and install grain storage bins, grain dryers or grain handling equipment will have two opportunities to learn how the 2008 farm bill modified and expanded the U.S. Department of Agriculture's Farm Storage Facility Loan program.
The seminars, which will take place at the Willmar Civic Center, will be presented by me at 2:30 p.m. Tuesday and again at 1:30 p.m. Wednesday.
Modifications made to the loan program include: an increase in maximum loan amounts; the availability of extended loan terms; and an expanded list of commodities and crops that will qualify for the program.
Previously, the maximum loan amount, including the remaining balance on any other outstanding Farm Storage Facility loans, was limited to $100,000. Under the new provisions, the maximum loan amount was increased to $500,000.
As in the past, any loans in excess of $50,000 will require additional security. The additional security can consist of either a first lien on the underlying real estate or another form of security, such as a guaranteed letter of credit that meets the approval of USDA.
Previously, loan terms were limited to a maximum of seven years. Under the new provisions, loan terms of seven, 10 or 12 years are available depending on the amount of the loan. However, the interest rate in effect for each term may be different, based on the rate at which USDA borrows from the Treasury Department.
The new farm bill also expanded the list of Farm Storage Facility Loan-eligible commodities. In addition to the typical grain crops of corn, soybeans and small grains, the list of eligible commodities now includes hay, fruit and vegetable crops, and a wide variety of renewable biomass crops.
Farmers have until March 15 to qualify for disaster programs
With the passage of the 2008 farm bill, crop and livestock producers can qualify for two new permanent disaster programs. Those programs include the Supplemental Revenue Assistance Program and the Livestock Forage Program.
The 2008 farm bill authorizes payments to farmers and ranchers with crop production or quality losses under the revenue program, and grazing losses under the forage program.
While there is no sign-up or application period, producers who wish to have the protection provided by these disaster programs for the 2010 crop year will need to have federal crop insurance coverage on all their insurable crops, or a Noninsured Disaster Assistance Program policy for any uninsurable crops. The deadline to purchase either crop insurance or NAP coverage for Minnesota's spring seeded crops is March 15.
Generally, the requirement to have either crop insurance or NAP coverage for the 2010 crop year applies to all land and crops that a producer has an interest in, including land located in other counties. However, since the enactment of the farm bill, Congress has authorized the following exceptions to this policy.
To be eligible for the Supplemental Revenue Assistance Program, producers are no longer required to obtain crop insurance or NAP coverage for crops intended for grazing or pasture use. However, to remain eligible for the Livestock Forage Program, insurance or NAP coverage on grazing or pasture acres will be required.
Producers can also waive the crop insurance or NAP coverage requirement for a crop if the NAP fee exceeds 10 percent of the value of NAP coverage, or if the crop is not considered economically significant. An economically significant crop is defined as any crop that is expected to contribute five percent or more of the total expected value of all crops grown by the producer.
NAP application deadline is March 15
The Noninsured Disaster Assistance Program provides protection from weather-related losses for virtually all crops produced commercially that cannot be insured under the federal crop insurance program.
In addition to losses directly related to severe weather conditions, the program also provides coverage for losses resulting from insect infestations and plant diseases if their occurrence was the result of damaging weather conditions. Coverage for prevented planting is also provided if more than 35 percent of the crop is affected.
To be eligible for coverage, producers must pay the required service fee by the application deadline. The deadline to apply for coverage on pasture and spring seeded crops, including vegetables, is March 15.
The service fee for coverage is $250 per crop, per county, not to exceed $750 per county. In addition, the service fees cannot exceed $1,875 per producer for all counties where crops are produced.
Producers can qualify for payments if severe weather conditions result in a reduction of the producer's expected production by more than 50 percent. Lost production eligible for payment is paid at 55 percent of the value of the crop, as determined by USDA.
Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.