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Farm Service Agency can provide financial assistance

WILLMAR -- Spring planting may be several months away, but farmers are already making preparations for the 2011 growing season. Part of those preparations may include putting together a financial plan with a lender.

Farming today is much like operating a business in town. Profit margins are small; large sums of money are often invested in machinery, facilities and labor; competition is fierce; and effective management of assets and capital can be critical to the success or failure of the farming operation.

Many farmers today may borrow $100,000 to $500,000 or more to cover their annual short-term crop and livestock expenses.

Input costs for farmers have risen dramatically in recent years, much of which is directly or indirectly the result of the increased cost of energy. And because of those higher input costs, farmers may need additional capital to cover their annual operating expenses.

Farmers who are unable to obtain adequate private or commercial credit for farming purposes should remember that local Farm Service Agency offices offer several lending programs that may assist farmers with their financing needs. In addition, the agency will provide free supervised credit counseling for farmers that qualify for financing.

Local Farm Service Agency offices have funds for direct or guaranteed operating loans. The agency also reserves funds specifically devoted to beginning farmers, minorities and women.

The interest rates on loans are typically lower than commercial rates. However, the agency does not intend to take business away from private and commercial lenders. Therefore, Farm Service Agency offices will only provide financing to farmers who are unable to obtain private or commercial credit, including loans with commercial lenders that are guaranteed by the agency.

Direct farm operating loans may be used to buy items needed to operate a farm. Those items may include livestock, livestock feed, seed, fuel, chemicals, fertilizer, insurance and other operating expenses.

Direct operating loans can also be used to buy machinery, equipment, breeding livestock, pay for minor building improvements, or to refinance existing debts.

During the month of February, the interest rate for direct operating loans will be 2.25 percent. The interest rate is fixed at the time of loan approval.

The direct operating loan limit is $300,000. Repayment terms will vary according to loan purposes and the availability of loan security.

Annual operating loans have a one-year term, with up to a seven-year term for breeding livestock and equipment loans.

To qualify for a direct loan, the applicant must have sufficient ability to repay the loan, while also pledging enough collateral to fully secure the loan.

In addition to direct loans, the Farm Service Agency offers several guaranteed loan programs. With a guaranteed loan, the agency can guarantee up to 90 percent of a loan issued by a commercial lender. However, all loans must meet specific eligibility criteria to qualify for the guaranteed loan program.

Lending program activity increasing

Officials from Minnesota's Farm Service Agency announced that during the final quarter of 2010, county offices received 540 applications for its farm lending programs. That's up nearly 25 percent from the 433 applications that were received during the last quarter of 2009. Nationally, total applications received were up about 20 percent.

The 540 applications received during the final quarter of 2010 included applications for both direct and guaranteed loans. When compared to the same quarter one year ago, Minnesota's guaranteed loan applications increased by 35.8 percent, and direct loan applications were up 19.6 percent.

Of the direct operating loan applications that were funded in Minnesota during 2010, the average loan size was $60,560, down slightly from 2009. The average guaranteed operating loan size was $217,500.

In the case of direct farm ownership loans, Minnesota's average loan size was $154,900. For guaranteed farm ownership loans, the average size was $370,200.

Minnesota's Farm Service Agency offices received 4.9 percent of the total applications received nationwide in 2010.

In fiscal year 2010, Minnesota realized a 56 percent increase in the number of loans approved and funded in comparison to fiscal year 2008.

USDA scientists develop bread free of gluten

Scientists from the U.S. Department of Agriculture have developed a process that creates gluten-free bread made from corn flour that is of high quality and mimics the texture of conventional bread.

Scott Bean and Tilman Schober of USDA's Agricultural Research Service found that by removing a certain amount of fat from a corn protein called zein, they were able to produce a free-standing dough more similar to wheat dough.

Bean and Schober had some success developing gluten-free pan bread from other grains, but they couldn't make free-standing rolls because the rolls spread out too much. Other gluten-free grains include sorghum and rice.

Millions of Americans affected by celiac disease are unable to digest gluten, a protein in flour from grains such as wheat, barley and rye.

Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.