Updated: July 29, 2016

Resources for MALs and LDPs:

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 specifying they retain beneficial interest even before they seek an MAL or LDP.


Unfortunately market conditions continue to deteriorate and farmers are asking for information about the Marketing Assistance Loans (MAL) and Loan Deficiency Payment (LDP) programs. Wheat producers have not participated in the LDP program since the late 1990’s, but unfortunately cash prices are dangerously close to the national wheat loan rate of $2.94.

MALs are available to producers at harvest time and are intended to provide interim financing for farmers to help them meet cashflow 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.

As prices change daily, the LDP status can also change daily. 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. Producers can check the loan rate for their county here.

Here is an FSA Fact Sheet about MAL and LDP for your reference.

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 specifying they retain beneficial interest even before they seek an MAL or LDP.

For additional information or questions, please contact the Texas Wheat office at 806-352-2191.

 
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