Utilizing USDA Marketing Assistance Loans for Grain Marketing & Cash Flow
As the 2025 harvest season approaches, producers should consider the potential benefits of utilizing USDA Marketing Assistance Loans (MALs) as a strategic tool for both grain marketing and managing cash flow. These loans offer a range of advantages, especially in navigating the frequently enough-challenging price surroundings following harvest.
How MALs Work
MALs provide short-term credit secured by eligible commodities like corn and soybeans. Producers deposit their grain with the Farm Service Agency (FSA) as collateral and receive a loan based on the Marketing Loan Rate (MALR) established for their county. Such as, if a county’s MALR for corn is $2.10 per bushel, and the Producer’s Choice Price (PCP) later falls to $1.90 per bushel when the loan is released, the producer may be eligible for a marketing loan gain of $0.20 per bushel.
An alternative to a MAL is a Loan Deficiency Payment (LDP). If the PCP drops below the county MALR, producers can opt for an LDP on the commodity rather of taking out a loan. The LDP calculation mirrors that of a marketing loan gain. However,a producer can only utilize an LDP once on a specific quantity of grain,and grain already under a commodity loan is ineligible.While LDP opportunities have been limited for corn and soybeans as the early 2000s, producers should be aware of the option.Currently, no significant LDP opportunities are anticipated for the 2025 corn and soybean crop.
Eligibility & Requirements
To be eligible for MALs, producers must be enrolled in USDA farm programs and have submitted an acreage report to their local FSA office for the 2025 crop year. Maintaining “beneficial interest” in the grain – meaning the producer retains control and title – is also crucial while the grain is under loan. Crucially,producers must contact their local FSA office to officially release any grain under a MAL before delivering it to market – a “call before you haul” practice.
Benefits of Utilizing MALs
Farm operators may find MALs beneficial for several reasons:
Low-Cost financing: MALs offer short-term credit at relatively low and stable interest rates.
Expense Coverage: Loan funds can be used to cover post-harvest expenses, land rental payments, and prepaid crop inputs like seed and fertilizer for the following year.
Debt Management: Funds can also assist with year-end or January principal and interest payments on term loans and real estate loans.
Harvest-Time Revenue: MALs provide partial compensation for crops during or after the fall harvest, a period when commodity prices are often depressed.
Marketing Flexibility: Producers can delay marketing the grain, allowing for potential price improvements and the chance to utilize forward pricing strategies. (Remember the loan must be satisfied before delivery.)
Livestock Integration: Livestock producers can utilize MALs and release the grain as needed for feeding operations.
* Price Protection: If commodity prices decline below the county CCC loan rates, producers can release the grain at the lower price or collect an LDP.
Critically important Note for Minnesota Producers
In Minnesota, the FSA files a Central notification system (CNS) form with the Minnesota Secretary of State Office for all grain used as security for a MAL. This process is similar to the CNS filings used by agricultural lenders for farm operating loans, ensuring proper fund transfer when grain is sold to cover loan balances.
Further Data
For detailed information on MALs, county loan rates, and eligibility requirements, producers should contact their local FSA office or visit the USDA FSA website: https://www.fsa.usda.gov/programs-and-services/price-support/Index.
