Utilizing USDA Marketingโ Assistance Loans forโ Grain Marketing & Cash Flow
As the 2025 harvest โseason approaches, producers should consider the potential benefits โขof โฃutilizing USDAโข Marketing Assistance Loans (MALs) as โขaโข strategic tool for both grain marketing and managing cash flow. These loans offer aโฃ range of โขadvantages, especially in โคnavigating the frequently enough-challenging price surroundings following harvest.
How MALs Work
MALs provide short-term credit securedโข by eligibleโข commodities like corn and soybeans. Producers deposit their grain โขwith the Farm Service โคAgency (FSA) โคas collateral and receive a loan based on the Marketingโฃ Loan โRate โค(MALR) established for their county. Such as, if a county’s MALRโข for corn is $2.10 per bushel, and โคthe Producer’s โฃChoice Price (PCP) later falls to $1.90 per bushelโข when the loan is released, the producer may be โeligible for a marketing loan gain โฃof $0.20 per bushel.
An alternative to a MAL is โaโ Loan โขDeficiency Paymentโ (LDP). If the PCP drops below the county MALR, producers can optโข for an LDPโข on the commodity โฃrather of taking โoutโข a loan.โฃ The LDP calculation mirrors that of a marketing loan gain. โHowever,a producer can only utilize an LDP once on aโ specificโ quantity of grain,and grain already โคunderโ a โฃcommodity loan isโ ineligible.While LDP opportunities have been โขlimited for corn andโฃ soybeans as the early 2000s, producers should be aware of the option.Currently, no significant LDP opportunities are anticipated for โขthe 2025 corn and soybean crop.
Eligibility โข& Requirements
Toโค be โeligible โfor MALs,โค producers must โขbe enrolled โin USDA farm programs and have submitted an acreage report to their local FSA officeโค forโ the 2025 crop year. Maintaining “beneficial interest” inโ the grain – meaning the producerโ retains control and title – โis also crucial while the grain is โคunder loan. Crucially,producers must contact their local FSA office to officially release any grain โunder a MALโข before delivering it toโค market – a “call โbefore โyou haul” practice.
Benefits of Utilizing MALs
Farmโ operators may find MALs beneficial โforโข several reasons:
Low-Cost financing: MALs offer short-term credit at relatively low and stable interest rates.
Expense Coverage: Loan fundsโ can be used to cover post-harvest expenses, land rental payments, andโฃ prepaid crop inputs likeโ seed and fertilizerโ for the following year.
Debt Management: Funds can also assist with โyear-end or January โprincipal andโค interest payments on termโข loans and real estate loans.
Harvest-Time Revenue: MALs provideโ partial compensation for crops during or after the fall harvest, a โคperiod when commodity prices are oftenโ depressed.
Marketing Flexibility: Producersโ canโ delay marketing โtheโข grain, allowing for potential priceโ improvementsโ and the chance to utilize forward pricingโ strategies. (Remember โthe loan must beโ satisfied beforeโค delivery.)
Livestock โขIntegration: Livestock producers โคcan utilize โขMALs and release the grain โคas needed for feeding โขoperations.
* Price Protection: โฃ If commodity prices decline below the county CCC loan rates, producers can release the grain atโฃ the lower price or collect an LDP.
Critically important Note for Minnesota Producers
In Minnesota, โthe FSA files a Central notificationโ system (CNS) form with the Minnesota โSecretary of State Office for all grain usedโฃ as โsecurity for a MAL. This process is similar toโฃ the CNS filings used by agricultural lenders โคfor farm operatingโ loans, ensuring โproper โฃfund transfer โขwhen grain is sold to โcover loan balances.
Further Data
For detailed information on MALs, county loan rates, and eligibility requirements, producers shouldโค contact their local FSA office or visit โคthe USDA FSA website: https://www.fsa.usda.gov/programs-and-services/price-support/Index.
