There are some changes in procedure at your county Farm Service Agency (FSA) office this fall, having to do with getting a USDA loan on this year's crop. There are two major changes affecting the way you go about signing up.
"There has been some confusion among farmers who want to take a marketing loan on this year's crop," says Derryl McClaren, state director of FSA in Iowa. "The procedure has changed and that will put a couple of extra steps in the application process for farmers."
The reason USDA is making this change in procedure is because the federal Office of Management and Budget wants to reduce the chances of fraud or abuse of these programs occurring.
How to get loan procedure started
"In the past we anticipated the workload," he explains. "We planned ahead for farmers coming in to our county FSA offices across the state to take out loans. We pre-processed some of the forms to get ready for that event.
"We got started on the procedure before the farmer actually came into the office, by checking to see if there are any liens on the crop. If there are liens, then a lien-waiver has to be filed. This fall under this new procedure, we still have to check for liens, but we can no longer begin that process until the farmer comes into the FSA office and requests the loan."
That new requirement—you must come into the office before FSA can start the lien search—requires some extra time and may cause a few days delay in getting the application approved. "What starts it all in motion, under this new procedure, is for the farmer to come in and request the loan," emphasizes McClaren. "Then FSA checks for lien filings and prints a lien waiver to give to the farmer."
Also, note another key change
You also need to be aware of a second change now required. "We must do the lien search every time the farmer asks for a loan," says McClaren. "If there is a farmer in our office today who wants a loan--that would get the process started. If that same farmer comes in next week and wants another loan, the application and approval process has to be repeated. This is a change in FSA procedure from what we've done in the past."
Basically, the county office can't anticipate things for you anymore. The farmer needs to come in and initiate them.
Understand "beneficial interest"
Also, be sure you understand what it means to have a "beneficial interest" in your crop, advises McClaren. Some people who are coming into FSA county offices this fall aren't sure about this.
You can't take a loan deficiency payment, or LDP, on your crop until it has been harvested. Also, you can't take an LDP on it after title to the crop has been transferred and the grain belongs to someone else. For you to take an LDP, it has to be taken during the time you have a beneficial interest.
McClaren suggests before you cross the scales, take the LDP on the grain. That means the crop has to be harvested, but you still must have a beneficial interest in it. That's the time when you take an LDP.