April 7, 2000

As we fast approach wheat harvest, it is very apparent that producers must maximize every aspect of income possible to enhance their cash flow.

The 1996 farm program includes a Loan Deficiency Payment that seeks to encourage producers to market their commodity instead of placing it in government storage when prices fall below loan rates. This LDP provision has been used by many producers, but there is some information and some problems that might be beneficial to highlight before harvest.

• Participation in the Loan Deficiency Payment program requires producers to file the appropriate forms with the Farm Service Agency and must be done while the producer still has beneficial interest in the crop.

• It is the producer’s responsibility for prompt delivery of production receipts to the Farm Service Agency office. Delays in delivery of this information can affect the date you qualify for program benefits and could result in a reduction in the LDP.

• Loan Deficiency Payments and Posted County Prices are calculated daily and can be different in every county. Loan rates and county differentials can be different in every county and cause program benefits to vary greatly in different counties. In the 1999 season, LDP rates were as much as 40 cents different in adjoining counties.

In the current program, the Posted County Price (PCP) and the average local cash price should have a relatively close relationship. In the past, there have been counties where the local cash price was far below the PCP, resulting in a smaller loan deficiency rate payment for that county. Texas Farm Bureau and other organizations have provided the Farm Service Agency data that proved there are problems with this system and have prompted a review and possible adjustment for the correction of these problems.

If this type of problem or any other problem with the LDP exists in your county, we will assist you with efforts to resolve the situation.

In another year of depressed prices, producers must learn how to maximize the benefits afforded in the current farm program. It is important to remain current on the LDP rates, as they can change daily. Research will also be needed by producers to study which counties have higher LDP rates and the methods that will be needed to qualify for the higher rates.