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Published January 30, 2010, 12:00 AM

FSA can assist farmers with operating capital

WILLMAR — Spring planting may be several months away, but farmers are already making preparations for the 2010 growing season. Part of those preparations may include putting together a financial plan with a lender.

By: Wes Nelson, USDA Farm Service Agency , West Central Tribune

WILLMAR — Spring planting may be several months away, but farmers are already making preparations for the 2010 growing season. Part of those preparations may include putting together a financial plan with a lender.

Farming today is much like operating a business in town. Profit margins are small; large sums of money are often invested in machinery, facilities and labor; competition is fierce; and effective management of assets and capital can be critical to the success or failure of the farming operation.

Many farmers today may borrow $100,000 to $500,000 or more to cover their annual short-term crop and livestock expenses.

Input costs for farmers have risen dramatically in recent years, much of which is directly or indirectly the result of the increased cost of energy. And because of those higher input costs, farmers may need additional capital to cover their annual operating expenses.

Farmers who are unable to obtain adequate private or commercial credit for farming purposes should remember that local Farm Service Agency offices offer several lending programs that may assist farmers with their financing needs. In addition, FSA will provide free supervised credit counseling for farmers that qualify for financing.

Local offices have funds for direct or guaranteed operating loans. The agency also reserves funds that are specifically devoted to beginning farmers, minorities and women.

The interest rates for the lending programs are typically lower than commercial rates. However, Farm Service Agency does not intend to take business away from private and commercial lenders. Therefore, FSA will provide financing only to farmers who are unable to obtain private or commercial credit, including loans with commercial lenders that are guaranteed by Farm Service Agency.

Direct farm operating loans may be used to buy items needed to operate a farm. Those items may include livestock, feed, seed, fuel, chemicals, fertilizer, insurance and other operating expenses.

Direct operating loans can also be used to buy machinery, equipment, breeding livestock, pay for minor building improvements, or to refinance existing debts.

During the month of January, the interest rate for direct operating loans is 2.875 percent. The interest rate is fixed at the time of loan approval.

The direct operating loan limit is $300,000. Repayment terms will vary according to loan purposes and the availability of loan security.

Annual operating loans have a one-year term, with up to a seven-year term for breeding livestock and equipment loans.

To qualify for a direct loan, the applicant must have sufficient ability to repay the loan, while also pledging enough collateral to fully secure the loan.

In addition to direct loans, Farm Service Agency offers several guaranteed loan programs. With a guaranteed loan, FSA can guarantee up to 90 percent of a loan issued by a commercial lender. However, all loans must meet specific eligibility criteria to qualify for the guaranteed loan program.

USDA survey finds increased supplies of corn and soybeans

Results from the U.S. Department of Agriculture’s latest Grain Stocks Survey found that the nation’s supply of corn and soybeans has increased.

As of Dec. 1, corn supplies in the U.S. totaled 10.9 billion bushels, up 9 percent from one year ago. Of the total supply, 7.45 billion bushels was stored on farms, up 15 percent from a year earlier. Off-farm supplies, at 3.49 billion bushels, were down 3 percent from a year ago.

The survey found that U.S. soybean supplies totaled 2.34 billion bushels, up 3 percent from a year ago. On-farm soybean supplies totaled 1.23 billion bushels, up 4 percent from one year ago. Off-farm supplies, at 1.11 billion bushels, were up 2 percent from Dec. 1, 2008.

USDA’s survey also found that Minnesota’s supply of corn and soybeans was also up from last year.

As of Dec. 1, corn supplies in Minnesota were at a record high of 1.22 billion bushels, up 18 percent from one year ago. Of the total supply, 940 million bushels, or 77 percent, was stored on Minnesota farms.

The survey estimated Minnesota soybean supplies at 241 million bushels, up 5 percent from a year ago. Of the total supply, 140 million bushels, or 58 percent, was stored on Minnesota farms.

Minnesota milk production continues to increase

According to USDA’s National Agricultural Statistics Service, Minnesota milk production during December totaled 774 million pounds, up 3.2 percent from December 2008.

Minnesota milk production during the entire 2009 calendar year totaled 9.03 billion pounds, up 2.8 percent from 2008.

Meanwhile, milk production in the 23 major milk producing states during the 2009 calendar year totaled 173.5 billion pounds, virtually unchanged from 2008.

Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.

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