Farm Storage Loan Program Announced

February 4, 2000

One day after Agriculture Secretary Dan Glickman announced USDA would implement an on-farm storage program, the Farm Service Agency said a proposed rule will be published soon to get the program underway. The program will use the Commodity Credit Corporation to fund 5 to 10-year loans at Treasury rates and should be operating later this year.

USDA is promoting the program as one way for farmers to preserve the identity of crops. By segregating crops with "specific desirable traits," farmers can sell them later at prices "reflecting their greater value." Identity preservation also applies to genetically modified crops.

The Treasury rate now is 5.25% and applies to CCC’s cost of borrowing. A proposed rule, to be published in the Federal Register "soon," will provide more details on the program. A similar program ended in 1982 when USDA determined farmers had sufficient storage for crops at that time. Now, says FSA Administrator Keith Kelly, severe storage shortages exist in some areas of the country.

Kelly says farmers are being forced to sell at harvest when prices usually are at the lowest in the marketing season. "They need to be able to store their product until prices are more favorable, and these loans will help them do that," he adds.