On-Farm Storage Loan Program Begins

May 10, 2000

USDA will begin making seven-year, low-cost loans May 30 to farmers to help build or upgrade commodity storage and handling facilities. Farmers who bought or built storage facilities between Feb. 2 and May 30 may apply for a loan as well.

The program will provide financing for on-farm storage of wheat, rice, soybeans, sunflower seed, canola, rapeseed, safflower, flaxseed, mustard seed, crambe, other oilseeds to be announced, corn, grain sorghum, oats and barley.

Interest rates will be the same as the rate charged on comparable Treasury securities in effect during the month the loan is approved. The rate will remain in effect for the term of the loan.

USDA will publish a draft regulation for the program in the Federal Register this week, then after a 30-day comment period, a final rule will be published. Consideration will be given in the final rule to additional storage structures such as those for silage, alternative types of storage such as "condo" storage and facilities to store other agriculture products.

Producers who want a loan will have to have a satisfactory credit rating as determined by USDA; have no delinquent federal debt; be a producer of facility loan commodities; provide proof of crop insurance; comply with USDA provisions for highly erodible land and wetlands; demonstrate the ability to repay the loan and demonstrate compliance with any applicable local zoning, land use and building codes for the storage facilities.

The principal amount of any farm storage facility loan will be 75% of the net cost of the applicant’s needed storage or handling equipment not to exceed $100,000. Borrowers are limited to one loan per fiscal year. Principal and interest will be amortized over the term of the loan. Equal annual installments will be due by no later than the last day of each 12-month period of the loan.