When it comes to a low period in the market, farmers often have no option but to look for a bit of outside help. The USDA recently reminded farmers that Loan Deficiency Payments and Marketing Assistance Loans are readily available for those who are struggling through the dry period.
Loans like this provide marketing and financing assistance for many different commodities, including honey, wool, rice, cotton, peanuts, and soybeans. Executive Director of Madison County for the USDA says that the market has been sitting at above average over the past few years. This means that there hasn’t been the typical demand for commodity loans.
Purdy continues by explaining that prices could very well approach ‘harvest-time lows,’ and this is when it’s vital that farmers feel like they can consider the options available to them. Everyone who is eligible for an LDPs or a MALs is able to apply for it when they wish.
What is Involved in a MALs loan?
The advantage of MALs is that it provides interim financing for producers, and lets them delay any sale of commodities until the market comes back in their favor. If a farmer or producer is available for a loan but doesn’t want to apply for a MALs, they can always try for an LDP.
However, there are some things to consider when applying for loans like this. First, producers must have a beneficial interest in the commodity that they wish to supply with the loan. Whether this is a title or control over the commodity, they must be linked to it somehow. Secondly, before producers or farmers can benefit from the loan, they need to meet various requirements, including member contribution and evidence of farming.
Alternatives to MALs and LDPs Loans
As you can see, with loans like this, there are disadvantages as well as advantages. This is why it can be worth considering an alternative option, such as a personal or a title loan.
A personal loan is a loan granted by an online lender, credit union, or bank. The payback process is usually done in monthly increments and typically completed over two to five years. Because personal loans aren’t usually backed by collateral, they’re not necessarily the most secure option available.
Another option is a title loan. A title loan is a loan that you can secure against the value of your car, whereby you use the title of your car as collateral. In exchange for this asset, you get a loan that is of equal value to or lesser than the value of your vehicle. Not only is this a low-risk alternative to more traditional loans presented to farmers and producers, but it also allows a lot of flexibility in terms of repayment plans.
If the low season is coming up and you’re not quite sure how your finances will look, perhaps it’s worth looking into your lending options. While loans like LDPs and MALs have their advantages, sometimes it pays to go for something that’s a little less risky, like a personal or title loan.