Producers who have grain in storage might want to consider a commodity loan for a source of operating capital.

Corn, soybeans, wheat, oats and barley can be pledged as loan collateral for a commodity loan. Commodities pledged for loan collateral must be maintained for quality. Loan commodities can be fed or sold with prior consent from the Farm Service Agency. Normally, when feeding grain under loan, a repayment schedule is utilized. Grain that is sold and delivered is done so within the provisions of a marketing authorization.

Commodity loans are generally disbursed within three working days. The interest rate for loans disbursed in January is 1.375 percent. Other loan provisions are as follows:

• Eligibility — Reported crop production on any farm. Conservation compliance rules do apply.

• Terms — Matures in nine months, and proceeds are deposited directly into your account.

• Repayment — Payments can be made at any time during the loan period.

• Collateral — The grain pledged for loan is the collateral. It cannot be fed or sold without first repaying a specific quantity or obtaining a marketing authorization.

• Storage — Grain must be stored in an approved structure for on-farm storage. Warehouse stored grains also are eligible if stored at an approved government warehouse.

To summarize, for those producers who are storing grain for sale later in the year of for feeding purposes, commodity loans provide one option to consider when obtaining operating capital for crop inputs.

Commodity loans are popular for a variety of reasons: to provide capital, provide better opportunity for timely grain marketing or capitalize on discounts for inputs offered in the winter.

Since the interest rate is low, producers can maximize early order discounts by paying for seed, fertilizer and crop protection products now. Interested producers should contact the FSA office for more information.

Luke Fritz is executive director of the Butler County Farm Service Agency.