It’s been a decade since low commodity prices made loan-deficiency payments a routine, if arcane, part of U.S. agriculture. But prices are low enough that wheat growers are collecting LDPs and the payments “might even be on the cusp of returning for corn in some parts of the country,” says DTN. When farmers request an LDP, the USDA pays them the difference between the support price for a crop and the market price, when prices are below the so-called loan rate.
It can amount to a sizable sum because the LDP is paid on every bushel submitted by a farmer.
Kansas State University economist Art Barnaby estimates the LDP rate will be 10 cents a bushel today for hard red winter wheat in Kansas.
The limit on farm-subsidy payments is stricter than it was a decade ago, said DTN, so farmers should pay attention to the cap of $125,000 per person per year, which includes LDPs and so-called marketing loan gains, the cousin of LDPs. “Farmers … might want to consider using USDA commodity certificates for marketing loans rather than simply taking the LDP, ” as commodity certificates “are not subject to farm-program payment caps.”