LDP Is Name Of The Game This Fall

With low corn prices, LDP is popular marketing option. Can you circumvent the payment limit? Rod Swoboda

Published on: Sep 30, 2005

With Loan Deficiency Payments now in the 40-cent per bushel range for corn, many farmers will hit the LDP limit.

"I think farmers are probably going to hit the payment limit with around 900 acres of corn, maybe a little more than that," says Steve Johnson, Iowa State University Extension farm management specialist. "With a 200-bushel per acre corn yield and 40-cent per bushel LDP, if you LDP all those bushels, you're going to hit the payment limit with just a little over 900 acres, if the farm is a single entity."

Johnson says there are ways to get around the limits. "There are a couple different ways," he explains. "Number one, many farmers realize that they can create multiple entities and each of those would qualify for that $75,000 payment limitation."

A simpler way is to keep track as you LDP—when you think you are up against that LDP limit of $75,000, then stop taking the LDP. You can use the marketing loan provision of the USDA farm program.

To use the marketing loan, you literally work with your local FSA office. You pay off that loan with generic certificates.

"So, we can avoid that payment limitation per entity, by using the marketing loan rather than the LDP," he adds. "Again, make sure you are working with the FSA office and they'll use generic certificates."