Farmers want non-farmers to get ethanol loans too

US farmers in Iowa are asking their senators to try and change the way that the US Farm Credit system operates to allow it to loan money to ethanol plants that are not majority owned by farmers. According to Domestic fuel.

On the face of it this sounds silly to me. As one of the signatories to the letter sent to the senators put it…

“We understand the struggles of expanding the ethanol and biodiesel industry and trying to keep it profitable in changing economic times,” he adds. “Rising input costs and other factors are creating increasingly smaller margins for ethanol and biodiesel producers.”

In the UK at least, the banks prefer to loan you money to buy an umbrella when the sun is shining. If margins are shrinking and input costs are rising you are not going to have a compelling case to take to the banks.

Jim Schipper, is president of American State Bank at Osceola and current chairman of the Iowa Bankers Association. He explains that the Farm Credit System has preferential tax treatment and access to funding at interest rates a commercial bank is not eligible to get.

“That’s fine as long as Farm Credit lenders are within their mission–providing credit to farmers,” says Schipper. “But this expanded horizons idea goes way beyond that. If they want to finance enterprises that are not farmer-owned projects, then they should have to discontinue their federal support.”

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One Response to Farmers want non-farmers to get ethanol loans too

  1. USDA 7 August, 2008 at 6:23 am #

    FARM LOAN PROGRAMS
    The U.S. Department of Agriculture (USDA) makes direct and guaranteed operating and farm ownership loans to eligible farmers and ranchers. Under its direct operating loan program, USDA also makes loans to rural youth to establish and operate income-producing projects of modest size in connection with their participation in 4-H clubs, FFA, and similar organizations. Guaranteed loans are made through private lenders with a guarantee of up to 95 percent of the loss of principal and interest. Direct and guaranteed operating loans can be used to purchase livestock, equipment, feed, seed, and other material essential to a farm or ranch operation.Direct and guaranteed farm ownership loan funds may be used to purchase land, construct buildings, or make farm improvements. Guaranteed operating and farm ownership loans may also be used to refinance debt. USDA also provides assistance to beginning farmers and ranchers under its Direct Farm Ownership Down Payment Loan Program, and provides retiring farmers the opportunity to transfer their land to future generations of farmers and ranchers. USDA also targets a portion of its direct and guaranteed operating loan and farm ownership loan funds to beginning farmers and ranchers and Socially Disadvantaged Applicants (SDAs).Emergency loans are available to established farmers and ranchers who have suffered losses as a result of a natural disaster or quarantine.The individual loan limits for each program are set by statute as follows: direct operating loan $200,000; direct operating loan-youth $5,000; direct farm ownership $200,000; direct farm ownership down payment $100,000; guaranteed operating loan and farm ownership $852,000 (adjusted annually for inflation); and emergency loans $500,000. The Consolidated Farm and Rural Development Act (CONACT) of 1961 authorized direct operating loan and farm ownership assistance. The Rural Development Act of 1972, which amended the CONACT, authorized the agency to make guaranteed operating loans, as well as farm ownership, emergency, and youth loans. The targeting of SDA farm ownership loan funds was authorized under the Agricultural Credit Act of 1987, and the 1990 farm bill authorized the targeting of operating loan funds to SDA.The targeting of direct and guaranteed operating and farm ownership loan funds to beginning farmers and ranchers was authorized under the Agricultural Credit Improvement Act of 1992. To be eligible for direct and guaranteed operating loan and farm ownership assistance, applicants must be a U.S. citizen or legal resident alien; be unable to obtain sufficient credit from other sources; not be delinquent on any Federal debt; and sufficient loan repayment ability; and meet other criteria. For you to show your interest in this loan program please contact the Registery Loan For Your Application Form..

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