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> MSU News
Wool growers must act now for LDPs on 2002 clip
November 26, 2002 -- By MSU News Service
BOZEMAN--Wool producers who wish to file for a loan deficiency payment (LDP) from the U.S. Department of Agriculture must have clipped on or after Jan. 1, 2002, say specialists with the Montana State University Extension Service.
Different filing deadlines apply, however, depending on when beneficial interest was lost.
Wool producers who lost beneficial interest in their wool between Oct. 12 and Nov. 3 of 2002 must file by Dec. 6 if they wish to request an LDP through the Farm Service Agency, said James Johnson, Extension farm management specialist.
Producers who lost beneficial interest in their wool from Jan. 1, 2002 through Oct. 11, 2002 have until Jan. 31, 2003 to request an LDP through the local FSA office.
Since Nov. 4, wool producers can retain LDP eligibility only by requesting an LDP at the local FSA office before relinquishing beneficial interest. These requests must be made before wool is delivered or sold, and prior to Jan. 31, 2003.
Producers who fail to meet the deadlines will be ineligible for LDPs on their 2002 wool clip.
Extension sheep specialist Rodney Kott said some confusion has arisen because FSA regulations for wool were still being developed during the 2002 marketing year.
“Because FSA regulations that relate to wool as a marketing assistance loan commodity are not finalized, it is unclear whether the producer loses beneficial interest in wool at delivery or when the wool is sold,” he said.
Under usual FSA requirements, producers must have beneficial interest when requesting an LDP and retain beneficial during the period a commodity is under loan. In order to request an LDP, a cash payment, or to take out a nonrecourse loan on an eligible commodity, a producer must have beneficial interest in the commodity, which is retained only if the producer retains control of the commodity, risk of loss, and title to the commodity.
Producers will likely have two options for their 2002 LDP payment rates, said Kott, one for ungraded wool and one for graded wool.
Because there is little indication at this time about which option will result in the largest LDP cash payment, producers may want to defer presenting their FSA offices with wool core test results, said Kott. He added that details on the regulations will be soon be available, thus giving wool producers a clearer signal about the appropriate course of action.
Kott said the safest strategy may be for wool producers to sign up at the local FSA office to assure LDP eligibility, but not provide their core test until final regulations are available.
Johnson said that producers requesting an LDP will be subject to the FSA rules for beneficial interest, and he anticipates the usual beneficial interest provisions for the marketing assistance loan program will apply to the 2003 wool clip.
Wool was made a loan commodity through passage of the Farm Security and Rural Investment Act of 2002, or what is commonly referenced as the “farm bill.” Wool is now included in the marketing assistance loan program.
Producers of a loan commodity can take out a loan on a commodity through the USDA’s Commodity Credit Corporation or they can elect to receive an LDP on the commodity if an LDP is available. Producers who choose to take an LDP forfeit the opportunity to take out a marketing loan.
Contact: Rodney Kott 994-3415 or Jim Johnson, 994-5606
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