How to Get a Secured Loan on Crops

Government farm programs allow farmers to sign up each spring and enroll a certain portion of their land in the USDA's voluntary crop program. This program was designed to help farmers with income issues while they hold their crops for later sale. Farmers can use their crop as collateral for secured loans from the government. Read on to learn how to get a secured loan on crops.

Instructions

Difficulty: Challenging

1. Establish a planting history for your crop over a period of five years. This mean that on average over the last five years a 100 percent of your designated acreage has been planted to the crop you want to enroll.
2. Enroll that portion of your acreage at the annual spring sign up held in various farming communities throughout the country. Commodity programs are available for wheat, corn, grain sorghum, barley, oats, rye, oilseeds, rice, tobacco, peanuts, milk, cotton, wool, mohair, sugar and honey.
3. Meet program requirements by idling a percentage of your base acres under the acreage reduction program. You must also meet conservation requirements and purchase crop insurance. You then become eligible for direct payments and price support loans.
4. Harvest your crop and obtain a loan from the United States Department of Agriculture using your crops as collateral.
5. Store your harvest and space out marketing in order to wait for better pricing. Once the crop is sold, repay the loan at the loan rate or market price, whichever is lower. You can also give the crop to the government in lieu of repayment.

Tips & Warnings

• Contact the United States Department of Agriculture or your local farm co-op for more information about getting a secure crop loan.

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