Columbia Basin, Ephrata, WA | JCBFarmsND - 8/23/2024 13:13
I'm too young to have known how the LDP program works, and I don't recall learning about it in college. How exactly does it work?
Been a while, but as near as I remember it:
You harvest your grain, store it, and put it under government loan, secured by the grain itself. There’s a max amount they’ll loan per bushel, so you borrow that much. When you sell the grain, if the sale price is below that amount you don’t have enough to pay back the loan, so your loan is deficient. So they give you a Loan Deficiency Payment to make up the difference. Essentially grain is never worth less than the LDP price to the farmer.
I don’t think they’ve adjusted LDP prices much in a couple decades. It was at a level that would barely keep you in business back in 2004, if price gets there in 2024 you might as well just fold it up and quit.
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LDP program
