By Janet Kubat Willette
Sen. Norm Coleman has introduced legislation to change the Farm Storage Facility Loan Program.
The legislation, Farm Storage for America’s Energy Future, was introduced in July. The legislation modifies the existing program, which began in 2000, in several ways:
• Extends the loan payoff from seven years to 20 years.
• Removes the Farm Service Agency requirement for a first mortgage, instead allowing for an egress agreement for the collateralized equipment or structure.
• Removes the FSA-imposed loan limit amount of $100,000 and replaces it with an average of three years annual production history less the applicants owned storage as a means of determining storage needs.
"This legislation fixes the FSA storage loan program so it can meet Minnesota growing grain storage needs," Coleman said in a press release.
Coleman hopes to include the language in the Senate version of the farm bill, said his spokesman, Leroy Coleman.
Minnesota and Iowa farmers haven’t been shy about taking advantage of the program, which currently allows them to borrow up to $100,000 for the purchase of new farm storage or upgrades to existing structures.
Iowa farmers have led the way with 25 percent of the national loan count for the program, said Jim Book, Iowa FSA program specialist.
The program has seen a lot of activity especially in the last two years, he said. From Oct. 1, 2005, to Oct. 1, 2006, 703 loans for $27 million and 20.5 million bushels of storage capacity were approved. From Oct. 1, 2006, to early September 2007, 708 loans were approved for $32 million and 23 million bushels of storage capacity.
The loan rate is 4.625 percent, down from 5 percent last month. The loans have a seven-year pay back. Farmers can apply for the loans any time throughout the year, but must apply before beginning site preparation or construction.
Minnesota is one of the leaders in loan activity in the program, said Minnesota FSA state executive director Perry Aasness.
Last year, more than 500 loans for more than $23 million were administered. So far this year, 138 loans for $7 million have been dispersed, with more pending approval.