For the second year in a row, USDA’s Farm Service Agency says its $2.65 billion operating loan program will likely run out of funds before the end of the fiscal year. USDA officials say the funds will likely run dry by the end of June, around three months before next year’s program starts on October first. Cash-strapped farmers and cautious banks have turned to the program amid the global grains downturn. These FSA loan guarantees and direct loans are typically considered loans of last resort, but an increasing number of agriculture lenders have turned to the program. The recent rebound in crop prices has not cooled demand. USDA data shows that at the end of May, applications for operating loans were up 23 percent and funding obligation had climbed 19 percent.
USDA officials and banking experts estimate the backlog of applications could total as much as $650 million by October.
Source: NAFB News Service