Iowa State Provides Daily Loan Rate Information

Susan Thompson, Ag Communications, Iowa State University College of Agriculture, (515) 294-0705;
From "Agriculture in Action: Notes from ISU"

August 9, 2001

In the fall of 1998, low prices for corn and soybeans triggered the federal loan deficiency payment (LDP) program -- one of two parts of the federal price support program. The first portion of the program is the traditional marketing loan that allows farmers to store their harvested crops and sell at a later date when market conditions improve.

The second is the LDP, which pays producers the difference between county-level prices and their county's loan rate on a date chosen by the producer. Producers can enroll production in either part of the program, but not in both.

"Loan deficiency payments were new to Iowa corn and soybean farmers," says Bruce Babcock, director of the Center for Agricultural and Rural Development (CARD) at Iowa State University. "They really didn't know how they worked or what they were. So we wrote a paper explaining how a farmer should think about them and use them in their marketing plan."

Because of the complicated nature of these programs, and because payment rates change daily, Babcock knew producers needed help. "We decided it would be a good service if CARD would update LDP payment rates daily and post them on the Internet," he says. "Producers need to know their LDP payments because the rates vary greatly over time. The CARD site helps them understand the rates and what risks are involved in taking or not taking their LDPs."

People have visited the site nearly 450,000 times since it began in September 1998. It averages 660 visits a day, with a high of 6,131 visits in a day. Even during slow marketing times, the site receives up to 400 daily visitors. Several private market information services have contracted with CARD to provide the information on their Web sites as well.

Chad Hart is responsible for updating the Web site every weekday by 8:30 a.m. "We use the same calculations the U.S. Department of Agriculture uses to set the information," Hart says. "In each county, payment rates are determined by the crop's loan rate, market prices from regional terminals and a value that represents the county's average production and transportation costs."

Program information and payment rates are available for 22 crops. For corn and soybeans, three basic marketing strategies are analyzed under current market conditions. The site also includes historical rate information and maps that illustrate state-to-state differences in the programs.

No charge or sign-up is required, although producers must input their crop, state and county to get a payment rate. More information is required for a marketing strategy analysis. Access the site at