By Clint Thompson
Pecan industry leaders are currently discussing the possibility of the industry enrolling in the U.S. Department of Agriculture’s (USDA) Marketing Assistance Loans (MAL) Program.
The program is administered by the Farm Service Agency and offers loans to farmers of eligible commodities to help manage cash flow needs and provide marketing flexibility.
Georgia grower Justin Jones was part of a grower panel at the recent Georgia Pecan Growers Association Conference on April 1 in Perry, Georgia. He explained the marketing loan process and how it could benefit Georgia’s pecan industry.
“The USDA says you’re going to put them into the loan program so therefore we’re going to give you a percentage back of the value,” Jones said. “Maybe I’m trying to get to a $2 per pound final number and the marketing loan program is set at $1. If you’re going to put them into a loan, the USDA is going to pay you $1 for all of those pounds.
“Now I’ve got $1 back, and now I’m trying to go out and market my pecans. I don’t have the whole weight of that crop on my back anymore, I’ve only got half of it.”
Loan Specifics
MALs provide short-term loans with terms up to nine months. The loans use the harvested commodity as collateral, and the loan amount is based on the established loan rate for the commodity.
“You have nine months, from the time you put it in to the time you’ve got to sell the crop. If the market was to drop to 75 cents per pound, you would still have your $1. You would forfeit your crop, you would have your $1, wash your hands of it and go into next year. That’s basically how the marketing loan program works,” Jones said.
“Instead of trying to get them out of the warehouse and not knowing what to do with, now you’re opening up a nine-month window, and it also gives you a chance to see what the crop looks like. Nobody knows what the crop’s going to do in the east until we get to the very end and you have the west get started too; it allows you to take advantage of dips in the market or dips in the crop supply, something like that for sure.
“It’s just another tool to help us push for more leverage on the selling side of the crop. It’s not going to change it dramatically but little changes and a bunch of them will add up.”