Loan Deficiency Payments or the Loan Program?

Date
1998-09-01
Authors
Hayes, Dermot
Hayes, Dermot
Babcock, Bruce
Babcock, Bruce
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Altmetrics
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Center for Agricultural and Rural Development
Abstract

Low marked prices for corn and soybeans have triggered two federal price support programs: (1) a Loan Deficiency Payment (LDP) that pays producers the difference between county-level prices and that county's loan rate on a date chosen by the producer and (2) a traditional loan program whereby the producer puts grain in storage and uses the grain as collateral on a loan. Producers may enroll in either program, but not in both. Therefore, the authors discuss three choices using existing information to suggest which choice is likely to be the best response.

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