Cotton: USDA Loans Available to Help Offset Delayed Ginning

Photo: USDA

This year’s adverse weather and increased cotton acres may mean it’s taking you a little longer to get your cotton ginned. USDA’s Farm Service Agency offers seed cotton recourse loans to provide interim financing while you wait.

“While the rain we received this fall in Texas was a welcome relief for our drought-stricken areas, it also slowed down harvest,” said Gary Six, FSA state executive director in Texas. “Here in Texas and elsewhere across the country, we’re making sure producers know about seed cotton recourse loans, which can help meet our producers’ financial needs.”

If you’re experiencing similar delays in getting your cotton ginned, visit with your local FSA staff about seed cotton recourse loans.

Recourse Loans

You may get a seed cotton recourse loan now through March 31, 2019. Loans must be repaid by May 31, 2019, either with with proceeds from a ginned cotton loan or a cash repayment. Our FSA staff will provide written or e-mail notification to every cooperative marketing association or loan servicing agent you use to ensure the proceeds from a ginned cotton loan are used to repay the recourse loan obligation.

The loan rate is the base loan rate for upland cotton, which is $0.52 per pound, and $0.7977 per pound for extra-long staple cotton.

To be eligible, the cotton must be harvested, but not ginned, and still in a module form. You must retain beneficial interest, including title and control of the cotton until the loan is repaid.

Marketing Assistance Loans are a tool that help meet your cash flow needs without having to sell your commodity when market prices are typically at harvest-time lows. Recourse marketing assistance loans are different than nonrecourse marketing assistance loans in that recourse loans can only be redeemed by cash repayment, and the loan collateral is ineligible to be delivered to the Commodity Credit Corporation.

Help When You Need It

Seed cotton recourse loans are just one of the many tools offered by USDA to help you recover from market downturns and adverse weather. Our safety net programs provide risk management, disaster assistance, loan and conservation programs to help you weather ups and downs in the market and recover from natural disasters as well as invest in improvements to your operation.

More Information

Download our fact sheet to learn more about seed cotton recourse loans. To apply for a recourse loan or get more information, contact the FSA staff at your local USDA service center.

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