Wool and Mohair Marketing Assistance Loans (MAL) and Loan Deficiency Program (LDP)

Click here for the latest MAL & LDP Fact Sheet from the Farm Service Agency.

 

CURRENT MAL/LDP RATES

CATEGORY2020 LOAN RATEEFFECTIVE
REPAYMENT RATE
11/24/2020
LDP RATE
GRADED WOOL
CLEAN PRICES in $ per Pound
<18.6 Micron3.884.15Not Available
18.6 - 19.53.383.63Not Available
19.6 - 20.52.943.31Not Available
20.6 - 22.02.722.96Not Available
22.1 - 23.52.563.99Not Available
23.6 - 25.92.332.95Not Available
26.0 - 28.91.781.47$.31 LDP Available
> 29 Micron1.38.96$.42 LDP Available
GREASE PRICES in $ per Pound
Ungraded Wool40 cents10 cents$.30 LDP Available
Unshorn PELT6.865 lbs x Ungraded Wool LDP$2.0595 LDP Available

Click here for weekly USDA Report

PROGRAM INFORMATION

For questions about these programs, to apply, and for more information, please contact your local Farm Service Agency Office. Find your local FSA Office Here

Click here for Presentation on MALs and LDPs including details and examples

Money is available to wool producers through the Farm Bill in the form of Wool Marketing Assistance Loans (MAL’s) and Loan Deficiency Payments (LDP’s). These programs are intended to:

  • minimize potential loan forfeitures;
  • subsequent government accumulation of stocks;
  • minimize the cost incurred by the Federal Government in storing the commodity; and
  • allow a commodity produced in the United States to be marketed freely and competitively both domestically and internationally.

Loan and payment options:

  • Marketing Assistance Loan (MAL)- Graded Wool
  • Marketing Assistance Loan (MAL)- Ungraded Wool
  • Loan Deficiency Payment (LDP)- Graded Wool
  • Loan Deficiency Payment (LDP)- Ungraded Wool
  • Loan Deficiency Payment (LDP)- Pelts

Growers can choose the option(s) most financially beneficial for their operation.

Eligibility

To be eligible to apply for these programs the producer must:

  • have beneficial interest in the wool
  • meet the definition of an eligible producer
  • sheep must be grown and shorn in the U.S.
  • have ownership of the sheep at least 30 days before shearing
  • wool must be shorn and in storable condition

Other eligibility and documentation requirements may apply.

 

Difference in Programs
MAL
LDP
Wool is used as collateral for a loanDifference between loan rate and weekly effective repayment rate
Loan available for up to 9 months (currently extended to 12 months until Sept. 30, 2020, CARES Act – Co-Vid)Only available when repayment rate is below loan rate (i.e.- low wool prices)
Costs – Low FSA interest rate + filing feeThink of an LDP as an “on the spot” price payment for low wool prices
Repay loan anytime (currently 12 months) at either loan rate or repayment rate – whichever is lower!Need to file with FSA before you sell wool
Operating capital ($$$ vs LDP)Pick the day you want to take LDP
Cannot sell the wool until loan is repaidSell wool later when prices improve
Marketing Assistance Loans (MAL’s)

MAL’s provide interim financing by providing money for continued operation while allowing the wool to be marketed at a later time.  Producers may apply for a loan, using the wool as collateral, at the yearly loan rate (set annually by USDA) on graded and/or ungraded wool. After wool is shorn, the 9-month loan may be taken with a small initial filing fee and will include interest. (The term is currently extended to 12 months for loans requested before September 30, 2020.) The wool CAN NOT be sold while under loan.

A grower can repay the loan at any time during the 9 months by: (1) repay the loan at either the loan rate or the announced repayment rate (whichever is lower) and reclaim the wool, (2) request a settlement.

Settlement

MAL’s not repaid by the loan maturity date, will be secured by FSA, sold, and producer paid a settlement amount which is the difference between loan value and price of wool sold. Contact your local FSA for more.

Loan Deficiency Payments (LDP’s)

Producers can choose to forgo a Marketing Assistance Loan and receive an “on-the-spot” payment on their wool when global prices are lower than expected.  An LDP is only available when the yearly Loan Rate is above the Effective Repayment Rate (announced weekly, they depend on the international wool market prices and currency exchange rates).

LDP’s on Pelts

Producers can also collect an LDP on unshorn slaughter lamb pelts. The be eligible, the producer must: meet the definition of an eligible producer, own the lambs for at least 30 days before slaughter, sell the unshorn lamb for immediate slaughter or slaughter the unshorn lamb for personal use, have beneficial interest in the pelts, sheep must be of U.S. origin, the pelt must be unshorn, and submit production evidence.

 

Graded vs. Ungraded Programs
GRADED
UNGRADED
Loan rate is established yearly based on 8 micron categoriesLoan Rate is set at 40 cents per pound
Participation requires core test information on your woolDoes NOT require core test
Graded Wool LDPs are reported in Clean Prices – and calculations are made based upon core test dataUSDA announces weekly Effective Repayment Rate for Ungraded Wool
Ungraded LDP is the difference between Loan Rate (40 cents) and Effective Repayment Rate

Both Graded and Ungraded programs require a weigh of the wool.

Graded rates/prices are reported on a clean basis (accounting for wool yield). Ungraded wool is reported on a grease basis.

The Graded program requires producers to also provide a core test report/certificate from a CCC-approved testing facility; currently only New Zealand Wool Testing Authority (NZWTA) is approved.

Growers can participate in a Graded or Ungraded programs or a combination of both, whatever is most beneficial to them. For example, a grower could choose to use the Graded LDP program for their fleece wool and Ungraded LDP program for off-sorts (tags, crutchings, bellies, pieces).

Wool Pools and Cooperatives

Ungraded and Graded LDP’s are available to wool pools; loans are not permitted as delivery to a pooling location is considered the day that growers lose beneficial interest of the wool.

Steps to Take:
  1. Contact your local USDA FSA (Farm Service Agency) Office- preferably before wool/pelts are harvested. Fill out forms and discuss plans and documentation needed.
  2. Documentation on your wool:
    1. Total weight of wool
    2. Micron and yield core test report/certificate (only needed for Graded wool programs)
    3. Other (may include storage documentation, delivery documentation, etc.)
  3. Complete forms and documentation with your local FSA Office.

Click here for more information on the Wool Marketing Assistance Loan and Loan Deficiency Payment Program

The information on this page is provided for informational purposes only, for detailed information please contact your local FSA office.

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