‘Leg up’ offered ag’s beginning producersWritten by Jennifer Womack
According to Fred Pannell of the Wyoming Office of State Lands and Investment’s (OSLI) Real Estate and Loans Division, the additional funds will not be available until after July 1, 2008. With rules and application guidelines already in place, however, interested producers can begin the application process.
SF8, signed by Gov. Freudenthal early March, increases funding in the program from the current $7 million to $27.5 million. The $7 million cap was reached in 2007 causing OSLI to turn down additional loan requests.
Beginning agricultural producer loans are limited to those individuals who have never owned or operated more than 160 acres of cultivated irrigated land, 320 acres of cultivated dry cropland or 640 acres of grazing land unless such land was acquired within the last two years.
“They have to be a resident of Wyoming and the land has to be in Wyoming,” says Pannell. “You have to have good credit history and adequate repayment ability. The most we can loan is 70 percent of appraised value.”
Right now interest rates are in the four to five percent range for the program, but can change as they’re based on the average yield on a U.S. Treasury Bond or eight percent, whichever is lower. “We call the Treasurer’s office to determine the rate the day we close,” he explains. Rates are locked in at closing and go to eight percent when the loan reaches the 10-year mark.
Pannell says it’s been a great program for the state with borrowers proving diligent in making their payments. “I think it’s done what it was intended to do,” he says.
The same legislation approved a loan program to enhance and restore Wyoming’s livestock numbers. Because this is a new program, the State Loan and Investment Board will need to approve rules prior to making loans under this program. Pannell expects to complete that process prior to money for the loan program becoming available July 1, 2008.
The Wyoming Stock Growers Association, in partnership with other agricultural organizations and the OSLI, led the effort to amend and enhance the state’s loan programs. In a January editorial in this publication, WSGA Executive Vice President Jim Magagna explained, “A new classification of loans, to be known as livestock enhancement loans, is established by the legislation. This program is designed to encourage growth in the state’s livestock industry, which constitutes nearly 85 percent of cash receipts from Wyoming agricultural production. Livestock numbers have seen a serious decline in recent years due in part to drought. Loans would be for a maximum of seven years and a maximum amount of $300,000, secured by a real estate mortgage and would be offered at an interest rate equal to 75 percent of the lowest rate on a standard farm loan.” According to Pannell, that would make the current loan rate six percent.
“This program would be in lieu of the drought breeding stock replacement program which was established by the legislature in 2005 but remains unused,” said Magagna.
The legislation would also increase the size of the minimum farm loan to $10,000 and the maximum total amount of loans to any one borrower to $800,000.
A total of $275 million is statutorily available for farm loans. The legislation does not change this amount, but only increases the allocation to specific programs. “During times of high commercial interest rates outstanding loans have approached this limit,” said Magagna. “However, recent low interest rates saw the use of the total Farm Loan Program decline to less than $35 million.”
“The specific provisions of the beginning agricultural producer and livestock enhancement loans reflect a policy decision to foster a healthy Wyoming agriculture industry with a strong future,” said Magagna.