What is a crop lien?

A crop lien is specifically a financial claim that allows lenders to secure repayment for loans made to farmers by placing a lien against the crops produced on their land. This means that if the farmer fails to repay the loan, the lender has the right to claim the crops as collateral. This form of lending is particularly important in agricultural settings where crops are the primary source of income and asset value.

Understanding this type of lien is crucial for both lenders and farmers, as it directly impacts the financial arrangements related to agricultural production. While claims on equipment and legal claims on farmland relate to other forms of collateral, the crop lien is distinct because it pertains solely to the crop yield, making it an essential tool in agricultural finance.