The U.S. Rice Producers' Group and U.S. Rice Producers Association have sent a letter urging USDA to gather all appropriate data before making a final counter-cyclical payment to rice producers.
“In making this decision the industry faced two choices, early and close or later and right,” said USRPG Chairman Jackie Loewer, a rice farmer from Louisiana.
“It was the consensus of all rice-producing states involved that we wanted the payment to be correct and avoid underpayment, overpayment or repayment issues.”
The Farm Security and Rural Investment Act of 2002 provides counter-cyclical payments to producers when the effective price is less than the target price. The secretary of agriculture is to make such payments available to producers via two preliminary partial payments with the final payment being made “as soon as practicable” after the end of the 12-month marketing year.
The marketing year for rice ends July 31. USDA compiles market data in order to calculate the final national average market price used in effective price calculations.
Due to various market factors, a substantial portion of the data used in these calculations is not available until December of each crop year.
Spokesmen for the two groups acknowledged that USDA faces a dilemma in determining the appropriate final counter-cyclical payment in years when the effective price is close to the target price.
In years when rice prices are extremely low, such as 2002, USDA is able to make a final payment well in advance of receiving the final market data because the maximum payment is obviously justified.
The final counter-cyclical payment for 2002 was delivered in such a manner, and the timeliness of such payments was much appreciated by the rice industry, the letter said.
During the meeting and in the subsequent letter it was clarified that it is the industry's desire to receive the final counter-cyclical payment as soon as practicable and the department was urged to follow the 2002 precedent for years in which the maximum payment is obviously justifiable.
However, in years where the margin between the effective price and the target price is narrow, the industry recommends using the final season average market rice price in calculating final counter-cyclical payment.
It is understood that using the final season average price may result in final counter-cyclical payments being delayed until the January following the 12-month marketing year, but this should facilitate making the most accurate final payment possible.
USDA officials said they appreciated the input and will take the rice industry's recommendations into consideration.