Because market prices for those crops remain below target prices in the 2002 farm bill, cotton, rice and peanuts are the only commodities eligible for the projected counter-cyclical payments for the 2002 crops. Average market prices for the other commodities are above target prices.
“We estimate this (the second advance CC payment) will mean about $610 million for our farmers,” said Agriculture Secretary Ann Veneman in a wide-ranging press conference in which she announced the second advance payments for cotton, rice and peanuts and addressed a number of other issues.
The Farm Security and Rural Investment Act of 2002 provides for two advance payments, in October and February, under the farm bill’s Direct and Counter-cyclical Program and a final payment after close of the marketing year.
The first partial counter-cyclical payment was 35 percent of the entire projected rate and began on Oct. 1, 2002. The first partial counter-cyclical payment rate for upland cotton was $0.0480 per pound; for rice, $0.58 per hundredweight; and for peanuts, $36.40 per short ton.
The second partial counter-cyclical payment rate for upland cotton is $0.096 per pound; for rice, $1.16 per hundredweight; and for peanuts, $72.80 per short ton. These payments are 70 percent of the total projected counter-cyclical payment, less any counter-cyclical payments already received in the first partial payment.
Final counter-cyclical payments will be determined at the end of the respective marketing year for each crop. Producers who receive total partial payments exceeding the actual counter-cyclical payment for each respective crop must repay any excess amounts.
Calculating Counter-cyclical Payments
For each commodity, the counter-cyclical payment equals the counter-cyclical payment rate times 85 percent of the farm’s base acreage times the farm’s counter-cyclical payment yield for each crop. The counter-cyclical payment rate is the amount by which the target price of each covered commodity exceeds its effective price.
The effective price equals the direct payment rate plus the higher of: (1) the national average market price received by producers during the marketing year, or (2) the national loan rate for the commodity.
Producers can also request 2002 direct payments at their local USDA Service Center anytime during the sign-up period that runs from Oct. 1, 2002, through June 2, 2003. For each commodity, the direct payment equals the direct payment rate times 85 percent of the farm’s base acreage times the farm’s direct payment yield.
For more information on DCP, contact your local USDA Service Center or visit USDA Farm Service Agency’s Web site at: http://www.fsa.usda.gov.