WASHINGTON – Rice and peanut producers should soon receive their second counter-cyclical program payments for the 2003-crop year, USDA officials said.
Under the 2002 farm bill, the second partial payment makes available up to 70 percent of the projected counter-cyclical payment for the crop year. The first partial payment was made available in October 2003.
The second partial payment rate for producers who opted not to take the first partial payment is $51.80 per ton for peanuts and $0.63 per hundredweight for rice. Producers who opted to take the first partial payment will receive an additional payment based on a rate of $15.40 per ton for peanuts and $0.0525 per hundredweight for rice.
Producers are eligible for counter-cyclical payments when the effective national average sales price for their commodity is less than the "target price" specified by the Farm Security and Rural Investment Act of 2002.
Because the projected market year prices for wheat, corn, grain sorghum, barley, oats, upland cotton, and soybeans are expected to exceed the “target” prices for those crops, producers of those crops will not receive counter-cyclical payments this month.
Market prices for wheat, corn, grain sorghum, and upland cotton have increased significantly since last October, and if current market forecasts are realized some repayment of the first partial counter cyclical payments for these crops would be required, USDA says.
The 2002 farm bill allows producers to receive counter-cyclical payments in three installments: 35 percent of the projected payment in October; up to 70 percent of the total projected rate in February of the following year; and the final payment after the end of the marketing year.
A commodity’s counter-cyclical payment equals the payment rate times 85 percent of the farm's base acreage times the farm's payment yield for eligible crops.
The 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 either the national average market price received by producers during the marketing year or the national average loan rate for the commodity.
USDA says it will determine final counter-cyclical payments as soon as is practicable after the end of the respective marketing year for each commodity. For upland cotton, rice and peanuts, the 2003-04 marketing year ends July 31. The marketing year for wheat, barley and oats ends May 31, and for corn, grain sorghum, and soybeans it ends Aug. 31.
If the first two counter-cyclical installments exceed the target price for that commodity at the end of the marketing year, producers who received those advance payments must repay any excess amounts. Producers may have these amounts deducted from future Commodity Credit Corp. payments, as required by the 2002 farm bill.
Counter-cyclical payments are available to producers who participate in the direct and counter-cyclical programs authorized by the 2002 farm bill.