Counter-cyclical payment rates released

WASHINGTON – USDA has released projected counter-cyclical program payment rates for 2002-crop wheat, feed grains, upland cotton, rice, oilseeds and peanuts.

Counter-cyclical payments are made to eligible producers who participate in the 2002 direct and counter-cyclical program.

Calculating payments. Producers are eligible for counter-cyclical payments only if effective prices are less than the target prices set in the 2002 Farm Bill.

After program participants elect their base and yield options, they may also request their first partial counter-cyclical payment, which is equal to 35 percent of the entire projected rate.

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 crops.

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 the national average market price received by producers during the marketing year, or the national loan rate for the commodity.

Payment rates. The first partial counter-cyclical payment rate for upland cotton is $0.048 per pound; for rice, $0.57 per hundredweight; and for peanuts, $36.40 per short ton.

Producers with wheat, corn, grain sorghum, barley, oats, soybean and other oilseeds base acreage will not receive a first partial counter-cyclical payment because the projected 2002 effective prices exceed the respective target prices.

Grain and oilseed rates are zero because reduced production of those crops around the world has led to declining inventory levels and sharply higher farm prices. Expected farm prices for the 2002 crops are now above the levels that would trigger counter-cyclical payments.

Issued later. After counter-cyclical payment rates are re-estimated in January, a second counter-cyclical payment may be issued to producers. These payments will be up to 70 percent of the projected counter-cyclical payment, less any counter-cyclical payments already received.

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.

Direct payments. Producers can also request 2002 direct payments at their local USDA Service Center anytime during the sign-up period that runs from Oct. 1 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.

Direct payments are similar to production flexibility contract (PFC) payments under the 1996 Farm Bill, but also now include oilseeds and peanuts as eligible commodities.

Most producers have already received their 2002 PFC payments; after producers enroll in the new direct and counter-cyclical payment program any PFC payments already received will be deducted from the 2002 crop year direct payments.

For more information on the direct and counter-cyclical payment program, contact your local USDA Service Center.