USDA Releases Counter-Cyclical Payments

WASHINGTON - Feb 15/05 - SNS -- The USDA will begin issuing second partial counter-cyclical payments for 2004 crop wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans and peanuts under the Direct and Counter-cyclical Payment Program (DCP).

Second partial counter-cyclical payments are not available to wheat DCP participants who received first partial payments. However, wheat DCP participants who did not receive first partial payments may request a $0.014 per bushel second partial payment rate. Wheat market prices have increased since first partial payments were made in October 2004 and, as a result, the first partial payment rate exceeds the revised second partial payment rate.

Counter-cyclical payments are available to producers who participate in the DCP authorized by the 2002 Farm Bill. Producers are eligible for counter-cyclical payments when effective prices are less than the target prices specified in the 2002 Farm Bill. 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.

The 2002 Farm Bill allows producers to receive counter-cyclical payments in three installments:

* a first in October (up to 35 percent of the total projected rate);

* a second in February (up to 70 percent of the total projected rate, less any amount received under the first payment); and

* the final payment after the end of the marketing year, which varies by commodity.

The first 2004 counter-cyclical payment was available in October 2004. Based on the Feb. 9, 2005, supply, demand and price forecasts released in USDA’s report, World Agriculture Supply and Demand Estimates, the total projected and second partial payment rates for 2004 are:

					Total           Second
				      Projected       	Partial
Commodity	Unit   			Rate   		Rate

				    --dollars per unit--

Wheat		bushel			0.02	0.0140
Corn		bushel			0.40	0.2800
Sorghum		bushel			0.27	0.1890
Barley		bushel			0.15	0.1050
Oats		bushel	 	       0.016	0.0112
Soybeans	bushel			0.26	0.1820
Upland cotton	pound	  	      0.1373	0.0961
Rice		hundredweight (cwt)	0.75	0.5250
Peanuts		short ton	       59.00	 41.30

                   2004 Final Counter-cyclical Payments

Final counter-cyclical payments will be determined after the end of the
2004-05 marketing year for each commodity:

	* Wheat, barley and oats - May 31, 2005
	* Rice, upland cotton and peanuts - July 31, 2005
	* Corn, grain sorghum and soybeans - August 31, 2005

Rice DCP participants earned a final 2003-crop counter-cyclical payment of $0.07 per cwt. This rate was computed based on the final market year average rice price of $8.08 per cwt, published Jan. 31, 2005, in USDA National Agricultural Statistics Service’s (NASS) Agricultural Prices.

The final counter-cyclical payment rate per cwt is $0.07 and is computed by subtracting from the target price of $10.50 the effective price of $10.43. The effective price is calculated by adding the farm price of $8.08 to the direct payment rate of $2.35.

Rice DCP participants who received a first and/or second partial counter-cyclical payment have been overpaid. As required by the 2002 Farm Bill, any overpayments to producers must be repaid. Overpayments will be deducted from any DCP payments received on or before Oct. 31, 2005, unless producers had otherwise notified their local Farm Service Agency (FSA) office by June 15, 2004. After Oct. 31, 2005, overpayments will be collected using Debt Collection Improvement Act procedures.