USDA Sets Second 2005-Crop Counter-Cyclical Payments

WASHINGTON - Feb 14/06 - SNS -- The USDA will begin issuing second partial counter-cyclical payments for 2005-crop corn, grain sorghum, barley, upland cotton, rice and peanuts under the Direct and Counter-cyclical Payment Program (DCP). USDA will also issue the final counter-cyclical payments for 2004-crop rice.

Producers enrolled in the DCP may receive counter-cyclical payments as authorized by the 2002 Farm Bill. Producers are eligible for counter-cyclical payments when effective prices fall below target prices as specified in the 2002 Farm Bill. The effective price equals the direct payment rate plus the higher of either: (1) the national average market price received by producers during the marketing year; or (2) the national average loan rate for the commodity.

Second Advance 2005-crop Counter-cyclical Payment Rates

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

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

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

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

USDA issued the first 2005 counter-cyclical partial payment in October 2005. The total projected and second partial payment rates for 2005 are based on supply, demand and price forecasts from USDA’s report, World Agriculture Supply and Demand Estimates. USDA issued the report Feb. 9, 2006. The total projected and second partial payment rates for 2005 are:

                                   Total        Second
                                  Projected    Partial
Commodity         Unit               Rate       Rate
                  --dollars per unit--

Corn            bushel                0.40      0.28
Sorghum         bushel                0.27      0.189
Barley          bushel                0.15      0.105
Upland cotton   pound                 0.1373    0.0961
Rice            hundredweight (cwt)   0.35      0.245
Peanuts         short ton           104.00     72.8

Producers of oats, soybeans and other oilseeds are ineligible for second partial counter-cyclical payments because effective prices of the commodities are equal to or more than their respective target prices.

2005 Final Counter-cyclical Payments

USDA determines final counter-cyclical payments after the end of the marketing year for each commodity. The end of the 2005/06 marketing year for each commodity is:

* Wheat, barley and oats - May 31, 2006

* Rice, upland cotton and peanuts - July 31, 2006

* Corn, grain sorghum and soybeans - August 31, 2006

Rice 2004-crop Year Final Counter-cyclical Payment Rate

Rice DCP participants earn a final 2004-crop counter-cyclical payment of $0.82 per cwt. The rate is based on the final market year average rice price of $7.33 per cwt, according to USDA’s National Agricultural Statistics Service (NASS) Agricultural Prices, published Jan. 31, 2006. The rate is the effective price of $9.68 subtracted from the target price of $10.50. The effective price adds the farm price of $7.33 to the direct payment rate of $2.35.

Overpayments

The 2002 Farm Bill requires that any overpayments to producers must be repaid. If not repaid, USDA will deduct overpayments from any DCP payments received after the final payments are determined.