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Posted: March 28, 2010 12:30 a.m.

USDA to issue partial 2009 crop counter-cyclical payments for upland cotton and peanuts

Agriculture Secretary Tom Vilsack announced on March 5 that USDA will issue approximately $121 million in partial 2009-crop counter-cyclical payments to producers with upland cotton and peanut base acres enrolled in USDA’s Direct and Counter-cyclical Payment (DCP) program.

The 2008 Farm Bill provides that one partial counter-cyclical payment, in an amount up to 40 percent of the projected counter-cyclical rate, may be issued after 180 days of the marketing year. The projected counter-cyclical payment rate is the amount by which the target price of each commodity, specified by the 2008 Farm Bill, exceeds its effective price. The effective price equals the direct payment rate plus the higher of either the projected national average market price received by producers during the marketing year or the national average loan rate for the commodity.

The partial 2009-crop upland cotton counter-cyclical payment rate is 1.03 cents per pound, equal to 40 percent of the difference between the target price of 71.25 cents per pound and an effective price of 68.67 cents per pound. The effective price is equal to the projected average market price of 62 cents per pound plus the direct payment rate of 6.67 cents per pound.

Under the 2008 Farm Bill, producers are required to repay any amount by which the partial payment exceeds the actual counter-cyclical payments determined after the end of the marketing year.

For all commodities other than upland cotton and peanuts, the market price projections exceed levels that would trigger these payments. Thus, no partial 2009-crop counter-cyclical payments will be issued for wheat, barley, oats, long grain rice, short and medium grain rice, pulse crops, corn, grain sorghum, soybeans, and the other oilseeds.

Also, USDA will also not issue final 2008-crop counter-cyclical payments for rice. The final market year average price published by USDA’s National Agricultural Statistics Service on Jan. 29, 2010, is $14.90 per hundredweight for long grain rice and $24.80 per hundredweight for short and medium grain rice. The direct payment rate of $2.35 per hundredweight is the same for long grain rice and short and medium grain rice. Thus, the respective effective prices of $17.25 per hundredweight for long grain rice and $27.15 hundredweight for short and medium grain rice far exceed the target price of $10.50 per hundredweight for both long grain rice and short and medium grain rice.

For each commodity, the counter-cyclical payment for each crop year equals 85 percent of the farm’s base acreage multiplied by the farm’s counter-cyclical payment yield multiplied by the counter-cyclical payment rate.

For more information on the direct and counter-cyclical payment programs including a table displaying the target price, projected average market price, loan rate, direct payment rate, effective price and projected counter-cyclical rates, visit your local FSA office or the FSA DCP Web site: www.fsa.usda.gov/dcp.

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