USDA today announced that it will immediately begin issuing final 2002-crop counter-cyclical payments for upland cotton, rice and peanuts.
Authorized by the Farm Security and Rural Investment Act of 2002, the counter-cyclical payments will be made at the rate of 13.73 cents per pound for upland cotton; $1.65 per hundredweight for rice; and $95 per ton for peanuts.
“This action demonstrates the Bush administration's continued commitment to implement the farm bill in a timely manner,” said Agriculture Secretary Ann M. Veneman, who announced the decision.
As required by the 2002 Farm Bill, final Counter-cyclical Payment Program (CPP) payments are made as soon as practicable following the end of the applicable crop's 12-month marketing year, which was July 31, 2003, for upland cotton, rice and peanuts. The 2002 Farm Bill provides for two advance counter-cyclical payments, one in October and one in February.
Counter-cyclical payments for 2002-crop upland cotton and rice are at their maximum levels due to low 2002-crop season market prices for these commodities. The respective market prices for these commodities have remained well below their marketing assistance loan rates during the entire marketing year. Because of these low prices, USDA was able to determine final counter-cyclical payment rates at this time for upland cotton and rice. In subsequent years, when market prices may rise above the loan rates, final counter-cyclical payments may be delayed until after the final marketing year farm prices are available. The final weighted average marketing year price for 2002 peanuts, which was announced on Aug. 29, is $364 a ton, slightly higher than the $355 loan rate.
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: (1) the national average market price producers received during the marketing year, or (2) the national loan rate for the 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 each crop.
Final counter-cyclical payment rates for corn, sorghum and soybeans will be announced after USDA's National Agricultural Statistics Service publishes weighted average marketing year prices in its Sept. 30, 2003, “Agricultural Prices” report. Wheat, barley, oats and other oilseed producers will not receive 2002-crop counter-cyclical payments because their 2002 effective prices exceeded their respective target prices.
Final direct payments for 2003-crops of wheat, corn, grain sorghum, barley, oats, soybeans, peanuts, rice, upland cotton and other oilseeds will begin to be made in October 2003.