USDA Announces Partial 2007-Crop-Year Counter-Cyclical Payments

U.S. Secretary of Agriculture Ed Schafer today announced that USDA will soon begin issuing about $315 million in partial 2007-crop-year counter-cyclical payments (CCPs) for producers with upland cotton and/or peanuts base acres enrolled in USDA’s Direct and Counter-cyclical Program (DCP). The 2002 Farm Bill authorizes preliminary partial payments for the 2007 crop to be made six months after the start of the marketing year, which began on Aug. 1, 2007, for these commodities. Preliminary payments must be refunded if full-year price calculations result in a lower payment rate.

USDA estimates producers with enrolled upland cotton and peanuts base acres will receive $300 million and $15 million, respectively, in partial CCPs. The 2007-crop year projected partial payment rates, equal to 40 percent of the projected amount, are $0.0309 per pound for upland cotton and $7.60 per short ton for peanuts.

Timing and Calculation of 2007-crop Counter-cyclical Payments

Producers enrolled in DCP may receive CCPs when “effective” prices for eligible commodities are less than their respective “target” prices specified in the 2002 Farm Bill. USDA calculates CCPs based on the calculated rate and on historical base acreage and payment yields, not current production. For the 2007 crop, if CCPs are required to be paid, USDA issues CCPs in two installments. The first payment may not exceed 40 percent of the projected payment and is made after the first six months of the marketing year. USDA makes the final calculation after the end of the marketing year and an additional payment or refund demand is made accordingly. USDA calculated CCP rates using the February World Agricultural Supply and Demand Estimates, released on Feb. 8, 2008.

Partial Payments for Other Commodities

USDA announced on Dec. 3, 2007, that producers who are enrolled in DCP and have wheat, barley or oats base acres would not receive partial CCP payments because average market price projections for those commodities exceeded levels that trigger these payments. USDA will announce any partial payments for producers with corn, grain sorghum and soybeans base acres on or after March 1, 2008. Producers with rice base acres will not receive partial payments because their average market price projections far exceed levels that would trigger these payments.

Overpayments

The 2002 Farm Bill requires that any overpayments to producers must be repaid. More information on DCP is available at local FSA offices and on FSA’s Web site at: http://www.fsa.usda.gov.