Checks Are In Mailboxes

Countercyclical payments for upland cotton, grain sorghum and peanuts were mailed the first week of September and already are arriving in mailboxes across the South.

Published on: Sep 19, 2006

USDA's Commodity Credit Corporation issued final 2005-crop upland cotton, grain sorghum and peanut countercyclical payments beginning Sept. 1.

This is the earliest that producers will have received final countercyclical payments for these commodities.

"Drought and low market prices are just two factors adversely affecting many producers this year," U.S. Agriculture Secretary Mike Johanns. "These payments will help many farmers during this difficult period to remain a viable part of America's agriculture sector in the future."

Payments are as follows:

Upland Cotton. The final 2005-crop upland cotton countercyclical payment rate is 13.73 cents per pound. The upland cotton payment rate is at the maximum level due to market prices averaging well below the 52-cent-per-pound loan rate during the marketing year. Because of these low market prices, USDA is able to calculate the final countercyclical payment rate for upland cotton at this time. If market prices were higher, USDA would calculate the payment rate after USDA's National Agricultural Statistics Service announces the national average market price in October.

Required by the 2002 Farm Bill, final Counter Cyclical Program payments for upland cotton are made following the marketing year. The 2002 Farm Bill provided for the availability of partial 2005-crop CCP payments in October 2005 and in February 2006. Producers who accepted the two partial payments received 9.61-cents-per-pound. They are due an additional 4.12-cents-per-pound.

Grain Sorghum. The final 2005-crop grain sorghum countercyclical payment rate is $0.27 per bushel. The grain sorghum payment rate is at the maximum level due to market prices averaging well below the $1.95 per bushel loan rate during the marketing year. Because of these low market prices, USDA is able to calculate the final countercyclical payment rate for grain sorghum at this time, prior to NASS's release of the final season average price at the end of September.

Final CCP payments for grain sorghum are normally made following the marketing year. The 2002 Farm Bill provided for the availability of partial 2005-crop CCP payments in October 2005 and in February 2006. Grain sorghum producers who accepted the two partial payments received $0.1890 per bushel. They are due an additional $0.081 per bushel.

Peanuts. CCC announced that peanut farmers will receive 2005-crop countercyclical payments of $104 per short ton. The final weighted average marketing year price for 2005-crop peanuts, which was announced on Aug. 31, 2006, is $346 per short ton, $9 lower than the $355 national average loan rate.

The 2002 Farm Bill requires final countercyclical program payments for peanuts to be made after the end of the marketing year. The 2002 Farm Bill provides for partial 2005-crop CCP payments in October 2005 and February 2006. Producers who accepted the first and second partial CCP payments for 2005-crop peanuts have received $72.80 per ton and are due an additional $31.20 per ton.

The countercyclical payment rate is the amount by which a commodity's target price exceeds its effective price. 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 average loan rate for the commodity. The countercyclical payment amount equals the CCP payment rate, times 85% of the farm's base acreage, times the farm's CCP yield per crop. USDA's Farm Service Agency distributes CCP payments on behalf of CCC.

For more information on the direct and countercyclical payment program, contact your local USDA Service Center or visit: www.fsa.usda.gov online.