U.S. Agriculture Secretary Mike Johanns has announced that peanut and upland cotton farmers will be receiving 2004-crop counter-cyclical payments of $81 per short ton for peanuts and 13.73-cents-per-pound for upland cotton.
Required by the 2002 farm bill, final counter-cyclical program (CCP) payments for peanuts and upland cotton are made after the end of the marketing year. The 2002 farm bill provides for two partial 2004-crop CCP payments, one in October 2004 and one in February 2005. The final weighted average marketing year price for 2004-crop peanuts, which was announced on Aug. 31, 2005, is $378 per short ton, $23 higher than the $355 loan rate.
The payment rate for upland cotton is at its maximum level due to low market prices that have averaged well below the 52-cents-per-pound loan rate during the marketing year. Because of these low prices, USDA is able to determine the final counter-cyclical rate at this time.
Producers who accepted the first and second partial CCP payments for 2004-crop peanuts received $41.30 per ton and are due an additional $39.70 per ton. Producers who accepted the first and second partial CCP payments for 2004-crop upland cotton received 9.61-cents-per-pound and are due an additional 4.12-cents-per-pound.
The counter-cyclical payment rate is the amount by which the “target price” of each commodity 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 counter-cyclical payment equals the counter-cyclical payment rate multiplied by 85 percent of the farm’s base acreage multiplied by the farm’s counter-cyclical payment yield for each crop. Target prices are mandated in the 2002 farm bill.
The final 2004 counter-cyclical payment rate for barley is 15-cents-per-bushel. Those payments were made during July. Producers will not receive 2004-crop counter-cyclical payments for wheat, oats and other oilseeds because their 2004 effective prices equal or exceed their respective “target prices.”
For more information on the direct and counter-cyclical payment program, producers can contact their local USDA Service Center.