Sign-up begins for 2004 Direct, CC payments

Unlike the one-time sign-up for the Production Flexibility Contracts under the 1996 farm bill, the Farm Security and Rural Investment Act of 2002 requires that producers sign contracts annually for the DCP program.

"Today's announcement begins the second year of successful implementation of the 2002 farm bill," said Agriculture Secretary Ann M. Veneman. "These programs will have made available some $8 billion to America's producers by the end of this month."

Producers have until June 1, 2004, to enroll for the 2004 DCP. Late-filed applications will be accepted through Sept. 30, 2004, if accompanied by a $100 late fee. Producers can opt out of participating in the program any year if they choose. For both the 2002 and 2003 programs, more than 98 percent of the eligible base acres were enrolled.

The 2002 farm bill authorizes direct and counter-cyclical payments to enrolled producers. Both payments are computed using the base acres and payment yields established for each farm. Producers receive direct payments at rates established by statute regardless of market prices.

Counter-cyclical payment rates, on the other hand, vary depending on market prices. Counter-cyclical payments are issued only when the effective price (which takes into account the direct payment rate, market price and loan rate) for a crop is below the target price for the commodity. For "other oilseeds," because of the existing loan rate, the maximum counter-cyclical payment rate is zero.

The following are the 2004 crop year direct payment rates and maximum potential counter-cyclical rates:

Commodity Unit Direct Counter-Cyclical
($/unit) ($/unit)
Wheat bushel 0.52 0.65
Corn bushel 0.28 0.40
Grain Sorghum bushel 0.35 0.27
Upland Cotton pound 0.0667 0.1373
Rice pound 2.35 1.65
Soybeans bushel 0.44 0.36
Other Oilseeds pound 0.0080 0.00
Peanuts ton 36.00 104.00

The following is the schedule of payments for the 2004 DCP:

  • Beginning in December 2003: 50 percent advance direct payment
  • ;
  • October 2004: 50 percent final direct payment
  • October 2004: first advance counter-cyclical payment (up to 35 percent of projected payment);
  • February 2005: second advance counter-cyclical payment (up to 70 percent of projected payment less first advance);
  • Dates vary by crop: In general, 30 days following the end of the marketing year: Final counter-cyclical payment (100 percent of actual payment, less any advances received)
  • .
By the end of October 2003, producers will have received some $8 billion in DCP payments for the 2002 crops and the direct and the first advance counter-cyclical payments (if any) for the 2003 crops.

For all years, refunds to USDA's Commodity Credit Corp. will be due if there is a violation of eligibility requirements or, in the case of counter-cyclical payments, if the advance payments exceed the final payment rate.

e-mail: [email protected]

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