October 13, 2006

USDA issues US$3 billion direct payments for grain producers
 

The final 2006 direct payments and 2005 counter-cynical payments for crop have been issued for producers, reported USDA

Under USDA's Commodity Credit Corporation (CCC) producers with base acres enrolled in the Direct and Counter-cyclical Programme (DCP) would be issued US$3 billion in final 2006 direct payments while those on farms with corn crop acreage bases enrolled in the program would receive US$1.6 billion in final 2005-crop corn counter-cyclical payments (CCP), said Chuck Conner, USDA deputy agriculture secretary

The rate for the final 2005 CCP had been fixed at US$0.35 per bushel. The payments could be made in parts as per the 2002 Farm Bill with partial allotments to be made in October 2005 and February 2006 and the rest to be made at the end of the marketing year. Producers thus received US$0.28 per bushel and now await the remaining US$0.07 per bushel, the final marketing year price for 2005-crop corn being US$2.00 per bushel.

The CCC however, would not issue any 2005-crop soy CCPs since the effective price for soy was more than the target price. The final marketing year price for 2005-crop soy stood at US$5.66 per bushel.

To be eligible, producers with base acres must be enrolled for the respective programme year.

Direct payments (DP) are based on historical acreage (base) and yields and not on current production or current prices. For each commodity, the direct payment for a crop year equals 85 percent of the farm's commodity base acreage multiplied by the farm's direct payment yield multiplied by the direct payment rate.

The CCP rate is the amount by which the target price exceed the 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 basis for CCP equals the CCP rate multiplied by 85 percent of the farm's commodity base acreage multiplied by the farm's CCP yield for that commodity.

Both DPs and CCPs are distributed by USDA's Farm Service Agency on behalf of the CCC.