USDA has announced that eligible producers with enrolled base acres in the Counter-cyclical Payment Program (CCP) will begin receiving final 2006-crop upland cotton.
The counter-cyclical 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 counter-cyclical payment amount equals the CCP payment rate, times 85 percent of the farm's base acreage, times the farm's CCP yield per crop
Upland Cotton:
The final 2006-crop upland cotton counter-cyclical rate is 13.73 cents per pound. This is the maximum upland cotton payment rate permitted, and occurs because of market prices averaging well below the 52-cent-per-pound loan rate for the marketing year.
Because of these low market prices, USDA is able to calculate the final counter-cyclical 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 (NASS) announces the national average market price in October.
The 2002 Farm Bill made it possible for farmers and landowners to receive partial 2006-crop CCP payments in October 2006 and in February 2007. Producers who accepted the two partial payments received 9.61 cents per pound. They are now due an additional 4.12 cents per pound.
United States Department of Agriculture
marketing@alchempro.com
