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Direct and counter-cyclical; USDA begins sign-up for payments

USDA Service Centers around the country have begun signing up farmers for the 2005 direct and counter-cyclical payments authorized by the 2002 farm bill. Producers may enroll online for the DCP payments beginning Oct. 20.

“Since the Direct and Counter-cyclical Payment Program was authorized by the 2002 Farm bill, the program has made available $12 billion in payments to America's farmers,” said Agriculture Secretary Ann M. Veneman in announcing the signup.

“This month, we will be making an additional $2.6 billion in final direct payments for the 2004 crop year. We are marking the third year of this program by offering producers the option to sign up for the 2005 program online. This time-saving electronic service is part of the e-Government initiative to improve delivery of services.”

The electronic DCP service allows producers to choose 2005 DCP payment options, assign crop shares and sign and submit their contracts electronically from any computer with Internet access. Participants no longer have to visit their USDA Service Center to complete these tasks and can view and print out submitted contract options at any time.

The user-friendly service saves producers time, reduces paperwork and speeds up contract processing at USDA Farm Service Agency offices, Veneman said.

Available Oct. 20

The voluntary service is available to all producers who are eligible to participate in DCP and who have obtained eAuthentication accounts. The service has strict security measures to protect participants' private information.

Growers may access the electronic service, which will be available online starting Oct. 20, by clicking on Eligible producers must have an active USDA eAuthentication Level 2 account, which requires filling out an online registration form at followed by a visit to the local USDA Service Center for identity verification.

Expanding electronic government is a major element of USDA's management agenda to provide more efficient, streamlined assistance to individuals and businesses across the country.

Producers have until June 1, 2005, to enroll for the 2005 DCP. USDA will accept late-filed applications through Sept. 30, 2005, if accompanied by a $100 late fee. Producers must sign contracts annually under DCP and can opt out of participating in the program in any year.

In addition to the new electronic DCP service, USDA is providing expanded service for producers who choose to travel to a USDA office to complete their 2005 DCP contract. These producers now have the option to visit any USDA Service Center in addition to their assigned center as required in previous years.

DCP 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 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 commodity 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 2005 crop year direct payment rates and maximum potential counter-cyclical rates are as shown at left.

The schedule of payments for the 2005 DCP is as follows:

Beginning December 2004: 50 percent advance direct payment;

October 2005: 50 percent final direct payment;

October 2005: first advance counter-cyclical payment (up to 35 percent of projected payment);

February 2006: 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).

For all years, refunds to USDA 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.

More information on DCP is available at USDA Service Centers and on FSA's Web site at:

e-mail: [email protected]

Commodity Unit Direct ($/unit) Maximum Counter-cycli cal ($/unit)
Wheat bushel 0.52 0.65
Corn bushel 0.28 0.40
Grain Sorghum bushel 0.35 0.27
Barley bushel 0.24 0.15
Oats bushel 0.024 0.086
Upland Cotton pound 0.0667 0.1373
Rice hundred-weight 2.35 1.65
Soybeans bushel 0.44 0.36
Other Oilseeds pound 0.0080 0.00
Peanuts ton 36.00 104.00
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