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Corn+Soybean Digest

Thiesse's Thoughts

It’s hard to believe, but the 2005 crop year will represent year four of the new Farm Bill that created the new “Direct and Counter-Cyclical” (DCP) Farm Program, which is scheduled to be in effect through the 2007 crop year. We are now past the mid-point of the current program, and already there is talk of what the next Farm Bill might look like. As we head into a new farming year, it is a good time to review current government farm programs and what to expect for 2005.

Sign-up for the 2005 DCP Farm Program is now under way at County Farm Service Agency (FSA) Offices. Producers must sign DCP contracts annually at County FSA Offices in order to receive direct payments and potential counter-cyclical payments for the 2005 crop year. Producers can request an advance payment, equal to half of their total 2005 direct payment, anytime after they have completed enrollment for the 2005 DCP Program at their County FSA Office. Base acres and “proven yields” that were established at the beginning of the current six-year Farm Program will remain in effect until the current Farm Bill expires in 2007. These base acres and payment yields can not be updated annually.


Direct Payment Rates for 2005 (Also 2006 and 2007) ……
Corn --- $ .28 per bushel (Advance = $.14/ Bu.)
Wheat --- $ .52 per bushel (Advance = $.26/ Bu.)
Soybeans --- $ .44 per bushel (Advance = $.22/ Bu.)

The second half of the 2005 direct payment will be made in October 2005. Remember the direct payments are the “guaranteed” portion of the DCP payments and do not change from year-to-year, unless the crop acres enrolled in the DCP Program change. Direct payment amounts should be similar to 2004 payment amounts, unless there has been a change in DCP Program acreage due to changes in landownership or rental acreage. All landowner consent forms, rental slips, or copies of leases must be in the FSA Office before DCP payments will be issued for the 2005 crop year. Please check with County FSA Offices for more details.

CCC commodity loans are nine month loans at the FSA interest rate that can be paid back when the grain is sold, or at any time during the nine-month loan period. If the grain price drops below the CCC County loan rate, the grain can be liquidated at the daily “posted county price”(PCP) for a given crop. PCPs for corn have been running 20-30¢/bu. below County loan rates for most of the past couple of months. Producers with a CCC loan can use a “60 day PCP lock-in” one time to have a PCP set for 60 days, in case the PCP increases. Many times, this can be a valuable marketing tool for stored grain. Currently, the PCP for soybeans is about 20-30¢/bu. above the County loan rate, so there are no current opportunities to release the grain below the loan rate. Remember, any 2004 corn or soybean bushels that received a loan deficiency payment (LDP) since harvest are not eligible to be placed under CCC loan this year. There are severe penalties for violation of this. Producers should check with their County FSA Office for more details.

Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at

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