June 2008
The Direct and Counter-cyclical Payment Program (DCP) provides payments to eligible producers on farms enrolled for the 2008 through 2012 crop years. There are two types of DCP payments -- direct payments and counter-cyclical payments. Both are computed using the base acres and payment yields established for the farm. DCP is authorized by the Food, Conservation and Energy Act of 2008 (2008 Farm Bill) and is administered by the U.S. Department of Agriculture's Farm Service Agency (FSA).
To be eligible for DCP payments, owners, operators, landlords, tenants, or sharecroppers must: - share in the risk of producing a crop on base acres on a farm enrolled in DCP, and be entitled to share in the crop available for marketing from the base acres or would have shared had a crop been produced;
- annually report the use of the farm's cropland acreage;
- comply with conservation and wetland protection requirements on all of their land;
- comply with planting flexibility requirements;
- use the base acres for agricultural or related activities; and
- protect all base acres from erosion, including providing sufficient cover as determined necessary by the county FSA committee, and control weeds.
Base acres and payment yields are established for the following commodities for 2008: - grain sorghum, including dual purpose varieties that can be harvested as grain;
- canola, crambe, flaxseed, mustard seed, rapeseed, safflower, sesame seed and sunflower seed, including oil and non-oil varieties;
- long grain rice, medium grain rice (which includes short grain rice), excluding wild rice;
Pulse crops will be added as an eligible commodity in the 2009 crop year. Pulse crops are defined as dry peas, lentils, small chickpeas (Garbanzo bean, Desi), and large chickpeas (Garbanzo bean, Kabuli).
The 2008 Farm Bill continues the direct payments that began under the Farm Security and Rural Investment Act of 2002. Direct payment rates for the eligible DCP commodities are as follows:
Barley: $0.24 per bushel Corn: $0.28 per bushel Grain sorghum: $0.35 per bushel Oats: $0.024 per bushel Other oilseeds: $0.80 per hundredweight Peanuts: $36 per ton Rice, long grain: $2.35 per hundredweight Rice, medium/short grain: $2.35 per hundredweight Soybeans: $0.44 per bushel Upland cotton: $0.0667 per pound Wheat: $0.52 per bushel
For each commodity, the total direct payment for 2008 for producters on a farm equals 85 percent of the farm's base acreage times the farm's direct payment yield times the direct payment rate. For 2009-2011, the payment percentage changes from 85 to 83.3 percent of the farm's base acreage. For 2012, the payment percentage reverts to 85 percent. The following is an example for 2008 corn:
Base acres planted to corn: 100 acres x 85% 85 acres payment acres x 110 bushels direct payment yield x $0.28 per bushel direct payment rate $2,618.00 direct payment
Direct payments are not based on producers' current production choices, but instead are tied to base acres and yields.
In addition to direct payments, the 2008 Farm Bill authorizes counter-cyclical payments, which provide support counter to the cycle of market prices as part of a "safety net" in the event of low crop prices. Counter-cyclical payments for a commodity are only issued if the effective price for a commodity is below the target price for the commodity. To view target prices as provided by the 2008 Farm Bill for each commodity, click on the above icon for the printable version of this fact sheet.
The counter-cyclical payment rate is the amount by which the target price of each commodity exceeds its effective price. The effective price for each commodity equals the direct payment rate plus the higher of: - the national average market price received by producers during the marketing year (see Example A); or
- the national loan rate for the commodity (see Example B).
Example A:
If the 2008 national average market price for soybeans is $5.10 per bushel: $0.44 direct payment rate + $5.10 average market price* $5.54 effective price (*Average market price is used since it is higher than the 2008 national loan rate of $5.00) $5.80 target price -$5.54 effective price $0.26 counter-cyclical payment rate
Example B:
If the 2008 national average market price for soybeans is $4.90 per bushel: $0.44 direct payment rate +$5.00 national loan rate* $5.44 effective price (*National loan rate is used since it is higher than the average market price) $5.80 target price - $5.44 effective price $0.36 counter-cyclical payment rate
For each commodity, the total 2008 counter-cyclical payment for producers on a farm each crop year equals 85 percent of the farm's base acres times the farm's counter-cyclical payment yield times the counter-cyclical payment rate. An example for 2008 soybeans (using the counter-cyclical payment rate of $0.26) is:
100 acres base acres planted to soybeans 85 acres, payment acres x 30 bushels per acre counter-cyclical payment yield x $0.26 per bushel counter-cyclical payment rate $663.00 counter-cyclical payment
For 2008 and 2009 crops, counter-cyclical payments are not available for other oilseeds (sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, and sesame seed) because the sum of their national loan rate and direct payment rate is equal to or greater than their target price. For 2010 through 2012, counter-cyclical payments are available for other oilseeds due to an increase in their target price.
For crop years 2008 through 2011, producers may elect to receive their direct payments in two installments: - The first advance payment is:
- For crop year 2008, as soon as practical after enrollment,
- For crop years beginning 2009 through 2011, up to 22 percent of the total payment available beginning in December of the prior calendar year.
- The balance of the total direct payment is available in October of the crop year. Producers who do not elect to take the first direct payment will receive the entire direct payment in October.
- For 2012, there will be no advance direct payment.
For crop years 2008 through 2010, producers may elect to receive two counter-cyclical payments per year: - A partial payment will be available after completion of 180 days of the marketing year for the crop. These payments cannot exceed 40 percent of the total projected payment.
- Final payments are made beginning October 1, or as soon as practicable thereafter, after the end of the marketing year for the crop. Producers who do not elect to take the partial payment will receive the entire counter-cyclical payment at this time.
- For fiscal years 2011 and 2012, there will be no partial counter-cyclical payments. Final payments are made beginning October 1, or as soon as practicable thereafter, after the end of the marketing year for the crop.
Producers must refund to FSA counter-cyclical payments that exceed the final and total counter-cyclical payment for each respective crop. This situation may occur when actual market prices exceed the projected market prices used in determining the partial counter-cyclical payment rates.
To view, the DCP payment schedules for 2008 and 2009 crop years, click on the above icon for the printable version of this fact sheet.
The 2008 Farm Bill provides that producers on farms with DCP base acres that total 10.0 acres or less will not receive a direct, counter-cyclical, or average crop revenue election program payment, unless the farm is wholly owned by a socially disadvantaged or a limited resource farmer or rancher.
For this provision's purpose, a socially disadvantaged farmer is a person who is a member of a group whose members have been subjected to racial, ethnic or gender prejudice because of their identity as members of a group without regard to their individual qualities.
Status as a limited resource farmer or rancher is one who directly or indirectly had gross farm sales of not more than $100,000 in each of the previous two years (to be increased beginning in fiscal year 2004 to adjust for inflation using Prices paid by Farmer Index as compiled by the National Agricultural Statistic Service) and has a total household income at or below the national poverty level for a family of four, OR less than 50 percent of county median household income in each of the previous years (to be determined annually using Commerce Department data).
A limited resources farmer or rancher can be determined in an automated system using the Website for USDA Limited Resource Farmer and Rancher Online Self Determination Tool at http://www.lrftool.sc.egov.usda.gov/tool.asp.
The DCP sign-up period for the 2008 crop began June 25, 2008, and will end September 30, 2008. Annual sign-ups for the 2009-2010 crops are from October 1 of the prior calendar year to June 1. The CCC-509 form, "Direct and Counter-cyclical Program Contract," includes base acres, payment acres, payment yields, producer payment shares, advance direct and counter-cyclical payment selections, and signatures of the producer and county office representative.
For the 2008 crop, the CCC-509 must be submitted by Sept. 30, 2008.
For 2009-2012 crops, the CCC-509 must be submitted by June 1 of the respective crop year. All owners and operators who will share in the DCP payments on the farm must sign the CCC-509. Forms with signatures that are obtained after June 1, but before September 30, will be accepted, but the farm will be assessed a late-file sign-up fee of $100. (The fee is waived for 2008.)
Farm producers must apply for DCP on an annual basis.
The following documents are required and applicable determinations must be made before the county committee can approve a producer's share on the CCC-509 for payment:
- a farm operating plan (CCC-502 and related forms);
- an average adjusted gross income certification (CCC-526);
- a certification of compliance with highly erodible land and wetland conservation provisions (AD-1026).
A certification of the acreage of all cropland on the farm (FSA-578) is needed before final payments can be issued.
Producers who participate in DCP may plant cropland in excess of the total base acreage on the farm to any commodity. However, producers are subject to certain restrictions on the planting of wild rice, fruits, and vegetables. Information on wild rice, fruits and vegetable restrictions is contained in the FSA fact sheet "Direct and Counter-cyclical Payment Program: Wild Rice, Fruit, and Vegetable Provisions." A 2008 fact sheet will be available on FSA's Web site at: http://www.fsa.usda.gov; click on "find FSA fact sheets."
A pilot project has been developed for certain states to permit the planting of cucumbers, green peas, lima beans, pumpkins, snap beans, sweet corn, and tomatoes grown for processing on base acres during each of the 2009 through 2012 crop years. DCP base acres on a farm for a crop year will be reduced by an acre for each acre planted under the pilot program.
The number of base acres eligible during each crop year for the pilot year for the pilot project is:
Illinois: 9,000 Indiana: 9,000 Iowa: 1,000 Michigan: 9,000 Minnesota: 34,000 Ohio: 4,000 Wisconsin: 9,000
The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of Discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW., Washington, DC 20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer.
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