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USDA ISSUES PARTIAL 2008 CROP COUNTER-CYCLICAL PAYMENTS FOR UPLAND COTTON
WASHINGTON, Jan. 28, 2009 - Agriculture Secretary Tom Vilsack said today that the Commodity Credit Corporation (CCC) will make $490 million available in partial 2008 Counter-cyclical Program (CCP) payments to eligible producers with enrolled upland cotton base acres in the Direct and Counter-cyclical Program (DCP). The projected partial CCP rate for producers with enrolled upland cotton base acres is 5.03 cents per pound or 40 percent of the projected total rate of 12.58 cents per pound.
Fees and Charges Assessed by the Commodity Credit Corporation for Cotton Loans, Loan Forfeitures, and Relocation of Collateral
Background
USDA's Commodity Credit Corporation (CCC) marketing assistance loans (MAL) are a marketing tool producers can use to store their production after harvest, which increases their marketing opportunities. In place of using MALs, producers may elect to take a loan deficiency payment (LDP) that provides a payment equal to any net gain from a MAL.
This fact sheet explains various fees and charges associated with cotton MALs, LDPs, and the relocation of cotton loan collateral.
USDA Registry for Cotton Merchants
Overview
USDA's Farm Service Agency (FSA) maintains an internal-use-only national registry to help cotton merchants efficiently redeem cotton held as collateral by USDA.
Direct and Counter-cyclical Payment (DCP) Program
The Farm Security and Rural Investment Act of 2002 (2002 Act) replaced production flexibility contract (PFC) payments (created under the 1996 Act) with direct payments and added new counter-cyclical payments for the 2002-2007 crops. DCP payments are based on historical acreage bases and payment yields, not current production. In addition to upland cotton, other eligible commodities are wheat, corn, barley, grain sorghum, oats, rice, soybeans, other oilseeds, and peanuts.
Overview
The Farm Security and Rural Investment Act of 2002 (2002 Act) provides for direct and counter-cyclical payments, nonrecourse marketing assistance loans, and loan deficiency payments for the 2002-2007 crops, which help ensure a strong and viable agriculture sector in the United States.
Nonrecourse Marketing Assistance Loans and Loan Deficiency Payments
Marketing assistance loans provide eligible producers with interim financing on their production. Instead of selling the crop immediately at harvest, producers may pledge their production as loan collateral, receiving loan proceeds equal to the loan rate times the quantity placed under loan. Marketing assistance loans mature at the end of the ninth month following the month in which the loan was received.
Under marketing loan provisions, rice producers may repay a loan at the lower of the loan rate plus accrued interest or the adjusted world price (AWP). If the AWP is lower than the loan rate, the amount by which the loan rate exceeds the AWP is the marketing loan gain (MLG) rate.
Producers are also eligible for a loan deficiency payment (LDP) in lieu of obtaining a loan. The LDP rate is the amount by which the loan rate exceeds the AWP?the same as the MLG rate.
Eligibility: Rice Quality Requirements
Rice (Oryza Sativa L.) must meet the definition for rough rice provided in the U.S. Standards for Rice, including rice of special grade designations. Grains referred to as wild rice (Zizania aquatica L.) are ineligible.
Aromatic rice (such as Jasmine varieties) must be pledged under a loan agreement separate from nonaromatic rice and stored separately from nonaromatic rice. When aromatic rice is delivered to USDA's Commodity Credit Corporation (CCC), it must be delivered to a CCC-approved facility able and willing to store such rice on an identity preserved basis, i.e., aromatic rice may not be commingled with nonaromatic rice. Producers shall not receive any credit for expenses incurred in the delivery of aromatic rice to storage.
Loan Rate
The national average loan rate for the 2008-2012 crops of rough rice is $6.50 per cwt. To achieve this national average rate and provide rate adjustments for different classes and qualities, separate loan rates are provided for whole and broken milled rice kernels.
Loan Value for 2009 Crop Whole Kernels and Broken Rice
Rough Rice Class | Whole Kernels(Cents Per Pound) | Broken Rice(Cents Per Pound) |
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Long grain | 10.00 | 6.67 |
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Medium grain | 9.78 | 6.67 |
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Short grain | 9.78 | 6.67 |
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Farm- and Warehouse-Stored Loan Rates
Loan rates for farm-stored rice (or rice for which the grade and milling yield are not determined) are based on state average grade and milling qualities for the prior five years. The farm-stored marketing assistance loan rates for 2009-crop rough rice are:
Long Grain ($/cwt) | Medium/Short Grain ($/cwt) |
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Arkansas | 6.48 | 6.32 |
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California | 6.45 | 6.54 |
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Louisiana | 6.48 | 6.36 |
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Mississippi | 6.57 | 6.50 |
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Missouri | 6.43 | 6.50 |
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Texas | 6.70 | 6.50 |
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Other-U.S. Avg | 6.50 | 6.50 |
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Program Notices
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