The Farm Security and Rural Investment Act of 2002 allows the secretary to provide an initial payment of up to 35 percent of the projected counter-cyclical payment for a program crop after Oct. 1. The maximum counter-cyclical payment for rice is $1.65 per hundredweight, and the maximum initial partial payment of 35 percent is 57.75 cents per cwt.
Bell said that the U.S. Department of Agriculture’s supply/demand estimate for rice, released Sep. 11, projects the 2003-04 average price received by farmers to be in the range of $6.25 to $6.75 per cwt.
“Since the mid-point of the range is the same as the $6.50 per cwt. loan rate for rice, a maximum 2003-crop counter-cyclical payment is anticipated, and a maximum initial partial payment is justified,” Bell said.
Bell said that issuing the maximum initial partial payment of the 2003-crop counter-cyclical payment as soon as possible would benefit rice farmers as they pay for seed, fertilizer, fuel, crop protectants, aviation services and equipment parts needed to produce and harvest the 2003 rice crop.
Earlier, National Cotton Council Chairman Robert Greene asked USDA to set the initial advance counter-cyclical payment for the 2003 upland cotton crop at the maximum allowable rate of 4.8 cents per pound.
"Although prices have recovered in recent months, US and international cotton prices remain below long-term average levels, and the counter-cyclical payments will provide an important financial safety net for producers and the rural economy," he said. He also urged Secretary Veneman to make the announcement as soon as possible "so producers and their lenders can plan accordingly."
Based on 2 analytical approaches using futures prices and world fiber market conditions, NCC analysis implies a likely range for the MYA price for upland cotton of 52 to 54 cents/lb. If the MYA price falls between 52 and 54 cents, the counter-cyclical payment would be between 11.73 cents and the maximum rate of 13.73 cents.
The analysis also accounts for the fact that market conditions and price relationships will change as the marketing year progresses. Based on observed market movements for the ’87-88 through ’02-03 period, the analysis indicates that the possibility of prices rising to a level necessary to reduce the CCP payment below an advance rate of 4.8 cents is remote.
NCC also has updated the program payment schedule for calendar years ’03 and ’04. That information is available at www.cotton.org/gov/Payment-Rates.cfm.