Current payments to offset new

Under the conference report that was expected to be passed by the Senate on May 8, most growers will receive a reduced, fixed payment and, assuming commodity prices stay below loan levels, a counter-cyclical payment based on the difference between the loan rate, the AMTA payment and the new target price for their crop.

“Farmers have received their AMTA payment under the current farm program,” said Hunter Moorhead, agricultural aide to Sen. Thad Cochran, R-Miss. “The next payment will likely be a fixed payment that will provide farmers with the difference in the current AMTA payment and the fixed payment in the new Farm Security and Rural Investment Act.”

What that means, says Chip Morgan, executive vice president of the Stoneville, Miss.-based Delta Council, is that any advance government payment producers received for their 2002 crop will be deducted from any payments they are due under the new farm program.

Example: If a cotton grower received a 5.99-cent advance AMTA payment in December, that amount will be deducted from the 6.67-cent per pound direct payment authorized by the new Farm Bill.

Then, assuming cotton prices do not go above the loan rate, the new farm bill’s 52-cent loan rate and the 6.67-cent Agricultural Market Transition Act payment (or 58.67 cents) will be subtracted from the new bill’s 72.4 cent target price for cotton to determine a grower’s counter cyclical payment, Morgan says.

The math works the same for rice, soybeans, corn, wheat and sorghum.

The payment limitation provisions of the new bill, Moorhead says, will not take affect until the 2003 crop year. Those will include limits of $40,000 on AMTA payments, $65,000 on counter-cyclical payments and $75,000 on marketing loan gains. But the new farm bill also retains the three-entity rule and generic certificates that can be used when growers exceed the $75,000 limit.

Morgan was asked how long it could take USDA to begin disbursing payments if the new law is passed by the Senate and signed by the president?

“Considering it’s an election year, whatever the Department of Agriculture can do to facilitate getting this money to growers’, they will do,” Morgan says.

The balance of the fixed payment for the 2002 crop could be in growers’ hands within about 30 days of the farm bill’s signing and the first counter cyclical payments could go out as early as September, according to Morgan.

Agriculture Secretary Ann Veneman says farmers shouldn’t expect to see their first checks from the new $180 billion farm bill for several months. “I don’t think farmers should be anticipating that they’ll get checks in August (as they did last year), but I think it’s too early at this point to give any kind of time frame,” she says.

Veneman says her department will work quickly to implement the program changes, including a new counter-cyclical payment provision, and a new policy allowing producers to update the planting records used to determine the sizes of their payments.

Moorhead says he, too, is confident that the professionals at USDA will implement the farm bill in a timely fashion, providing farmers with much needed support. Implementing the new farm bill will require USDA to develop computer software and educate county Farm Service Agency Offices regarding new programs and options for agriculture producers.

“Fortunately, many FSA offices still have employees who remember the old target price system, so the new calculations will not be totally foreign to them,” says Sen. Blanche Lincoln, D-Ark.

Beginning in the 2003 crop year, producers may elect to receive up to 50 percent of the direct payment beginning Dec. 1 of the year prior to the year the crop is harvested. The counter cyclical payments are scheduled to be paid incrementally with 35 percent of the projected payments paid in October of the year the crop is harvested, an additional 35 percent paid in February of the following year, and the balance paid at the end of the 12-month marketing year for the specific crop.

Moorhead says he expects the Senate to pass the farm bill the week of May 6. “I am confident that the bill will gain a majority vote and quickly move to President Bush’s desk,” he says.

Adds Morgan, “I assume the proposed farm bill will be on the president’s desk within two weeks, and it’s highly likely he will quickly sign it into law.”

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