FSA Makes CC Program Announcements: Final 2003 CCP Rate and 1st2004 Advance CCP Rate

LUBBOCK, October 15, 2004        By Shawn Wade

      Thewait is almost over for growers eager to learn what the final 2003Counter-Cyclical Program payment rate will be. Announcement of a 2003 marketyear average price of 61.8 cents per pound by USDAÕs National Ag StatisticsService put the wheels in motion for Farm Service Agency officials to make thefinal calculations and begin the process of making payments to DCP programparticipants. NASS published the data on October 12.

      Usingthe 61.8 cent figure announced by NASS, the final 2003 Counter-Cyclical Paymentrate is estimated to be 3.93 cents per pound. Growers who received the initial2.01 cent 2003 CC advance payment in October 2003 would receive an additional1.92 cents per pound.

      Growerswho did not receive the first 2003 advance payment would receive the full3.93-cent payment amount because the second upland cotton advance payment ratewas set at zero.

      Asif the pending announcement of the 2003 final CC payment rate werenÕt enough,USDA is also expected to announce the first 2004 advance payment rate forUpland cotton.

      Itis thought that the 2004 program announcement will come at the same time asannouncement of the final 2003 CC payment rate. If that is the case FSA couldbe making both payments at the same time.

      FSAwill set the first 2004 advance payment rate based on the supply, demand andprice implications included in the October 12 World Supply and Demand Estimatereport. Based on this report, the first 2004 advance payment for the CCP isexpected to be the maximum allowed under the 2002 Farm Bill.

      Ifthat assumption is correct growers can expect to see an advance payment rate ofapproximately 4.8 cents, or 35 percent of the maximum 13.73 cent Upland cottonCC payment rate.

      Basedon these estimates, producers could receive between 6.72 and 8.73 cents perpound in 2003 and 2004 CC program payments within the next few weeks. Somegrowers may net less than these amounts if they received any advance paymentson grain sorghum or corn in 2003.

      Thefinal 2003 payment rate for these two crops are expected to fall to zerobecause price rallies carried their average market price above the point atwhich a CC payment would be triggered.


Disaster Signed & Sealed By President

Focus Now Shifts To FSA To Get It Delivered

LUBBOCK, October 15, 2004        By Shawn Wade

      Signed,sealed and awaiting delivery is the most accurate description of the 2003/2004Crop Disaster Program that charted a painful course through Congress over thepast few weeks.

      Muchcould be said about the process that finally produced a program that will makeassistance available to growers who suffered crop losses in either 2003 or2004.

      Unfortunately,recounting the chronology of the legislationÕs development leaves people,especially those that tried to keep up with the process as it unfolded,exhausted and sometimes disheartened at the clash of forces that eventuallyculminated in the package signed by President George Bush October 13.

      Thebottom line for High Plains cotton producers is that help is on the way tothose that came up short in 2003 or 2004. Instead of dwelling on how we gotwhere we are, the next step is to figure out how the new program will beimplemented.

      Fortunately,most of the nuts and bolts of the program were assembled way back in 2001 forgrowers who suffered crop losses during the 2000-growing season.

      Thatyear the program instituted a differential payment rate for insured andnon-insured crops. In the 2000 CDP the new payment rates were calculated as 65%of the multi-peril insurance (MPCI) price for insured crops and 60% of the MPCIprice for uninsured crops. The program also initiated a new quality adjustmentprovision for cotton that allowed growers to apply for benefits on abale-by-bale basis.

      Muchof that same program was carried forward for the 2001/2002 Crop DisasterProgram (CDP) with a few notable exceptions: a lower 50%/45% payment structurefor insured/non-insured crops; the inclusion of a 95 percent benefit cap; and,a gross income test to determine program eligibility.

      An$80,000 payment limit is also expected to be in effect for the program as wasthe case in past CDP programs. The three-entity rule is also expected to be ineffect for benefits under this program.

      Whatthis means for the 2003/2004 Crop Disaster program is that the Farm ServiceAgency shouldnÕt have to reinvent the wheel to get things rolling.

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      Thesimilarities between the last two disaster assistance programs and the2003/2004 assistance package should also: allow FSA to quickly verify thecommon parts of the programs in question; give FSA an opportunity to correctsome of the unexpected problems that were identified during delivery of thelast program; and then update the software that will help deliver the program.

      Thefollowing is a rough estimation of what Plains Cotton Growers thinks the2003/2004 CDP will look like, based on the information currently available.

      Asmore information is developed PCG will be pulling together a 2003/2004 Disasterspreadsheet to help growers determine if they are eligible for assistance andhow much benefit they will be able to receive.

      Looking at previous CDP programs indicates the 2003/2004 program will provideassistance for both quantity and quality losses. As in the 2000 CDP program,2003/2004 applications should be accepted on a unit-by-unit basis when theactual production in the year of the application is less than 65 percent of thehigher of the producers Actual Production History (APH) yield or the CountyAverage Yield.

      Thecounty average yield will be calculated using figures supplied by the NationalAgricultural Statistics Service. It is not known what time period will be usedto calculate the county average yields for the 2003/2004 CDP.

      ANon-harvest factor will also be developed by each State and applied to disasterpayments on acreage not harvested.

      Paymentrates for the quantity loss portion of the program would be calculated as theywere in the 2000 Crop Disaster Program. Under this scenario the payment ratefor insured crops would be 65 percent of the multi-peril crop insurance priceelection for the year of loss. Uninsured crops would be paid at a rate equal to60 percent of the MPCI price for the crop.

      Cropsfor which no insurance is available would be paid at a rate equal to 65 percentof the Non-insured Assistance Program (NAP) price.


      MPCIprice elections for upland cotton were 52 cents per pound in 2003 and 60 centsper pound in 2004.

      Asmentioned earlier in this article, quality losses will also be included in the2003/2004 CDP. Implementation procedures for the quality provisions areexpected to mirror those used in both the 2000 and 2001/2002 CDP programs.

      Inthe last two programs quality losses were calculated in two different ways,depending on how the losses manifested themselves during the year.

      Thefirst method available for growers in previous programs is through anadjustment in the amount of production to count in the CDP payment calculation.Under this portion of the Quality Loss Program, average quality data for cropsharvested during the year can be provided to the County Office and used tolower the amount of production counted against the maximum disaster level.

      Additionally,the previous two CDP programs offered a separate bale-by-bale Quality LossProgram (QLP). This could be an extremely valuable program for producers whosuffered primarily quality losses and whose actual yield losses were not largeenough to meet the 35 percent loss threshold for the Crop Loss portion of theprogram.

      Thestand-alone Quality Loss program will require a complete listing of all balesproduced and the average loan value for each to determine eligibility andpayment amounts.

      Manyof the details of the 2003/2004 CDP will not be known for several weeks. Theinformation provided in this article is offered as an educated guess about howthe program might look and to remind producers about the type of informationthey will need to gather when the sign-up period opens.

      Additionalinformation and specifics about the 2003/2004 program will be provided as itbecomes available.






How 2000 CDP Payments werecalculated:


Acres X APHYield or County Average X .65 = Maximum Disaster Level (lbs.)


Max. DisasterLevel - (Actual or Assigned Production X Quality Adjustment Factor*) =Eligible Disaster Level (lbs.)


Eligible DisasterLevel X MPCI Price X .65 X Non-Harvest Factor** = Calculated Payment($'s)


      *    Quality Adjustment factor = Ave. Loan Value of Crop / CountyAve Loan Value

      **   Non-HarvestFactor = To be determined by the Texas State FSA Committee.