USDA EXTENDS 2009 DCP SIGN-UP PERIOD

Friday, April 3, 2009                                  By Shawn Wade

      Secretary of Agriculture Tom Vilsack announced March 31 that USDA is extending the sign-up deadline from June 1 to August 14, 2009, for both the Direct and Counter-cyclical Program (DCP) and the forthcoming Average Crop Revenue Election (ACRE) Program.

      USDA's action extends the sign-up deadline by 10 weeks and gives producers ample time to decide whether to participate in ACRE or remain in DCP.

      One aspect of the DCP sign-up process that has not changed as a result of Tuesday's announcement is the June 1, 2009 "Contract Change" deadline for producers to make structural changes to their operations, including changing or reorganizing legal entities and/or adding a spouse or other family member to an existing operation. USDA officials say that a decision to extend the "Contract Change" date has not been made, but that the issue is under consideration.

      In his comments Tuesday, Secretary Vilsack said extending the DCP and ACRE sign-up deadline would allow farmers extra time to digest information about the new ACRE Program before making their decision.

      Sign-up for ACRE is expected to start in late April, with an official sign-up announcement to be made in the coming weeks. After the sign-up period commences producers will be able to elect ACRE, in lieu of the current Counter-cyclical program, at their FSA county office.

      USDA said that a factor in their decision to extend the sign-up deadline was that the original June 1 date could have forced producers to rush their decision.

      The ACRE program, authorized by the 2008 Farm Bill, provides eligible producers a state-level revenue guarantee, based on the 5-year state Olympic average yield and the 2-year national average price. To participate in ACRE a producer must also agree to: forgo the current DCP program's counter-cyclical payments; take a 20-percent reduction in direct payments; and, also agree to a 30-percent reduction in their CCC loan rates. The decision to elect ACRE is also an irrevocable decision and binds the farm to the program through the 2012 crop year, the last crop year covered by the 2008 Act.

      For more information about ACRE, DCP and other price support programs, please visit your FSA county office or http://www.fsa.usda.gov.

UPLAND COTTON AVERAGE PRICE RECEIVED BY
GROWERS THROUGH FEBRUARY 2009

Friday, April 3, 2009                                  By Shawn Wade

      January's marketing spike appears to be an anomaly following USDA's announcement of estimated February 2009 marketings of only 739,000 bales brings the reality of the current cotton market back in focus.

      As it stands, cumulative Upland cotton marketings for the first seven months of the 2008-marketing year now total 6.164 million bales according to information released March 30, 2009 by the USDA National Agricultural Statistics Service.

      That figure is 3.151 million bales below the 9.315 million bales marketed through the same period for the 2007-crop. According to the USDA report, the average selling price reported for the month of February was 41.60 cents per pound.

      Based on these figures, the 2008 Upland Cotton Weighted Average Price calculated through February 2009 is 50.45 cents per pound. With the first seven months of the marketing year now past, the calculated 2008-crop Weighted Average Price appears to be solidifying a position below the 52-cent Upland cotton Base Loan rate.

      The following table shows the average price received each month by farmers and the associated weighted average price based on prices and cumulative marketings from August 1, 2008 through February 2009.

      The 2008 Counter-cyclical payment rate authorized under the 2008 Farm Bill will be based on the 12-month Weighted Average Price Received by growers. For cotton the 12-month Weighted Average Price will reflect price and marketings for the 2008 marketing year. The 2008 cotton marketing year began August 1, 2008 and ends July 31, 2009.

Average Price Received For 2008-crop Upland Cotton
(Weighted by Marketings)

 

 

Marketings

Prices

 

(000's of Running bales)

(cents/Lb.)

 

Monthly

Cum.

Monthly

Weighted

August

1,144

1,144

56.50

56.50

September

95

1,239

61.10

56.85

October

578

1,817

55.50

56.42

November

978

2,795

53.10

55.26

December

781

3,576

51.90

54.53

January

1,849

5,425

46.10

51.65

February

739

6,164

41.60

50.45

March

na

na

40.90*

na

Source: National Agricultural Statistics Service; * = preliminary

USDA AMS PROPOSES INCREASE IN COTTON
CLASSIFICATION FEES FOR 2009 CROP

Friday, April 3, 2009                                  By Shawn Wade

      USDA's Agricultural Marketing Service (AMS) is proposing to raise the user fee for 2009 crop cotton classification services from the current level of $2.00 to $2.20 per bale.

      The proposed increase is derived from a new formula authorized in the 2008 farm bill and developed by AMS to account for the operation of the cotton classing operation and provide for sufficient reserves.

      Individuals and groups wishing to comment on the proposed increase have until April 10 to submit written comments by mail or electronically. However, the NCC has indicated it will request a short extension to allow for additional producer leadership discussion at the ACP meeting on April 15-16.

Continued on Page 2

 

      Written comments may be submitted to Darryl Earnest, deputy administrator, Cotton and Tobacco Program, AMS, USDA, STOP 0224, 1400 Independence Ave., SW, Washington DC 20250-0224. Comments also may be submitted electronically at http://www.regulations.gov.

      AMS officials developed the $2.20 per bale fee after extensive consultations with US cotton industry representatives, including the National Cotton Council. AMS Deputy Administrator Darryl Earnest's reviewed the development of the new user fee formula with the American Cotton Producers (ACP) during the NCC's Annual Meeting in February.

      As part of the proposal the current the current 5 cents per bale discount would continue to be applied to voluntary centralized billing and collecting agents.

 

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