Source: USDA, 9/19/11

The U.S. Department of Agriculture (USDA) will issue approximately $17.1 million in 2010-crop counter-cyclical payments to farmers enrolled in the direct and counter-cyclical program for peanuts. The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) requires 2010 final counter-cyclical payments to be made beginning Oct. 1, 2011, or as soon as practicable following the end of the marketing year, which was July 31 for peanuts.

Counter-cyclical payments are administered by the Farm Service Agency (FSA). The counter-cyclical payment rate for peanuts is $9.00 per ton ($0.0045 per pound). Producers who accepted a partial payment in June 2011 received $5.20 per ton ($0.0026 per pound). They are due an additional $3.80 per ton ($0.0019 per pound). The 2010 marketing year average price for peanuts was $450 per ton ($0.225 per pound).

The counter-cyclical payment rate is the amount by which the target price for each commodity, specified by the 2008 Farm Bill, exceeds its effective price. The effective price equals the direct payment rate plus the higher of either the national average market price received by producers during the marketing year or the national average loan rate for the commodity.

Prices during the 2010-crop marketing year for all other program commodities were well above the level that would trigger a counter-cyclical payment.

A table displaying national monthly average market prices to date and market year average (MYA) price forecasts for selected direct and counter-cyclical program (DCP) commodities may be found at www.fsa.usda.gov/Internet/FSA_File/2010_11_mya_ccp.pdf.

For each commodity, the counter-cyclical payment for each crop year equals 85 percent of the farm’s base acreage multiplied by the farm’s counter-cyclical payment yield multiplied by the counter-cyclical payment rate.

Counter-cyclical payments, authorized in the 2008 Farm Bill, provide support counter to the cycle of market prices as part of the “farm safety net,” in the event of low crop prices. A strong farm safety net is important to the vitality of American agriculture because, historically, the cost to produce most crops is close to the potential income from the crop, making any yield losses that decrease revenue difficult to mitigate.

For more information on the direct and counter-cyclical payment programs, visit a local FSA office or the FSA website at www.fsa.usda.gov.