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Sign-up under way for 2010 for two payment programs

WILLMAR -- Officials from the U.S. Department of Agriculture have announced that signup for the 2010 Direct and Counter-cyclical Payment program and the Average Crop Revenue Election program is now under way at local Farm Service Agency offices. Sign-up will continue through June 1, 2010.

Under the Direct and Counter-cyclical Payment program, participants can qualify for two types of payments, both of which are computed using a farm's base acres and payment yields.

The first type of payment is called a direct payment. The direct payment rates are specified in the 2008 farm bill and are earned without regard to market prices. For that reason, the direct payment is sometimes referred to as the "guaranteed" payment.

The per bushel direct payment rates are as follows: barley - $0.24; corn - $0.28; oats - $0.024; soybeans - $0.44; and wheat - $0.52.

The second type of payment is a counter-cyclical payment. Unlike the direct payments, counter-cyclical payments are not guaranteed since the payment rates will vary depending on market prices. Therefore, counter-cyclical payments can be sizable during years when prices are low, with little or no payment when prices are high.

The program provisions also allow participants to request and receive a portion of their direct payment in advance. During sign-up, eligible producers may request an advance payment equal to 22 percent of the total direct payment for each commodity associated with the farm. Local FSA offices will issue the advance direct payment as soon as practical after enrollment.

Participants also have the option of requesting an advance counter-cyclical payment. However, at current price levels, it is unlikely that participants will qualify for an advance counter-cyclical payment.

Authorized by the 2008 farm bill, the optional Average Crop Revenue Election program provides a financial safety net based on state revenue losses, and takes the place of the price-based counter-cyclical payments under the Direct and Counter-cyclical Payment program.

The decision to enroll a farm into the Average Crop Revenue Election program is irrevocable. Participation begins with the initial year of enrollment and continues through the 2012 crop year.

Since enrollment is irrevocable, all producers and owners of a farm must agree to participate.

By participating in the Average Crop Revenue Election program, producers agree to forgo counter-cyclical payments, accept a 20 percent reduction in their direct payments, and accept a 30 percent reduction in the commodity loan rates for all commodities produced on the farm.

Commodities eligible for crop revenue payments include wheat, corn, soybeans, oats, barley, grain sorghum and a number of minor oilseed crops.

Producers may elect and enroll in the revenue program for the 2010 year even after they've enrolled in the Direct and Counter-cyclical Payment program and received an advance direct payment. However, to be effective for the 2010 crop year, producers will need to elect Average Crop Revenue Election by the sign-up deadline of June 1, 2010.

Dairy producers qualify for October MILC payments

Due to abnormally low milk prices during the month of October, dairy producers again qualify for payments under the U.S. Department of Agriculture's Milk Income Loss Contract Program.

Initially authorized by the 2002 farm bill, and then reauthorized under the 2008 farm bill, the MILC Program provides monthly financial assistance to dairy producers whenever the Boston Class 1 milk price falls below the payment trigger price of $16.94 per hundredweight. In that case, producers qualify for a payment equal to 45 percent of the price difference.

Under the provisions of the 2008 farm bill, the $16.94 trigger price is adjusted upward whenever the monthly national average cost for a 16 percent protein feed ration is greater than $7.35 per hundredweight. According to USDA, feeding costs for the month of October did not warrant an upward adjustment of the $16.94 trigger price.

The Boston Class 1 milk price for the month of October was $15.60 per hundredweight. Therefore, the October MILC payment rate will be $0.603 per hundredweight.

The Boston Class 1 milk price for the months of November and December has already been determined. For November, the Boston Class 1 milk price was $16.11, which would indicate that the minimum payment rate for November milk production will be $0.3735 per hundredweight.

For December, the Boston Class 1 milk price is $17.24, which is higher than the $16.94 trigger price. Therefore, unless feeding costs increase dramatically, it is unlikely that dairy producers will qualify for a MILC payment for December milk production.

Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.