Sign-up for the 2006 Direct and Counter-cyclical Program is now under way at local Farm Service Agency offices. Sign-up will continue through June 1, 2006.
Under the 2002 farm bill, farm owners and operators must annually enroll their farms into the Direct and Counter-cyclical Program. Under the previous farm bill, an annual sign-up was not necessary.
During sign-up, producers must decide if and when they want to receive any authorized advance program payments.
Under the program, producers can qualify for two types of payments. Both payments 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 were specified by the farm bill and are earned without regard to current market prices. For that reason, a direct payment is sometimes referred to as a "guaranteed" payment.
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The direct payment rates are: 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 payment, counter-cyclical payments are not guaranteed since payment rates will vary depending on market prices.
Counter-cyclical payments can be sizable during years when prices are low, with little or no payment when prices are higher.
Producers can elect to receive advance direct and counter-cyclical payments. An advance direct payment can be requested and received as early as December of this year.
Producers can select the month they want to receive their advance direct payment. A final direct payment will be issued in October of 2006.
Producers can also elect to receive two advance counter-cyclical payments. If authorized by the United States Department of Agriculture, a first advance payment can be received in October of 2006, with a second advance issued in February of 2007.
A third and final counter-cyclical payment could be issued at the conclusion of the 2006 marketing year.
Producers should remember that the advance counter-cyclical payments are based on projected market prices. If actual prices during the marketing year exceed USDA's projection, part or all of the advance payment may have to be refunded.
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Sign-up available
via Internet
Producers can visit any Farm Service Agency office to sign up for the 2006 Direct and Counter-cyclical Program. But in addition, producers now have the option of enrolling via the Internet.
The electronic service allows producers to choose 2006 payment options, assign crop shares, and submit their contracts electronically from any computer with Internet access.
Without having to visit their county Farm Service Agency office to complete these tasks, producers can view and print submitted contract options at any time.
The user-friendly service also saves time, reduces paperwork and speeds up contract processing.
To access the voluntary electronic service, eligible producers must have an active USDA eAuthentication Level 2 account. To have such an account, producers will need to complete an online registration form followed by a visit to their local Farm Service Agency office for identity verification. The online registration form is available at: www.eauth.egov.usda.gov .
In addition to the new electronic service, Farm Service Agency is also providing expanded service for producers that have to travel long distances to visit the USDA Service Center where their farm records are located. Producers can now enroll all of their farms, even farms administered by another Farm Service Agency office, by stopping at any FSA office.
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November loan
interest rate is 5 percent
With grain prices as low as they are, many farmers are somewhat reluctant to sell at these prices. For that reason, some farmers are deciding to put some of this year's crop under loan with USDA.
Under the nine-month commodity loan program, farmers retain ownership of their grain while having the needed capital to pay bills and creditors.
The interest rate on nine-month commodity loans disbursed during the month of November is 5 percent up slightly from October's rate of 4.875 percent.
Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.
