August 13, 2002

Sign-up begins Oct. 1 for the direct and counter-cyclical program for crop years 2002 and 2003. USDA will begin making payments to farmers soon after that. The 2002 farm law provides for payments to be made to eligible producers of covered commodities and peanuts for the 2002 through 2007 crop years.

Direct and counter cyclical payments are made to producers with established crop bases and payment yields. Payment rates for direct payments are established by the 2002 Farm Bill and are issued regardless of market prices. Producers also are eligible for counter-cyclical payments, but payments are issued only if effective prices are less than the target prices set in the 2002 Farm Bill.

The effective price is equal to the higher of the average loan rate or national average market price received by producers, plus the direct payment rate.

In July, letters were mailed to farm owners and operators asking them to verify acreage history reported to FSA. Based on this information, a second letter will soon be sent to farm owners and operators providing them with several options unique to their farm for establishing or updating bases.

The 2002-07 base options include: (1) using the farm's 2002 production flexibility contract acres as the base acres; (2) adding oilseeds to the 2002 contract acres; and (3) using the farm's 1998-01 planted acres.

Additionally, the letter will inform owners that if they elect to update their bases using the farm's 1998-01 planted acres, they will have the opportunity to use their current farm program payment yield or to update their yields using the farm's 1998-01 production. The updated yields may only be used for counter cyclical payments.

To update yields, owners or operators must provide verifiable production evidence. The letter will provide a date that owners and operators should begin providing base and yield information to their FSA service center.

In absence of verifiable production history, producers can use 75% of the county average yield. The letter will notify each producer of the farm's 2002 production flexibility contract program payment yield and 75% of the county average yield. In most cases, the 75% yield will be the lowest possible crop payment yield for counter cyclical payments attributed to the farm.

Commodities eligible for both direct and counter-cyclical payments include wheat, corn, sorghum, barley, oats, upland cotton, rice, soybeans, sunflower seeds, canola, flaxseed, mustard, safflower, rapeseed, and peanuts.

USDA will soon make available an Internet-based tool to help producers understand their base and yield options. Sign-up for the 2002 and 2003 direct and counter-cyclical program ends June 2, 2003.

Producers who have questions should contact their local USDA Service Center or county FSA office. More information about 2002 farm laws issues is available at http://ww.usda.gov/farmbill.