Questions and Answers about the New Farm Bill

Q: How do counter-cyclical payments work?

A: The counter-cyclical payment rate is the difference between the target price and the sum of the direct payment plus the higher of the loan rate or the 12-month average market price. Both counter-cyclical and direct payments are made on 85% of base times the payment rate times the program yield.

Q: What do producers need to do to prepare for the changes?

A: In the coming months, FSA will provide to producers instructions on calculating new bases and yields and information on payments and other issues. Producers should also visit the FSA web site frequently to obtain more information.

Q:Are there any changes to current planting flexibility provisions?

A: The provisions are similar to current planting flexibility provisions. However, there are a few changes. For example, in addition to fruits and vegetables, wild rice is now also included as a prohibited crop unless an exception applies.

Q: A provision enacted for the 2000 crop allows the loan deficiency payment rate to be determined as of the earlier of the date (a) the producer lost beneficial interest or otherwise marketed the crop, or (b) the producer requested an LDP. Will this provision continue for the 2002 through 2007 crops?

A: No. A provision in the Farm Bill makes this applicable only for the 2001 crop only. No such provision exists in the bill for the 2002 through 2007 crops. Therefore, for 2002 through 2007, LDP rates will be determined on the date of the request for an LDP. If beneficial interest is lost prior to the date of the request, no LDP will be forthcoming.

Q: My direct farm ownership loan has been approved but I am told there is no money to fund it right now. Will there be money for my loan after the bill is signed?

A: The new farm legislation does not appropriate any money for farm loans. Because loan funds are made available only through appropriations bills, it is unlikely that funds will be available for your loan until after October 1, 2002, when the government’s new budget year starts.. However, you should stay in contact with your local FSA office in the event that additional funding is made available.

For more Q&A on the new farm bill, go to the web site: www.usda.gov/farmbill