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Farmers are experiencing higher prices for most major crops. That’s the good news. The bad news is producers who received a partial counter cyclical payment in October 2003 might have to pay it back.

The U.S. Department of Agriculture recently released data from the initial enrollment for benefits under the 2002 Farm Bill. Producers reported payment yields and acreage bases that were lower than expected for several major crops. In addition, prices of most major crops are higher than were anticipated last summer. Consequently, the Congressional Budget Office now expects lower federal payments will be made to agricultural producers for the next few years. The Commodity Credit Corporation’s projected outlays for farm price and income-support payments during the 2004 to 2013 period have been reduced by $8 billion since the baseline established in August 2003.

High prices and less farm payments are welcome news; however, producers who received a partial counter cyclical payment in October 2003 for wheat or corn have been notified that they will likely need to repay all or part of the payment. As outlined in the 2002 Farm Bill, when the 12-month average price for program crops is higher than the target price, farmers do not earn the counter cyclical payment. According to Rick Borland, chief program specialist for commodity programs for Ohio Farm Service Agency, producers can pay back the advanced payment now, or they can wait until after the end of each crop’s marketing year to see the final target price. If a refund would need to be made, Borland said FSA could offset the part that needs to be repaid from a future payment to producers that would be made between October 2004 and March 30, 2005.

Producers who are affected received a letter in May notifying them of the situation. Contact your local FSA office for more information.