Counter-cyclical payments by crop year

Counter-cyclical payments by crop year

Counter-cyclical payments (CCPs) are paid on a fixed acreage base?the same as for direct payments. Target prices are specified in the 2008 Farm Act. CCPs are also available for pulse crops. The payment rate for CCPs equals a so-called "target price," minus the direct payment rate, minus the higher of the market price or the loan rate. Thus, when market prices fall, the payments increase. Since crop year 2006/07, payments have been made only for cotton and peanuts. Prices for the other commodities have been above the target price less the direct payment rate, so no payments have been made. Because CCPs are linked to market prices, the payments may indirectly affect production by reducing revenue risk. Further research is necessary to fully understand how farmers react to CCPs.


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