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Texas Agriculture Archive

May 21, 2004

CCC repayment
provisions announced

Farm program participants have two options to repay portions of countercyclical payments (CCP) that exceeded the final payment rate.

Under current market prices, many producers who received 2003 crop advance CCPs for various program crops will likely be required to repay all or part of that advance. Under procedures recently announced by USDA, producers will be sent a letter providing them with two options for repaying USDA for any overpayment.

The Commodity Credit Corporation (CCC) issued first-advance countercyclical payments for wheat, corn, sorghum, cotton, rice and peanuts in October 2003 and issued second-advance payments for rice and peanuts in February 2004. Advance countercyclical payments were not issued for soybeans, barley, oats and oilseeds.

The first repayment option is a default option, and no action is required by the producer. CCC will automatically reduce any direct or countercyclical payments these producers are scheduled to receive between October 2004 and March 2005 to satisfy any obligation to repay unearned 2003 crop advance payments. No interest will accrue on the debt using this repayment method.

Payments scheduled during this period include the 2004 crop final payments (October 2004), 2004 crop advance CCPs (October 2004/February 2005) and 2005 crop advance direct payments (beginning December 2004). Producers will receive a statement showing the amount of reduction to satisfy the debt. If DCP funds are not sufficient to repay unearned advances, CCC will notify producers in April 2005 that refunds will be collected under the procedures for Option 2.

The second option would require producers to notify their Farm Agency Service Center by June 15 that they wish to repay unearned CCPs by following normal repayment procedures.

Under these procedures, producers will be sent an initial notification following the end of each crop's marketing year that will inform them of their debt followed by a first demand letter approximately 30 days later. Producers may then settle their debt by writing a check. If they have not paid within 30 days, a second demand letter will be sent that will include interest on the debt from the date of the first letter. If necessary, a third demand letter will be sent and the debt will be transferred to another agency for collection.

As of this date, it appears that producers who received wheat, corn, grain sorghum and rice advance CCPs will have to refund all are part of those payments. According to the National Cotton Council, cotton and peanut CCP refunds are not likely at current prices.

For more information: ftp://ftp.fsa.usda.gov/public/notices/DCP 109.pdf.