Expected Payment Rates to Upland Cotton
Producers for Calendar Years 2003 and 2004
Prepared by National Cotton Council, September 2003
| Date of Payment |
Nature of Payment |
Payment Rate |
September/
October 2003 |
Final 2002 Counter-Cyclical Payment |
4.13 cents/lb. |
| October 2003 |
Final 2003 Direct Payment |
3.34 cents/lb. |
| October 2003 |
First Advanced 2003 Counter-Cyclical Payment |
Up to 4.80 cents/lb. |
| December 2003 |
Advanced 2004 Direct Payment |
3.34 cents/lb. |
| February 2004 |
Second Advanced 2003 Counter-Cyclical Payment |
Up to 70% of Total Projected CCP less First Advanced CCP |
September/
October 2004 |
Final 2003 Counter-Cyclical Payment |
Total CCP less First & Second Advanced CCPs |
| October 2004 |
Final 2004 Direct Payment |
3.34 cents/lb. |
| October 2004 |
First Advanced 2004 Counter-Cyclical Payment |
Up to 4.80 cents/lb. |
| December 2004 |
Advanced 2005 Direct Payment |
3.34 cents/lb. |
Secretary is authorized to offer an advance of up to 35% of projected total counter-cyclical payment (CCP) in October of year of harvest.
Producers can elect to take an advance payment on the 2004 crop DP equal to 50% of the 6.67 cents/lb. payment rate.
Secretary can offer a second advance CCP in February following year of harvest, but total of first and second advance may not exceed 70% of total projected CCP. Producer has option whether to take the advance or wait for final payment. If producer did not take first advance on CCP offered in October 2003, then payment would be the sum of the initial advance payment plus the second advance payment.
Final CCP will be based on difference between target price (72.40 cents/lb.) and effective price. Effective price is direct payment plus higher of: (1) marketing year average price received or (2) loan rate. Producers who receive advances exceeding actual CCP for each respective crop must repay any excess amounts.
Based on projected marketing year average price received by farmers for 2004 crop USDA may offer 35% advance CCP in October 2004 (maximum is 4.80 cents/lb.).
Notes:
(1) all advance payments are exempt from IRS rule of constructive receipts, so tax due only on receipt not on availability of advance,
(2) total DP (cotton, rice, grains and oilseeds) are subject to limit of $40,000 per person,
(3) total CCP (cotton, rice, grains and oilseeds) are subject to limit of $65,000 per person, and
(4) DP and CCP limitations are applied based on crop year regardless of when payment is actually made.