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Cotton Transition Assistance Program and General Provisions for Agriculture Risk Coverage and Price Loss Coverage Programs

August 8, 2014



SUMMARY: This rule implements the new Cotton Transition Assistance Program (CTAP) authorized by the Agricultural Act of 2014 (the 2014 Farm Bill). It also includes general provisions needed to implement CTAP, the Agriculture Risk Coverage (ARC), and Price Loss Coverage (PLC) Programs. ARC and PLC will be implemented through a separate rulemaking and will provide benefits for other commodities. CTAP is a temporary program that provides payments to producers on farms for which cotton base acres were in existence as of September 30, 2013, as adjusted. It will operate for only the 2014 crop year and in certain counties for the 2015 crop year, and is intended to be a transition for producers on farms with upland cotton base acres that were in existence as of September 30, 2013, between the previous Direct and Counter-cyclical Payments Program (DCP) and the new Stacked Income Protection Plan (STAX), which is authorized to begin no later than the 2015 crop year.

DATES: Effective Date: August 8, 2014.

FOR FURTHER INFORMATION CONTACT: Brent Orr; telephone: (202) 720-7641. Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.) should contact the USDA Target Center at (202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Background

Section 1119 of the 2014 Farm Bill (Pub. L. 113-79) authorizes CTAP for producers on farms "for which cotton base acres were in existence for the 2013 crop year." CTAP is only authorized for the 2014 crop year, and for the 2015 crop year in counties where STAX is not available. STAX, as specified in section 11017 of the 2014 Farm Bill, is required to become available no later than the 2015 crop year, but is not required to provide coverage for every county in 2015. (USDA's Risk Management Agency is implementing STAX.) CTAP has some similarities to the direct payment aspect of DCP, for upland cotton only. The new ARC and PLC Programs authorized by sections 1116 and 1117 of the 2014 Farm Bill, respectively, which are being implemented through separate rulemaking, provide benefits for the commodities, other than upland cotton, that were previously covered by DCP.

The 2014 Farm Bill specifies that CTAP payments will be based on the farm's upland cotton base acres that were "in existence for the 2013 crop year." Accordingly, the 2014 CTAP payments will be made available to eligible producers on farms for which cotton base acres were in existence as of September 30, 2013, as adjusted. STAX is scheduled to be available in some counties beginning with the 2015 crop year; producers on a farm located in a county where STAX is available will not be eligible for CTAP for the 2015 crop year. In counties where STAX is not available for the 2015 crop year, producers on farms for which 2013 upland cotton base acres were in existence as of September 30, 2013, as adjusted, will be eligible for 2015 CTAP payments after October 1, 2015. This rule specifies the eligibility requirements for CTAP, which are different for 2014 and 2015 because of the provision involving STAX availability. Similar to DCP, producers do not have to actually grow or harvest upland cotton to be eligible for CTAP. However, producers must have an interest in the upland cotton base acres on the farm and must meet or satisfy other payment eligibility requirements (including average adjusted gross income requirements, conservation compliance provisions, and actively engaged in farming) to be eligible for CTAP.

The regulations for CTAP, ARC, and PLC will be specified in 7 CFR part 1412. Some definitions and requirements for base acres that are needed for all three programs are specified in this rule. For example, as specified in the 2014 Farm Bill, base acres of upland cotton in effect on September 30, 2013, are defined as generic base acres for the purposes of ARC and PLC. As another example, provisions for double cropping and replacement crops are similar to those for DCP, but the definitions are being revised to remove references to DCP and to insert references to CTAP, ARC, and PLC. Additional terms "eligible subsequently planted crop acreage" and "subsequently planted crop acreage" are added as those terms have different applicable meanings under the 2014 Farm Bill. Under section 1114 of the 2014 Farm Bill, subsequently planted crop acreage can be used as payment acres or for attributing generic base acres if the initial crop is any crop other than a covered commodity. These subsequently planted crop acres are termed "eligible subsequently planted crop acreage." The term "subsequently planted crop acreage" is also added to distinguish it from "eligible subsequently planted crop acreage" by virtue of it following any planted and considered planted (P&CP) covered commodity not in an approved double cropping sequence. To reiterate, "eligible subsequently planted crop acreage" may be used to determine payment acres under ARC or PLC and to attribute generic base acres on a farm; "subsequently planted crop acreage" may be used to facilitate base acre reallocation. Common provisions in 7 CFR 718 that apply to all FSA and CCC programs, including those for base acres and farm reconstitutions, apply to CTAP.

Eligible Land and Payment Amounts for CTAP

The eligible land for CTAP in 2014 and 2015 is based on the farm's upland cotton base acres that were in existence for the 2013 crop year, as of September 30, 2013, adjusted, including, but not limited to, adjustments for expired, terminated, or released Conservation Reserve Program (CRP) land, and limited by the total number of cropland acres on the farm (cropland is defined in 7 CFR 718.2). A producer's share interest in cropland on a farm must be equal to or greater than that producer's share interest in cotton base acres on the farm for that crop year, as reported on that farm's acreage report. FSA will verify and confirm the producer's share interest in cotton base acres reported on the CTAP application by comparing it to the producer's share interest in the cropland as reported on that farm's acreage report for that crop year. For example, if a farm has 50 base acres of cotton and two producers report equal shares of those 50 base acres of cotton, each must each have a 100 percent share interest in at least 25 reported cropland acres on that farm's acreage report for the same crop year to support their reported share of cotton base acres on that farm.

Section 1119(c) of the 2014 Farm Bill states that the CTAP payment amount is equal to the number of adjusted base acres of upland cotton divided by the national program yield for upland cotton of 597 pounds per acre times the transition assistance rate for upland cotton times the farm's DCP yield, times a specified percentage payment rate. The 2014 Farm Bill specifies that the transition assistance rate of upland cotton is the June 12, 2013, midpoint estimate for the marketing year average price of upland cotton for the marketing year beginning August 1, 2013, less the December 10, 2013, midpoint estimate for the marketing year average price of upland cotton for the marketing year beginning August 1, 2013, as contained in the applicable World Agricultural Supply and Demand Estimates report published by USDA, multiplied by the national program yield for upland cotton of 597 pounds per acre. Mathematically, the 597 pounds per acre cancels out of the above equation. Accordingly, the transition assistance rate can be restated as simply the difference between the August 1, 2013, and the December 10, 2013, midpoint estimates. FSA has calculated the transition assistance rate to be $0.09 per pound. The payment rates, as specified in the 2014 Farm Bill are: 60 percent for the 2014 crop year and 36.5 percent for the 2015 crop year. Therefore, the payment per base acre of upland cotton for 2014 would be $0.09, times the farm's DCP yield, times 60 percent. If the farm's DCP yield was 500 pounds, that payment would be $27.00 an acre. For 2015 it would be $0.09, times the farm's DCP yield, times 36.5 percent. If the farm's DCP yield was 500 pounds, that payment would be $16.425 an acre.

CTAP payments will be made to eligible producers on or after October 1 of the crop year when upland cotton is or ordinarily would have been harvested. Similar to DCP, payment eligibility is based upon the number of upland cotton base acres, which are not required to be planted to cotton. As discussed earlier, eligibility for CTAP in 2015 is determined in part by the availability of STAX.

Eligible Acreage Reductions for ARC and PLC

ARC and PLC have similar provisions to the former DCP with regard to planting flexibility and reductions for plantings of fruits, vegetables, and wild rice on base acres. The acreage reduction provisions apply to ARC and PLC, but not to CTAP. However, we are specifying them in this rule so that producers are informed of how generic acres and acreage reductions will be used in the payment calculations for ARC and PLC.

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule.

CFR Part: "7 CFR Part 1412"

RIN Number: "RIN 0560-AI22"

Citation: "79 FR 46335"

Federal Register Page Number: "46335"

"Rules and Regulations"


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