| Below are some examples of how the farm program works by using rice. Since the Direct Payment is guaranteed, the 12 month average market price determines how much the counter cyclical payment will be, since market price + DP + CCP = Target Price. Hence, the only variable other than market price is the counter cyclical payment (CCP). The maximum CCP rate for rice is $0.7425 per bushel.
Example A: If the market price plus the DP for rice is less than the target price, the farmer/landowner receives a CCP equal to the amount needed to reach the target price.
| Market Price per Bu. Rice |
|
$3.2500 |
| Direct Payment |
+ |
$1.0575 |
| Counter Cyclical Payment |
+ |
$0.4175 |
| Target Price per Bu. rice |
|
$4.7250 |
Example B: In this example the market price for rice is less than the target price. However the market price is sufficient enough that the target price is reached without the need of a counter cyclical payment.
| Market Price per Bu. Rice |
|
$3.6675 |
| Direct Payment |
+ |
$1.0575 |
| Counter Cyclical Payment |
+ |
$0.0000 |
| Target Price per Bu. rice |
|
$4.7250 |
Example C: In this example the market price for rice is greater than the target price. The market price is sufficient enough that the target price is reached without the need for a counter cyclical payment.
| Market Price per Bu. Rice |
|
$4.9500 |
|
| Direct Payment |
+ |
$1.0575 |
|
| Counter Cyclical Payment |
+ |
$0.0000 |
|
| Target Price per Bu. rice |
|
reached |
Farmer/Landowner receive $6.00/Bu. Rice |
Example D: In this example the market price for rice is not only below the target price, but also below the loan rate. However the farmer/landowner still receives the loan rate on 100% of the produced crops .
| Market Price per Bu. Rice |
|
$2.3500 |
Farmer/Landowner choose to place rice in USDA-CCC Rice Loan Program |
| USDA-CCC Loan Rate |
|
$2.9900 |
|
| Direct Payment |
+ |
$1.0575 |
|
| Counter Cyclical Payment |
+ |
$0.6775 |
|
| Target Price per Bu. rice |
|
$4.7250 |
|
|
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