Federal farm legislation provides payments to producers of several agricultural commodities if the average marketing year price of a commodity drops below a threshold level. However, as that average price is not determined until the end of the marketing year, many producers wonder throughout the year if they will receive payments. A new University of Illinois Extension tool will provide insight on the answer to that question as the marketing year unfolds.

Located on the farm.doc Web site, the Counter-Cyclical Payment Tool provides a way for producers to judge, from current prices, the likelihood of the marketing year average price dropping below the payment-triggering threshold, according to Darrel Good, U of I Extension marketing specialist and part of a team that developed the tool. The tool is located at: http://www.farmdoc.uiuc.edu/marketing/CounterCyclical/CCP.html.

"As we get the average monthly price for corn, soybeans and wheat, we calculate the estimated average price to date and compare that price to the threshold price," explains Good. "The tool calculates what the average market price needs to be for a given commodity for the rest of the year in order for the marketing year average price to just equal the threshold price and result in no counter-cyclical payment."

Robert N. Wisner, an economist at Iowa State University, developed the tool for corn and soybeans. Wheat was added and the tool was "tweaked a bit," Good says. Others on the U of I team were Scott H. Irwin, like Good, a professor in the Department of Agricultural and Consumer Economics, and Joao Martines-Filho, a visiting scholar in the department.

"In the very near future, we we’ll add oats, barley, grain sorghum and upland cotton to the tool," says Good. "We believe that this tool can shed some light on the likelihood of counter-cyclical payments during the marketing year but also keep producers abreast of how market prices are progressing."