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TeachMeFinance.com - explain Production flexibility contract Production flexibility contract The term 'Production flexibility contract ' as it applies to the area of agriculture can be defined as 'A 7-year contract covering crop years 1996-2002, authorized by the FAIR Act of 1996 between the CCC and farmers, which makes fixed income support payments in place of the previous variable target price deficiency payments. Farmers are given production flexibility and diversification options on their contract acres not previously allowed on base acres. Each farm’s total payment is the payment rate times the payment quantity for participating base acres. In exchange for annual fixed payments, the owner or operator must agree to comply with the applicable conservation plan for the farm, the wetland protection requirements currently in law, and the constraints on growing fruits and vegetables on contract acres. Land enrolled in a contract must be maintained in an agricultural or related activity. The law states that not more than $35.6 billion will be paid over the 7-year period, in declining annual amounts from $5.3 billion in FY1996 to $4.0 billion in FY in 2002. The annual payments are allocated among commodities similar to historical deficiency payments, with 53.6% going to feed grains, 26.3% for wheat, 11.6% for upland cotton, and 8.5% for rice'. Previous 5 Terms: Production costs Production Credit Association (PCA) Production expense Production expenses Production expenses Next 5 Terms: Production payments Production plant liquids Production, crude oil Production, lease condensate Production, natural gas About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005-2011 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional medical, legal or financial advice. Information presented at TeachMeFinance.com is provided on an "AS-IS" basis. Please read the disclaimer for details.