ACRE, or the Average Crop Revenue Election, is a revenue based program contained in the 2008 Farm Bill. The 2008 Farm Bill made ACRE available through the 2012 crop year. Last year, the 2008 Farm Bill was extended to the 2013 crop year and some farmers choose to enroll in ACRE for 2013. In Illinois, ACRE payments are not likely for corn, soybeans, or wheat in 2012. There is a reasonable chance for ACRE payments for corn and soybeans in 2013.
ACRE State Benchmark Revenue Calculations
ACRE makes payments when a crop's state revenue, as measured by the state yield times the national market year average (MYA) price, is below state benchmark revenue. If this state benchmark is met, a farm benchmark also must be met before ACRE will make payments on a farm-basis. This post deals with the chance of the state revenue being below the state benchmark revenue.
Table 1 shows the calculation of state benchmark revenues for corn, soybeans, and wheat in Illinois for the years from 2009 through 2013. The 2012 state guarantee for corn is $705.34. The benchmark is arrived at through a two-step process. First, the benchmark yield (Olympic average of the previous five state yields) times the two-year average of MYA prices times .90 gives preliminary benchmark revenue. The 2012 preliminary guarantee for corn is $861.84, which equals the 168 benchmark yield times the $5.70 benchmark price times .90. Second, the preliminary benchmark revenue is compared to the previous year's benchmark revenue. Benchmark revenue cannot go up or down more than 10% from one year to the next. In 2011, the benchmark revenue for corn is $641.22, meaning that 2012 benchmark revenue cannot be above $705.34 ($641.22 x 1.1). Since $861.84 is greater than $705.34, benchmark revenue is capped at the limit of $705.34.
With near certainty, 2013 benchmark revenues will be capped at the upward movement of 10 percent for corn, soybeans, and wheat in Illinois. Therefore, even though the 2012 market years for corn and soybeans have not come to an end, the 2013 benchmark revenues can be calculated with near certainty as a 10 percent increase from last years' benchmarks. For this not to be the case, the 2012 MYA corn price would have to be below $3.87 per bushel and the soybean price below $11.35 per bushel. With the market year ending in August, it is extremely unlikely that prices below these levels will occur. State benchmark revenues for 2013 will be $775.87 per acre for corn, $534.86 per acre for soybeans, and $352.07 per acre for wheat.