The 2008 farm bill was extended through Sept. 30, 2013, for most programs that were in place for the 2012 crop year. This means producers have the option to enroll in the Direct and Counter-cyclical Payment (DCP) program or the Average Crop Revenue Election (ACRE) program this spring.
The deadline for enrolling in the ACRE program is June 3, while the final date to enroll in the DCP program is Aug. 2. This is a one-year enrollment, which is unlike ACRE enrollments in past years that locked producers into the program for more than a year.
To be eligible for an ACRE payment, the state and individual farm unit must qualify. The most important questions about ACRE enrollment are whether the state will be eligible for an ACRE payment and for how much. Obviously, this is unknown right now.
This is important because enrolling in the ACRE program means the direct payments received will be reduced by 20 percent. This reduction applies to total direct payments on a farm unit. In addition, marketing loan rates are lowered by 30 percent for production on farms enrolled in the ACRE program.
Current projections show an ACRE payment of $34 per acre for soybeans in North Dakota. In South Dakota, the payment is $49 per acre, and in Minnesota, it is $51 per acre. Soybeans are the only crop that shows a payment in all three states. Several crops in Montana are covered under irrigation practices only.
A payment of $28 per acre is projected for corn in Montana only. At the assumed $4.80 national average marketing year price for corn, to trigger a state payment, the yield would have to decline from the benchmark yield by 8 bushels per acre in North Dakota, 9 bushels in Minnesota and 15 bushels in South Dakota.
Of the three major crops, wheat is the least likely to earn ACRE payments in 2013. At the U.S. Department of Agriculture projected price of $7 per acre for wheat, the state yield would have to decline by 9 bushels per acre in North Dakota, 12 bushels in Minnesota and 8 bushels in South Dakota and Montana before an ACRE payment would begin to accrue.
Several small-acreage crops are projected to earn ACRE payments. ACRE payments for lentils are projected to be $38 per acre in North Dakota, $28 per acre in South Dakota and $33 per acre in Montana. Projected payments for small chickpeas are $23 per acre in North and South Dakota and $7 per acre in Montana. Flax payments are estimated to be $2 per acre in North Dakota and $13 per acre in Minnesota.
While many of these payments look attractive, most producers do not plant a large number of acres to these crops. ACRE payments are earned on the acres planted or considered planted for each crop.