Most Corn Belt farmers not have received an ACRE payment, since the inception of the program in the 2008 Farm Bill. While that primarily results from very low participation in the program, most of those producers who did opt for the ACRE program have not financially qualified for payments due to the calculation formulas. However, the ACRE program may be worthy of consideration in 2013 depending on crop production prospects in your particular state.
Could ACRE benefit a farmer with very low soil moisture or a farmer whose spring planting has been delayed because of wet soils?
The Average Crop Revenue Election (ACRE) program was established in the 2008 Farm Bill as part of the farm safety net. However, the complexity of the program and the requirement for landowner participation resulted in very low participation.
The highest rates of participation were in Nebraska and Illinois, possibly because of active program promotion by Extension-based agricultural policy economists such as Brad Lubben in Nebraska and Gary Schnitkey in Illinois.
With the availability of ACRE in the 2013 production year, farmers will have until June 3 to decide whether to sign up for the program. And not unexpected, both Lubben and Schnitkey have offered extensive assistance to farmers to help make their decisions.
But their assistance benefits everyone, because Nebraska is beginning the season as the epicenter of the drought and Illinois farmers have been kept out of the fields due to incessant wet weather issues.
Lubben provides several points that provide a refresher about the ACRE program, which provides financial protection based on average revenue levels instead of commodity price levels set in legislation:
- Average revenue-based safety net tied to benchmark based on average yields and average prices.
- Protection from revenue losses when state and farm revenue both fall below respective benchmarks.
- Protection tied to planted acres of program commodities on a farm, up to the farm’s total base acreage.
- Direct payments available on base acres and program yields at 80 percent of the full DP rate for ACRE participants.
- Marketing loans available on actual production at 70 percent of the full ML rate for ACRE participants.
There are two calculations for ACRE, and both must be used to qualify a farm for an ACRE payment should crop prices fall:
- The state ACRE guarantee is calculated as 90 percent of the 5-year Olympic average yield, multiplied by the 2-year simple-average price of the two prior marketing years for the current year guarantee.
- The farm-level guarantee is equal to the average yield, multiplied by the average price, plus the farmer-paid crop insurance premium.