Decision timehas arrived for the new Average Crop Revenue Election (ACRE) Program. The ACRE Program has been discussed in meetings and articles for months, and many university farm management specialists have done analysis and developed calculation spreadsheets for ACRE. The recent drop in expected 2009 corn and soybean prices has seemed to make ACRE sign-up much more attractive. However, as of mid-July, less than 25 farm operators in Minnesota had enrolled in the program for 2009, and ACRE sign-up was very slow throughout the country. Farm operators and landowners have until Aug. 14, 2009, to sign-up for the ACRE Program at county Farm Service Agency (FSA) offices.
Given the higher likelihood of ACRE payments, with the current 2009 corn and soybean price projections, why has sign-up been so slow to this point? Following are some of the reasons producers have listed for not enrolling in the ACRE Program thus far:
- ACRE is new and is difficult to understand, especially for landlords.
- The double-trigger aspect of ACRE – requiring both a state revenue trigger and a farm unit revenue trigger to be met before ACRE payments are made – is confusing to some producers.
- ACRE requires the signatures of all landlords on cash rented farm units, and some farm operators do not feel prepared to discuss ACRE with their landlords.
- ACRE sign-up is a four-year commitment (2009-2012), and some producers are concerned about the longer-term ACRE enrollment beyond 2009.
- Some producers are worried about farm-level yield verification requirements that will be required to establish five-year average farm yields to used to calculate ACRE guarantees.
- Some producers do not want to lose 20% of the direct payments (approximately $3.50-5.50/crop base acre for most producers in Minnesota), which is a requirement for ACRE enrollment.
- Producers are concerned about the 30% reduction in CCC loan rate required with ACRE enrollment, and the impact on the annual cash flow of their farm business. (The ACRE loan rate reduction in corn will be 53-56¢/bu. in most Minnesota counties, which is a cash flow impact of well over $50,000 on 100,000 bu. of corn placed under CCC loan, even though there is no loss of income.)
- Some producers have decided to wait until the 2010 crop year to evaluate ACRE, due to the complexities of ACRE and difficulty in understanding the new program.
Farm operators are encouraged to use whatever time remains to take a closer look at the ACRE program for 2009. Remember, ACRE enrollment is by farm unit, so a producer does not have to enroll all of their farms in ACRE for 2009. It may be tempting to just wait until 2010 for possible ACRE enrollment; however, some university farm management specialists have suggested that the current situation with 2009 revenue guarantees, along with 2009 corn and soybean price projections, may mean that 2009 could offer the best potential for ACRE payments in the next four years. However, we must also remember that there are no guarantees with ACRE, so there is some financial risk involved. There may not be any ACRE payments during the four-year period, which would cost the producer the value of the 20% reduction in direct payments over the four-year period. In the end, the final ACRE decision lies with the producers and landowners, and we will not know the results of that decision for the 2009 crop year until after August 31, 2010.
The county FSA office is the best resource to find out details on sign-up for the ACRE Program, farm-level yield verification, reporting requirements, landlord requirements, etc. Many FSA offices are holding information meetings, sending out newsletters, etc. Attend the meetings, read the newsletters and find out all that you can about the ACRE Program. Kent Thiesse has developed an ACRE information sheet, an ACRE calculation worksheet and has links to several electronic ACRE spreadsheets. To receive any of this information, contact him via e-mail at [email protected].
There are also many excellent Web sites with ACRE information and calculation spreadsheets. Here are some of the best ACRE web sites:
- USDA Farm Bill Web Site – www.usda.gov/farmbill
- University of Minnesota – www.extension.umn.edu/agbusinessmanagement/
- U of Missouri FAPRI Web Site – http://www.fapri.missouri.edu/
- U of Illinois Farm Management Web Site – www.farmdoc.uiuc.edu
- Iowa State U Decision Maker Web Site – www.extension.iastate.edu/agdm/
- Kansas State U Ag Manager Web Site – http://www.agmanager.info/
- National Corn Growers Assn. – www.ncga.com/acre-resource-center
Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected].