Sign-up for the new Average Crop Revenue Election (ACRE) Program for 2009 ended in mid-August; however, some farm operators who enrolled in the program have one final decision to make by Sept. 30, 2009. Any producers who have total crop acreage enrolled in ACRE for 2009 that exceeds 120% of the total 2009 crop base acres on any farm unit will need to prioritize their base acres for order of ACRE payment by Sept. 30 at their county Farm Service Agency (FSA) office. Otherwise, FSA will prorate the crop acreage eligible for ACRE payments, based on the percentage of crop base acres for each crop. The crop acreage priority decision at the FSA office is for the 2009 crop year only. Producers will have an opportunity to reprioritize their crop acreage for ACRE for the 2010 crop year.
Producers who have less than 120% of total crop base acres as planted crop acres on a farm unit in 2009 do not have to make any decisions on ACRE acreage priority or contact the FSA office by Sept. 30. In this situation, the total crop acreage on the farm unit would be eligible for 2009 ACRE Program, depending on the crop that was planted for 2009. Of course, farm operators who did not enroll in ACRE for 2009 do not have to worry about this decision. However, it probably is a good idea to understand the ACRE crop priority process at FSA offices, in case they decide to enroll in the Program for the 2010 or 2011 crop years.
The main thing to look at for prioritizing ACRE payment acres among limited crop base acres is to look at the potential for the NASS price triggers to be achieved for the 2009 crop year, thus increasing the likelihood of statewide ACRE payments for 2009. Secondly, it is good to pay attention to the USDA estimated statewide yield for a given crop for 2009, and how that compares to the benchmark state yield for that crop that was used to establish the state revenue guarantee for a given crop. Thirdly, you consider the anticipated 2009 farm-level revenue, especially if you expected one crop to have a considerably higher percentage yield increase in 2009 above the farm-level benchmark yield. In most cases, the farm-level calculations are not likely to impact the prioritization of crop acres for potential 2009 ACRE payments on a given farm unit.
2009 ACRE Crop Prioritization For Minnesota
We will now specifically look at crop prioritization for the 2009 ACRE Program in Minnesota, based on current USDA estimates for 2009 crop yields and average market prices.
Following is a summary for 2009 corn, soybeans, and wheat in Minnesota:
- CORN: The 2009 ACRE benchmark state yield for corn in Minnesota is 161 bu./acre and the estimated NASS benchmark price is $4.14/bu., resulting in an estimated statewide ACRE revenue guarantee for 2009 of $599.89/acre (161 bu./acre. x $4.14/bu. x 0.90 = $599.89/acre). Based on the most recent USDA report on Sept. 11, USDA is estimating the 2009 statewide corn yield at 167bu./acre and the 12-month national average corn market price for 2009 at $3.35/bushel. Based on the current USDA numbers, the estimated 2009 ACRE payment would be $33.69/eligible ACRE corn payment acre, plus any additional payment for farm-level average yields that exceed state benchmark yields. The maximum corn ACRE payment for 2009 would be $124.93/corn payment acre, plus any farm-level payment enhancements.
- SOYBEANS: The 2009 ACRE benchmark state yield for soybeans in Minnesota is 41 bu./acre and the estimated NASS benchmark price is $10.05/bu., resulting in an estimated statewide ACRE revenue guarantee of $370.85/acre (41 bu./acre x $10.05/bu. x 0.90 = $370.85/acre). Based on the most recent USDA report, the estimated 2009 statewide soybean yield is 40 bu./acre and the 12-month national average soybean price for 2009 is estimated at $9.10/bu. Based on the current USDA numbers, the estimated 2009 ACRE payment would be $5.71/eligible ACRE soybean payment acre, plus any additional payment for farm-level average yields that exceed state benchmark yields. The maximum soybean ACRE payment for 2009 would be $77.27/soybean payment acre, plus any farm-level payment enhancements.
- WHEAT: The 2009 ACRE benchmark state yield for wheat in Minnesota is 49.9 bu./acre and the estimated NASS benchmark price is $6.63/bu., resulting in an estimated statewide ACRE revenue guarantee of $297.75/acre (49.9 bu./acre x $6.63/bu. x 0.90 = $297.75/acre). USDA did not estimate statewide wheat yields (so the state average was used), along with the USDA estimated 12-month national average soybean price for 2009 of $5.10/bu. Based on the current estimates, the estimated 2009 ACRE payment would be $35.61/eligible ACRE wheat payment acre, plus any additional payment for farm-level average yields that exceed state benchmark yields. The maximum wheat ACRE payment for 2009 would be $62.01/wheat payment acre, plus any farm-level payment enhancements.
Based on these calculations, and the USDA crop production and average price estimates as of Sept. 1, 2009, the recommended crop priority order for ACRE payments for the 2009 would be: corn, wheat and then soybeans. The current estimated ACRE payment level of $33.69/eligible ACRE payment acre for corn is slightly below the projected 2009 payment level of $35.61/acre for wheat. However, the maximum payment potential for corn acres is much higher at $124.93/acre, compared to $62.01/acre for wheat, if corn market prices continue to drop in the coming months. In addition, most farms in southern and western Minnesota will be more likely qualify for enhanced payments for higher farm-level corn yields with corn, as compared to wheat or soybeans.
Acreage priority for potential 2009 ACRE payments will likely vary a lot among farm units; however, producers should make sure that the potential for 2009 corn ACRE payments is analyzed before minimizing corn acres for potential ACRE payments. For many farm units, this is a non-issue, since all crop acres will likely be eligible for potential 2009 ACRE payments. Farm operators who want more information on acreage priority in the ACRE program are encouraged to contact their county FSA office.
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].