USDA must decide soon the most significant question for the new U.S. farm revenue-protection program – the trigger price for releasing payments – a senior USDA official said on Monday.
Created by the 2008 Farm Bill, the Average Crop Revenue Election (ACRE) program would be the first federal program to shelter farmers from poor yields, as well as low prices.
A high trigger price could lure grain, cotton and soybean growers to enroll in the novel program, which is offered as an alternative to traditional subsidies. But it could triple the cost of the program, according to a think tank estimate.
"It's probably the biggest decision we have to make," Deputy Agriculture Secretary Chuck Conner told reporters. "That decision has to be made fairly soon."
The difference in the starting point could amount to $6.6 billion over five years in payments to corn, wheat, soybean, upland cotton and rice growers, says the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.
FAPRI estimates payments would total $3.46 billion if 2006 and 2007 prices are used, compared to $10.1 billion if 2007 and 2008 are used.
By law, the trigger cannot rise or fall by more than 10% a year.
National Farmers Union President Tom Buis said the price trigger should be based on the average farm-gate price for 2007 and 2008 crops. Agriculture Secretary Ed Schafer has suggested that earlier and lower prices might be used as the starting point for calculating the moving two-year average.
"2007 and 2008 are more favorable to producers," said Buis during a news conference. "Congress wrote 'the most recent years.'"Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.