The Average Crop Revenue Election (ACRE) program is being implemented by USDA for the 2009 crop year, as part of the Food, Conservation, and Energy Act of 2008 (the new farm bill). Beginning in 2009, eligible farm operators will have the option to enroll in the ACRE program as an alternative to the current Direct and Counter-Cyclical Payment (DCP) program that was initiated in 2003 as part of the last farm bill. The ACRE program will offer the potential of revenue-based payments, based on yield and price, as compared to current price-only counter-cyclical payment (CCP) calculations. Farm Service Agency (FSA) offices will be holding information meetings and starting sign-up for the new ACRE program, in the coming months.
The Basics of ACRE:
- Eligible Crops: Corn, soybeans, wheat, cotton, other small grains and other program crops are eligible.
- Farm Unit: Enrollment in ACRE will be based on farm numbers, as they are recorded at the county FSA office.
- Eligible Acres: All crop base acres on a farm unit are eligible for the ACRE program. For example, a 100-acre farm, with a 50-acre corn base, 40-acre soybean base and 10-acre wheat base, would have all 100 acres eligible for ACRE. If the total of all crop base acres was only 90 acres, only those 90 acres would be eligible for the program.
- Planted Crops: A producer may plant any program crop on a farm and be eligible for ACRE on all eligible acres of that crop, regardless of the existing crop base acres. For example, if all 100 acres on a farm unit were eligible crop base acres, the producer could plant the entire farm to corn in 2009, could plant all soybeans in 2010 and be eligible for the ACRE program on all 100 acres in both years.
- ACRE Option: Producers and landowners have the option to enroll a farm unit in the ACRE program for 2009. The ACRE enrollment on that farm unit will be for all crops and will continue through the 2012 crop year. If the decision in 2009 is to stay with the current DCP Program, there will be another opportunity to enroll in ACRE for the 2010 crop year.
- Program Signup: Signup for the 2009 farm program should begin soon at county FSA offices. It is not known if ACRE program sign-up will also begin at that time, because USDA has not yet finalized all details for the ACRE program. Signup for the ACRE program for 2009 will likely continue until June 1, 2009, so it may be better to wait a while to sign-up for ACRE, in order to learn all details about the program and to have a better idea on the price guarantee.
- Landowner Sign-up: Enrollment for ACRE will require landowner signatures, meaning that all landlords in cash rental situations will have to decide on ACRE enrollment. This will require producers to understand ACRE and be able to explain it to their landlords.
- Farm Unit Changes: ACRE enrollment stays with a farm unit, regardless if there is a different farm operator in subsequent years. In other words, if a landlord signs up for ACRE in 2009, and rents the farm to another producer in 2010, the farm will remain in the ACRE program, and cannot be changed back to the DCP program.
- Crop Insurance: Producers enrolled in ACRE are required to carry minimum levels of crop insurance coverage on those farm units (premium amount is added to the farm level guarantee).
- Cost of ACRE: Although there is not a stated cost for ACRE participation, producers who sign-up will give up 20% of direct payments from 2009 to 2012. (Approx. $4-5/crop base acre/year for most producers). The national and county loan rates will be reduced by 30% for those in the ACRE program, which will affect the amount of revenue available from CCC loans and will reduce the potential to earn loan deficiency payments (LDPs).
In future articles, I will examine the mechanics of how the ACRE program operates and look at the state level and farm level triggers that will lead to ACRE payments. I will also review scenarios where the ACRE program may be more favorable, as compared to staying with the current DCP program in 2009 and beyond.
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 firstname.lastname@example.org.