Farms have the option to enroll in the ACRE program. Previous ACRE elections do not matter. The decision to enroll in ACRE for 2013 crops must be made by June 3, 2013. ACRE must be elected as the DCP program is the default selection. Farms electing ACRE

  • have direct payments equal to 80% of direct payments under the DCP program
  • have marketing loan payments with loan rates set at 70% of the DCP marketing loan rates
  • substitute ACRE revenue payments for DCP counter-cyclical price-based payments

ACRE must be elected for all farm program crops grown on the farm. However, payments by ACRE are specific to a crop, state and farm. An ACRE payment is made for the 2013 crop year if revenue for the crop and state is less than the 2013 ACRE revenue guarantee for the crop and state. In addition, a farm level condition must be met. Thus, both the state and farm have conditions that must be met for a farm to receive an ACRE payment. Because of length, the farm payment condition and other consideration related to the farm are discussed in detail in the section titled "Other Decision Factors" later in this article.

If ACRE payments exist, they will be made beginning in October 2014. More detail on the ACRE program is provided in a Jan. 9, 2009 farmdoc article available in themanagement section titled "Questions and Answers about the ACRE Provision of the 2008 Farm Bill".

 

Estimated ACRE Revenue Guarantee for U.S

Because all program crops planted on a farm must be enrolled in ACRE, it is important to evaluate the 2013 ACRE decision for the mix of farm program crops. For the reason of simplicity in illustrating the key considerations, this article will evaluate this decision from the perspective of the U.S. A given crop's U.S. ACRE revenue guarantee equals [90% times (ACRE benchmark U.S. yield per planted acre) times (ACRE benchmark price)]

  • Benchmark Yield is an Olympic average (removes low and high yields) of yields for the 5 most recent years (2008 through 2012 crops for the 2013 ACRE program).
  • Benchmark Price is a simple average of U.S. price for the two most recent crop years (2011 and 2012 crop years for the 2013 ACRE program).
  • Also, a 10% limit exists on year-to-year decrease or increase in ACRE's revenue benchmark.

ACRE calculations for this article start with the 2009 crop year, the first year ACRE was offered. It is important to underscore that the ACRE revenue guarantees presented in Figure 2 for selected farm program crops are estimates. They are for the U.S., not a specific state. In addition, price for the 2012 crop year is not yet known, although the current estimate is not likely to change by a lot since farms have already sold a majority of their 2012 crops. Moreover, the use of a two-year average to calculate the ACRE price benchmark dampens any change in the 2012 crop year price. The estimates are calculated using data from the U.S. Department of Agriculture (USDA), National Agricultural Statistics Service (NASS) and USDA, Office of the Chief Economist (OCE).