ACRE 2.0: What Changes Will Have To Be Included?

Survey findings

Among their findings:

• Initial farmer plans to switch to ACRE in 2009 were primarily driven by producer perceptions of whether or not ACRE would pay more than existing programs and whether or not it would provide more risk protection.
• Planning to stay with existing programs in 2009 and possibly switching to ACRE later was driven more by producer risk aversion and perceptions about the effect of yield and price variability on income risk in the coming years.
• Membership in organizations such as National Farmers Union, National Farmers Organization and the Grange was consistently and strongly associated with intending to stay with existing programs in 2009.
• Consistent state and crop effects were also found. Texas and Wisconsin producers were more likely to plan to wait and possibly switch to ACRE later.
• Cotton growers consistently and strongly intended to stay with existing programs in 2009, likely due to the large “cost” of giving up the relatively larger direct payments for cotton and price expectations that made counter-cyclical payments more likely.
• The ACRE decision was clearer for farmers focused on some crops (e.g., cotton and wheat).
• The fact that many producers did not follow recommendations – to sign up for ACRE because expected returns would exceed returns from traditional programs – runs contrary to the often accepted notion that producers are simply rent seeking in farm program participation.

Summary

If Congress includes another version of ACRE in the 2012 Farm Bill, several changes may have to be made to attract more producer participation. Choices of programs lead farmers to stick with the direct payment program they knew. Farm organizations may need to be included in the sign-up process, instead of just Extension economists, and the program needs to treat all commodities equally.

 

Read the article at farmgateblog.com.