What is in this article?:
- Should You Sign Up For ACRE and SURE Farm Programs?
- A SURE thing?
Is there a benefit to signing up for farm programs anymore? Sure, you get a small check for direct payments, if you are not in the ACRE program. But what about ACRE and SURE, the latter being the permanent disaster program? Yes, there is paperwork for both of them, but in the end, is there value in signing up? Your answer is probably “It all depends on the year,” and if that is the case, is this the year?
Chris Bruynis at Ohio State University says June 1 is the deadline for deciding whether to opt out of the Direct Payment program and sign up for ACRE, which would be effective for the 2011 crop and benefits would be paid late in 2012 after the end of the marketing year for the 2011 crop. The price guarantee for the 2011 crop will be the average of the 2009 and 2010 crops, which is forecast at $4.43 for corn, $10.65 for beans and $5.26 for wheat. Since price is half of the equation and yield is the other half, Bruynis says if crop yields are good, then the price guarantee has to be lower.
Bruynis looked at the current futures market prices, compared to the average cash price that would be needed to trigger an ACRE payment, and he says “it does not appear that ACRE will be beneficial in 2011.” That is, if you have not signed up for ACRE before and were considering it for 2011. But Bruynis says markets are fickle and can move quickly and unexpectedly, and he says there is no downside risk protection if grain prices decrease significantly. It would cost $4-5 in loss of Direct Payments to sign up for ACRE, and Bruynis says it might be a good risk strategy for some operations.
Another “what if” might be in the case of a crop failure in your region, but not widespread enough to impact national price trends. That is where the SURE disaster program comes into play, says University of Illinois Farm Management Specialist Gary Schnitkey. It will provide financial support if your whole farm revenue falls below a guarantee level, and Schnitkey says that meant a $35/acre payment in 2008 for some farms, when typical farm income was relatively high.