FAQ: If there would be an ACRE payment made for the 2009 crop, our high proven yields on corn for our farm would work in our favor. Do you feel we have a very good chance of getting our 20% Direct Payment or more back in the form of an acre payment in the next four years?
Answer: Provided by Steve Johnson and William Edwards, Iowa State University Extension farm management specialist and ISU Extension economist.
Yes, based on the recent cash price estimate for the 2009-10 marketing year you would get all the DP back the first year. However, you’d only collect an ACRE payment on the acres planted to corn and on farms enrolled in ACRE.
Another advantage is that the farms you enroll in ACRE in 2009 would have a state guarantee minimum of $571 per acre for the 2010 corn crop. That’s because the state revenue guarantee can’t drop by more than 10% from one year to the next. The math on that is: $635 per acre for Iowa corn revenue guarantee estimate for 2009 multiplied by 90% equals a $571 per acre corn guarantee for 2010.
For soybeans, the 2009 Iowa revenue guarantee with ACRE is estimated at $457 per acre. A farm enrolled in ACRE will have a 2010 revenue guarantee of $411 per acre, which is 90% of $457 per acre.
Revenue guarantees for 2010 could be higher
While the state revenue guarantees for ACRE would be $571 for corn and $411 for beans at the lowest, you should understand that they could be higher than that.
With a 2-year rolling price average, the 2009 crop marketing year average price would have to be at least 20% lower than the 2007 price to cause the maximum drop of 10%, assuming the 5-year yield didn’t change. If 2009 Iowa average yields are more than 173 bushel per acre for corn or more than 52 bushels for beans, that would raise the Olympic average yield for 2010 and keep the revenue guarantees higher.
Enrolling in 2009 vs. enrolling in 2010
A farm that enrolls in ACRE starting in 2010 would get a guarantee based on the new rolling averages for prices (2008-2009) and yields (2005-2009). However, if neither the 2009 corn nor the 2009 bean guarantee drops more than 10%, then the 2010 enrollee would get the same guarantees as if he had enrolled in 2009. If the price multiplied by yield drops more than 10%, then the 2009 enrollee will have a higher guarantee than the 2010 enrollee.
The farm level guarantees follow the same rules as for the state level guarantees—maximum change of 10% each year. So, enrolling in 2009 could give you a higher guarantee in future years compared to enrolling in a later year—but it is not a sure thing.
This is an aspect of USDA’s ACRE program that is important to understand, because enrolling in ACRE in 2009 can affect the amount of revenue guarantee you could get on the 2010 crop. Once you enroll in ACRE you are in it for the remaining years of the program, which means if you enroll in 2009 you are in the program through the 2012 crop year.
For more information about ACRE, DCP and other programs, visit your local USDA Service Center or your FSA county office. You can also get information on-line at www.fsa.usda.gov.
If you have a question you'd like answered regarding the new USDA farm program, please send it to [email protected]. We will pass it on to the ISU Extension specialists or to the program specialists at USDA's Farm Service Agency office in Des Moines and they will send you the answer.
Also, ISU Extension farm management specialist Steve Johnson keeps Iowa farmers and landowners updated using his ACRE Answers web page at www.extension.iastate.edu/polk/farmmanagement.htm