FAQ: FSA Releases More ACRE Rules

In-depth look at how new rule information could impact your ACRE election decision.

FAQ: USDA recently issued an update to the rules for the Average Crop Revenue Election or ACRE program. How will these rules affect my decision on whether or not I should enroll in ACRE?

Answer: Provided by Steve Johnson, Iowa State University Extension farm management specialist.

The sign up period for USDA’s Average Crop Revenue Election or ACRE program began April 27, 2009. The Farm Service Agency issued a 278-page booklet of rules April 23.

You have until August 14 to decide whether or not to enroll in the 2009 state-level revenue based program established by the 2008 Farm Bill. ACRE gives you a choice. You can elect to enroll in ACRE or continue with the Direct & Counter Cyclical Program (DCP). Farmers have several reasons to consider signing up for ACRE in 2009.

1) ACRE provides low-cost revenue protection for growers of corn, soybeans or other program crops. You enroll by FSA farm number. In Iowa the cost to participate is roughly $5 per acre on average for every FSA base acre. This amount reflects the direct payment that is reduced by 20%. And if you plan to use the marketing loan program, the county loan rate is reduced by 30%. Also, you give up any potential for collecting a counter cyclical payment (CCP) when you enroll in ACRE.

An ACRE payment isn’t guaranteed. It is paid only if annual prices and yields fall below both the state and farm revenue triggers. ACRE will likely provide a much larger payment than the DCP, especially if 2009 prices decline.

2) ACRE provides an annual revenue guarantee through 2012 and uses historical cash prices. You start with a high revenue trigger, including five-year Olympic average yields at both the state and farm levels. Current prices indicate your guarantee will be approximately $4.20 per bushel for corn and $9.97 ½ for soybeans in 2009.

3) ACRE complements crop insurance, but doesn’t replace it. Crop insurance is likely a better tool for managing revenue risk reflecting your own farm’s yields through actual production history (APH). Also, crop insurance revenue products use a futures price to set the guarantee; the spring-base price or the fall price, whichever is higher. These two yield and price multipliers reflect the revenue guarantee on your farm.

4) You can prove your farm yields annually with ACRE enrollment. However, if you choose to not prove your yields for the five years 2004 through 2008, you can use “plug yields.” This plug yield will be 95% of the computed county yield which is USDA’s NASS final yield for planted acres. So your county’s average yield annually times 95% could be your “plug yield” on your farm, but only for ACRE enrollment. You’ll still need to prove your farm’s yield annually in order to determine the actual farm revenue.

5) Once you enroll in ACRE you are in the program through 2012. If you don’t sign up in 2009, you can sign up in future years until 2012. Talk to your landowners and let them know you are interested in enrolling in ACRE, as it is an irrevocable decision.

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 http://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.

For more information and analysis of the new farm program, see ISU's Ag Decision Maker site www.extension.iastate.edu/agdm. For clarification on farm program details contact your local FSA office.

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