FAQ: Why Wouldn't a Farmer Want to Sign up for ACRE?

Exploring a question a lot of farmers are asking.

FAQ: Is there any time or situation when we wouldn't consider signing up for ACRE? The program looks like a small price to pay for good protection on the downside if markets decide to really go south.

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

There are a few reasons or situations why you would not want to elect the ACRE program for a farm.

  • The landowner refuses to sign the ACRE election form as designated by an FSA farm number. The election amends the original DCP on that farm and becomes an irrevocable contract that lasts through the 2012 crop year.
  • The producer doesn't feel comfortable giving up the 20% of their direct payment or DP annually. In Iowa, that's roughly $6 per acre for every corn base acre and $3 per acre for every soybean base acre.
  • The producer has no proven yields on that farm for the most recent 5 years. FSA will likely provide "plug yields" for years in which a yield cannot be proven. In addition, a March press release from FSA states farm yields will be established using production evidence including crop insurance yields/
  • The producer feels the National Marketing Year Average or MYA cash price for 2009, 2010, 2011 and 2012 will likely be higher than the most recent 2-year MYA; as of March 11 those prices were $4.15 per bushel for corn and $9.73 for soybeans.
  • The producer believes their actual state average yields and/or farm average yields per planted acre for the next 4 years will move higher, along with the national MYA cash prices. As a result, the ACRE payment will be difficult to trigger at the state and/or farm level.

Most farmers will likely want to enroll

For most Iowa farms, producers will likely benefit from enrolling in the ACRE program by FSA farm number, especially if they enroll in 2009 and the price declines. That's because the large revenue guarantee for the first year of ACRE would likely trigger a large ACRE payment.

With 2009 state yields similar to the 5-year Olympic average (171 bu. per acre corn and 50.5 bu. per acre soybeans), the tentative ACRE trigger price for the 2009-10 national MYA cash price would be below $3.75 per bu. corn and $8.75 per bu. soybeans. Large ACRE payments would favor soybean planted acres in 2009, since most forecasted prices are below this level.

ISU has a decision tool to help you estimate ACRE payments at www.extension.iastate.edu/agdm/crops/html/a1-45.html. Plug in your own farm numbers, state and farm yield estimates along with your best guess for national MYA cash prices for 2009, 2010, 2011 and 2012.

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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