A farmer from northern Iowa sent this question to Iowa State University Extension farm management specialist Steve Johnson last week: "With all my land enrolled in USDA's ACRE program, I'm very curious as to the possibility of an ACRE payment being made to farmers for the 2013 crop. With crop prices moving lower in 2014 and all the gloom and doom currently in the marketplace, I'm wondering if the ACRE program will pay anything for last year's corn or soybean crop? I farm in Worth County."
Here's how Steve Johnson answered the question: It looks like there is the potential for a 2013 ACRE payment in Worth County of $29 to $63 per acre for corn acres only. Using the $4.45 per bushel midpoint price for corn projected in the July 11, 2014 USDA World Agricultural Supply & Demand Estimates report, the payments would be a little less than $46 per acre for each acre of corn planted in 2013, and only for a farm enrolled in the ACRE program.
Ag Decision Maker tool can estimate possible payments
ISU Extension has an Excel spreadsheet on the Ag Decision Maker website which allows you to change the projected corn price for the 2013-14 crop marketing year, to plug in different prices and see the possible outcomes. You can change the $4.45 per bushel (or whatever price you choose to use) on the right-hand side of the spreadsheet and play "what if" regarding potential ACRE payments, Johnson explains.
The spreadsheet is titled "ACRE Payment Estimator (Average Crop Revenue Election) 2013." You will find it in file A1-45 on the Ag Decision Maker Website. Go to www.extension.iastate.edu/agdm and look under the "Crops" section to find file A1-45 "Average Crop Revenue Election (ACRE) and click on the Excel file titled "Projected ACRE Payment Rates for Iowa Crops." Use this tool to estimate potential possible payments under the ACRE program.
You should keep in mind that the WASDE report is actually using a range of projected cash prices between $4.35 per bushel (which would amount to an ACRE payment of $29 per acre) and $4.55 per bushel (an ACRE payment of $63 per acre).
Work with your FSA office on calculations to finalize any payment
Make sure you've provided your actual 2013 production to your local Farm Service Agency office, says Johnson. The final 2013-14 marketing year average (MYA) cash price will not be known until September 2014, thus the 2013 ACRE payment will not be made until October 2014. The marketing year for crops begins September 1 and ends August 31. Thus, the marketing year to establish the price for the 2013 corn and soybean crop began Sept. 1, 2013 and will end August 31, 2014.
"You need to work with your local FSA office regarding any final calculations used to finalize the actual 2013 ACRE payment," he emphasizes.
New ARC County or ARC Individual farm coverage
In the 2014 Farm Bill, Congress did away with the Direct Payments (DP) program. Congress also repealed two other programs: Countercyclical Payments (CCP) and the Average Crop Revenue Election (ACRE) program. The new farm bill offers two new programs instead. They are Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC).
If you choose ARC beginning in 2014 with the election likely this fall, you will have to make another decision. You'll choose by FSA farm number, either ARC County coverage (county yields) or ARC Individual farm coverage (farm yields). FSA hasn't announced the sign-up for the five-year election followed by an annual enrollment for both 2014 and 2015 crops, but it will probably be held in early 2015.
Both ACRE and ARC County coverage programs use a revenue benchmark and an Olympic average yield (remove the high and low) for the most recent five crop years. ACRE required both state and farm level triggers times 90% to be met, with potential payments based on the state level. Both ARC County and ARC Individual coverage programs use a benchmark revenue times 86%. The ARC County coverage pays on 85% of base acres and commodity program crops can remain separate to trigger payments. It does not matter what crop was planted on the farm annually, as payments are made on base acres.
All of these programs use MYA national cash prices
The ACRE Individual farm coverage pays on 65% of base acres and the revenue for all commodity crops on the farm are combined, says Johnson. The crop must be planted on the farm to trigger a potential payment, the payment reflects the base acres.
They all use marketing year average (MYA) national cash prices. ACRE uses a simple average for the most recent two crop marketing years. Both ARC County and ARC Individual farm coverage use the MYA for the most recent five years. The ARC County uses an Olympic average on price (remove the high and low) and ARC Individual farm coverage uses an Olympic average of the revenue.
"Those producers who enrolled in the ACRE program from 2009 thru 2013 may have an advantage," says Johnson. "They might better understand the use of a multiyear revenue risk management tool and the potential triggers and calculations for both the ARC County and ARC Individual farm coverage."
For farm management information and analysis visit ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson's site is at www.extension.iastate.edu/polk/farm-management.