Average Crop Revenue Election (ACRE) Program for 2011

Cory Walters and Greg Halich, Extension Ag Economists, University of Kentucky

The deadline to enroll in the ACRE program for the 2011/2012 marketing year is June 1. We are about to complete the second year with the ACRE program in Kentucky. ACRE payments were made for the 2009 wheat crop of about $95 per acre. The wheat payment was driven by lower state yields and a lower national average price. No other crops received an ACRE payment in 2009. For 2010 it is unlikely that ACRE payments will be paid for corn, soybeans, and wheat, due to the fact that prices have increased substantially for all three crops. However, with the current volatility in the market, unknown state yields, there exists a chance that ACRE payments could be made in 2011. The purpose of this article is to show expected price guarantees, where prices need to drop to trigger a payment, relationship between ACRE and the Counter-Cyclical program and probability of payments given current prices and unknown yields for the 2011/2012 marketing year.

Average Crop Revenue Election (ACRE) Program

In the 2008 Farm Bill the United States Department of Agriculture (USDA) released a new provision called Average Crop Revenue Election (ACRE) program. Beginning with the 2009 crop yearproducers will have the choice, before or on August 14, whether or not to enroll in the ACRE program. Selecting to participate is made by farm number (hereafter referred to as a “farm”) and everyone involved (i.e., tenant, landlord, etc. ) must agree to sign up. Participating in ACRE will result in reducing direct payments by 20 percent, marketing loan rates by 30 percent, and forgoing any counter-cyclical program payments. When a farm elects to participate in ACRE that farm will be required to continue in the ACRE program over the life of the 2008 Farm Bill (2009-2012). Additionally, any farm not involved in ACRE can elect to participate for the following crop year at any time over the life of the 2008 Farm Bill. By enrolling a farm into ACRE the producer enrolls all eligible crops on that farm in ACRE. The USDA will not make any ACRE payments before the end of the crop year. To sign up in ACRE producers must elect ACRE then annually enroll in ACRE. Electing to participate but not enrolling results in forgoing any ACRE payments. The timing of ACRE payments will be made beginning October 1 or as soon as possible after end of marketing year.

For more information on how the ACRE program works and access to the online University of Kentucky ACRE calculator please visit : http://www.ca.uky.edu/agecon/index.php?p=110