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Showing posts from 2009

2010 DCP and ACRE Signup begins, deadline June 1, 2010

Kent Olson, Extension Economist

USDA announced today that the signup period for the 2010 Direct and Counter-Cyclical Program (DCP) and the Average Crop Revenue Election (ACRE) program has begun and will continue through June 1, 2010.

However, don't rush out to sign up. Let's watch how the programs unfold for the 2009 crop being harvested now. Let's see how the ACRE payments work for those signed up for ACRE.

Since the deadline is June 1, 2010, we'll have a good idea of actual planting decisions, but we won't know much about the weather for the 2010 crop. So the decision to switch from DCP to ACRE will require more analysis about potential yield variability on the farm and for the State as well as some estimates of price variability. We can't assume that the 2010 ACRE payment will be the same as the one for the 2009 crop. Stay tuned for more information about decision tools as we move into the fall and winter.

If you signed up for ACRE in 2009, you can't cha…

ACRE for 2009? More likely for corn and wheat

Kent Olson, Extension Economist

If yesterday's yield and price forecast releases from USDA hold, the potential for a positive ACRE payment rate for Minnesota has increased. This is especially true for corn and wheat. If the low part of the WASDE price forecast becomes reality, we would likely see positive State ACRE payment rates for corn, soybeans, and wheat at current yield estimates.

However, the State payment rate is only the first trigger for an ACRE payment to an individual farm. The individual farm also has to have lower revenue than that farm's benchmark revenue. If a farm is expecting better than average yields from recent years, the farm may not receive a payment even if the State has a revenue shortfall.

And if farmers sign their farms up for the 2009 crop, the farm is enrolled for all four years. If farmers expect normal yields and future prices to be below recent levels, the ACRE program could look very attractive compared to the 20% cut in direct payments. If fut…

ACRE for 2009? We're on the fence in late July

Kent Olson, Extension Economist

With recent crop price declines, farmers have become more interested in whether they should sign up for the Average Crop Revenue Election (ACRE) program. And they are right to be more interested. Farmers have until August 14, 2009, to elect and enroll their farms in either the ACRE program or the Direct and Counter-cyclical Program (DCP) program for their 2009 crop.

For corn and soybeans, current average price and yield projections for the 2009-10 marketing year and the 2009 crop put potential actual state revenue for corn and soybeans essentially equal to the almost final state ACRE guarantees. If the actual is equal to or more than the guarantee, the State payment rate for ACRE would be zero. However, my estimates show that it doesn't take much of a price drop to have an ACRE payment rate that would cover the required 20% in direct payments (DP).

For wheat, the forecast wheat price for 2009-10 indicates a high likelihood that the potential ACRE pa…

ACRE? Sign up or not?

Starting with the 2009 crop year, the Average Crop Revenue Election (ACRE) program is a new, optional safety net for farmers provided by Congress in the Food, Conservation, and Energy Act of 2008 (commonly called the farm bill). The ACRE program is based on changes in crop revenue. It is an alternative to the counter-cyclical (CC) program which is based only on changes in crop prices. Farmers have to choose between the two programs; they cannot receive benefits from both. At first, farmers may find this safety net based on crop revenue appealing; however, making this choice is more complicated than it first appears. The complexities essentially take away any possibility to develop simple decision rules or breakeven prices for farmers to make the decision to choose between ACRE and CC. The attached factsheet and Excel worksheet are designed to help farmers understand the ACRE program and to help farmers make the choice between ACRE and CC by estimating payments under different views of…