— The Average Crop Revenue Election Program was implemented by the U.S. Department of Agriculture for the 2009 crop year, as part of the Food, Conservation and Energy Act of 2008 (a.k.a. the new farm bill).
In 2010, eligible farmers will again have the option to enroll in the ACRE program, as an alternative to the current Counter-Cyclical Payment Program that was initiated in 2003 as part of the last farm bill.
The ACRE program will offer the potential of “revenue-based” payments, based on yield and price, as compared to current “price-only” CCP calculations.
The official ACRE program information is available at county Farm Service Agency offices, and on the USDA FSA website at www.fsa.usda.gov/FSA.
2009 ACRE crop payment potential
Following is a summary of the potential for ACRE payments for 2009 corn, soybeans and wheat in Minnesota as of March 1.
Corn: The 2009 ACRE benchmark state yield for corn in Minnesota was 161 bushels per acre, and the estimated National Agricultural Statistics Service benchmark price was $4.13 per bushel, resulting in an estimated statewide ACRE revenue guarantee for 2009 of $598.44 per acre.
(161 bu./acre x $4.13/bu. x 0.90 = $598.44/acre)
According to the latest USDA projections, the USDA is estimating the 2009 statewide corn yield at 174 bu./acre, and the 12-month national average corn market price for 2009 at $3.60/bu. Based on the current USDA numbers, there would not be a 2009 ACRE payment for corn in Minnesota. The 2009 national average corn price would need to drop to $3.43/bu. or lower, in order to trigger a 2009 ACRE payment.
Soybeans: The 2009 ACRE benchmark state yield for soybeans in Minnesota was 41 bushels per acre and the estimated NASS benchmark price was $10.04/bu., resulting in an estimated statewide ACRE revenue guarantee of $370.48/acre.
(41 bu./acre x $10.04/bu. x 0.90 = $370.48/acre)
According to the latest USDA projections, the estimated 2009 statewide soybean yield is 40 bu./acre and the 12-month national average soybean price for 2009 is estimated at $9.45/bu. Based on the current USDA numbers, there would not be a 2009 ACRE payment for soybeans in Minnesota.
The 2009 national average soybean price would need to drop to $9.26/bu. or lower, in order to trigger a 2009 ACRE payment.
Wheat: The 2009 ACRE benchmark state yield for wheat in Minnesota was 49.9 bu./acre and the estimated NASS benchmark price was $6.63/bu., resulting in an estimated statewide ACRE revenue guarantee of $297.75/acre.
(49.9 bu./acre x $6.63/bu. x 0.90 = $297.75/acre)
According to the latest USDA projections, the estimated 12-month national average wheat price for 2009 at $4.90/bu. Based on those projections, the estimated 2009 ACRE payment for wheat in Minnesota would be about $31.93 per eligible ACRE wheat base acre, plus any additional payment for farm-level average yields that exceed state benchmark yields.
2010 ACRE program details
Producers that enrolled in ACRE for the 2009 crop year are automatically enrolled in ACRE for 2010, 2011 and 2012 when they annually sign up for the farm program at county FSA offices. Other producers can enroll in ACRE for 2010 when they sign up for the 2010 farm program at anytime until June 1.
Producers may sign up for the 2010 Direct and Counter-Cyclical farm program at any time at their county FSA office, and wait until a later date, up until June 1, to decide on enrollment in the ACRE program.
Only about 8 percent of crop producers nationwide, and about 13 percent of the total eligible acres, were enrolled in ACRE for the 2009 crop year.
Direct payment and CCC loan rates with ACRE
Direct payments will be reduced by 20 percent (approximately $3 to $5 per acre), and national and county CCC loan rates will be reduced by 30 percent on farms enrolled in the ACRE program for 2010. The national loan rates will drop from $1.95/bu. to $1.37/bu. for corn; from $5/bu. to $3.50/bu. for soybeans; and from $2.94/bu. to $2.06/bu. for wheat.
Price guarantees with ACRE
The ACRE price guarantee for all crops is the national average price for the of the previous two years, which is based on the 12-month marketing period for corn and soybeans from Sept. 1 in the year of harvest until Aug. 31 the following year, and June 1 to May 31 for wheat and other small grain crops.
The 2009 price guarantees were based on the national average price for 2007 and 2008, while the 2010 price guarantees will be based on the national average price for 2008 and 2009. The final national average prices for the 2007 and 2008 crop years, and the preliminary USDA national price estimates (through February, 2010) for the 2009 crop year, are shown in the Table; however, final 2009 prices for corn and soybeans will not be finalized until Oct. 1.
| Corn | Soybeans | Wheat | |
| 2007 national average price | 4.20 | 10.10 | 6.48 |
| 2008 national average price | 4.06 | 9.97 | 6.78 |
| Est. 2009 national average price | 3.60 | 9.45 | 4.90 |
| 2009 ACRE base price | 4.13 | 10.04 | 6.63 |
| Est. 2010 ACRE base price | 3.83 | 9.71 | 5.84 |
Yield guarantees with ACRE
The state yield guarantee is the “Olympic average” state yield for the past five years (2005-09), with the highest and lowest yield being dropped, and the three remaining yields being averaged.
(Example: Corn yields of 174, 161, 146, 164, and 174, with the 174 and 146 are dropped, and the average yield is 166.3 bushels per acre.)
The average state yields for a given year are based on the NASS. The farm-level yield guarantee will be the “Olympic average” actual or “proven” farm yield for the past five years (2005-09), with the highest and lowest yield being dropped, and the three remaining yields being averaged. For each year that the program crop was not raised (2005-09), or that the yield cannot be proven, a “Plug Yield” equal to 95 percent of the county average yield (from NASS) will be used.
(Example: County average corn yield of 170 bu./acre x 0.95 = 161.5 bu./acre)
Revenue guarantees with ACRE
State revenue guarantee = “Olympic Average” state yield x Two-year average price x 0.90
(Corn example: 166 bu./acre x $3.83/bu. x 0.90 = $572.90/acre)
Farm-level guarantee = Average farm yield x Two-year average price + 2010 crop insuance premium
(Corn example: 178 bu./acre x $3.83/bu. + $25/acre = $706.74/acre )
Future yield, price, and revenue guarantees with ACRE
Both state and farm level guarantees will be recalculated each year (2010-12), based on changing average yields and prices. This is a important factor in determining ACRE program participation for 2010 and beyond. ACRE revenue guarantees can not vary up or down by more than 10 percent from one year to the next.
Revenue guarantees with ACRE
There are two “revenue triggers” that must be met before ACRE payments will be made, one based on actual state revenue for a given crop in a particular year, and the other based on actual farm-level revenue for that crop in the same year. In order for a producer to receive a payment under the ACRE program, the “actual revenue” for both the state and farm-level must be lower than the corresponding established revenue guarantees for a given year. The actual revenue is based on the actual 12-month average price (Sept. 1-Aug. 31 for corn and soybeans) for a crop in the year of production, times the actual state average yield, and actual farm yield, respectively. If both “revenue triggers” are reached, the ACRE payment will be made for that crop on that FSA farm number for the given year.
Calculating ACRE payments
ACRE program payments will be the higher of difference between the state guarantee and the actual state revenue, or the “state guarantee revenue” times 25 percent (0.25), times 83.3 percent (0.833), times the producer adjustment.
The total ACRE payment can not exceed 25 percent of the state guarantee. ACRE payment will be paid on 83.3 percent of crop base acres (same as for direct payments). The state revenue guarantee can be adjusted up or down, based on farm-level yields.
(Example: Farm-level yield guarantee of 178 bushels per acre, state yield guarantee of 166 bu./acre, would result in the ACRE payment being factored upward by 7 percent (x 1.07).
ACRE decision summary
Remember, that farm owners and operators have until June 1 to finalize their decision on enrollment in the ACRE program for 2010. ACRE enrollment does require a signature from landlords on cash rental farm units. Producers are encouraged to analyze situations and scenarios that are more favorable for ACRE enrollment for 2010, as well as situations where the best option may be continuing with the traditional DCP farm program.
The attached “ACRE Program Calculation Worksheet” has been updated with the Minnesota state average yields for corn and soybeans, and with the estimated average price guarantees (through February).
To receive copies of other ACRE program information and a listing of websites with good ACRE information, contact me via e-mail.
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Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com.
