The deadline for signing up for the Average Crop Revenue Election program for the 2009 crop year has been extended to Aug. 14. ACRE is the best kept secret for southern Minnesota farmers. I have not had a single conversation or meeting with a producer who has really studied the program and worked the numbers. The recent drop in corn prices may make ACRE a viable option for some producers.
There are many reasons why ACRE has been ignored by crop producers. Farmers need good financial incentives to accept the 20 percent reduction in direct crop payments and the 30 percent reduction in marketing assistance loan rates required by ACRE. Because southern Minnesota yields are high, there is a perception that the reduced state yield trigger makes the program unattractive to southern Minnesota producers. Many people assume that corn and soybean prices for the 2009 crop marketing year will be at high enough levels that ACRE will not be needed.
There have been many delays in interpretation and implementation of the regulations for ACRE, and when they delayed the signup deadline from June to Aug. 14, many people assumed that the election may receive another deadline postponement. There were concerns that the ACRE election is irrevocable for the life of this farm bill through 2012. Finally, the prevailing attitude was to skip ACRE in 2009, study it this winter and perhaps do the ACRE election for 2010-12.
After working the ACRE decision making spreadsheets at numerous farms and doing our class with Kent Thiesse and Doug Westphal this past Wednesday evening, I am concerned that ACRE deserves attention for 2009. The compelling reason to look at ACRE for 2009 is the $1.30 drop in corn prices since the June 30 report with 3 million more corn acres.
Remember that the 2009 crop marketing year calculations are based upon monthly national average prices from September 2009 through August 2010
If you think the average corn price (national before basis reduction) in the year ahead could be in the low $3s or high $2s; ACRE could pay six-digit returns over the old DCP/CCP program. We need to do the calculations.
Producers should review the spreadsheet developed by Kent Olson at the University of Minnesota. I encourage you to put your numbers in his ACRE calculator and compare results. Try different national prices over the next four years. You can find the worksheet at www.extension.umn.edu/agbusinessmanagement/components/xls/acre_vs_ccp_minnesota_v1.3.xls.
For more information on ACRE or traditional crop insurance programs, contact a Farm Business Management instructor. You can find an instructor at www.mgt.org.This article was submitted by Paul Gorman, Farm Business Management instructor at South Central College in Mankato.
