Date of this Version
Cornhusker Economics (August 21, 2013)
The one-year extension of the farm bill legislation back on January 1, 2013 brought with it a new round of enrollment and producer decisions between the Average Crop Revenue Election (ACRE) Program and the Direct and Counter-Cyclical Program (DCP). Producers faced a new program participation decision for the 2013 crop year, and another choice between ACRE and DCP that was first considered in 2009. As with the earlier decision, the choice between ACRE and DCP largely came down to expectations of ACRE payments and protection relative to the larger guaranteed Direct Payment (DP) received in the DCP. A quick review of the mechanics and features of each program provides a general overview:
Average revenue-based safety net tied to benchmark based on average yields and average prices.
Protection from revenue losses when state and farm revenue both fall below respective benchmarks.
Protection tied to planted acres of program commodities on a farm, up to the farm’s total base acreage.
DPs available on base acres and program yields at 80 percent of the full DP rate for ACRE participants.
Non-Recourse Marketing Assistance Loan (ML) available on actual production at 70 percent of the full ML rate for ACRE participants.
Price-based safety net tied to set-in-legislation target prices.
Counter Cyclical Payment (CCP) protection from price losses when national marketing year average price falls below CCP trigger price (target price minus DP rate).
Protection tied to base acres and program yields of program commodities on a farm.
DPs and MLs available at full rates for DCP participants.
The sign-up decision in 2013 presumably was affected by expected ACRE protection for 2013, as well as experiences of ACRE payments in 2009-2012. An earlier issue of Cornhusker Economics (April 10, 2013) examined both expected payments for the 2012 crop year as well as guarantees and expected protection for 2013. This issue updates that analysis and shows the substantial impact ACRE has had over the past two years.