Updated ACRE Analysis for 2012 and 2013

Authors

Bradley Lubben, University of Nebraska-LincolnFollow

Date of this Version

2013

Citation

Cornhusker Economics (August 21, 2013)

Comments

Published by University of Nebraska–Lincoln Extension, Institute of Agriculture & Natural Resources, Department of Agricultural Economics. Copyright © [2013] Board of Regents, University of Nebraska. http://agecon.unl.edu/cornhuskereconomics

Abstract

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:

ACRE

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.

DCP

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.