Which of the new farm bill provisions represents some of the most far-reaching reforms and also the most complexity? Without a doubt, it’s the new Average Crop Revenue Election (ACRE) program.
The concept behind this new program is simple: pay farmers when revenues drop below normal revenue levels rather than a program like direct payments that dishes out dollars whether or not there has been a yield or price drop. Yet, farmers must give up 20% of their fixed direct payment and accept a 30% decline in loan rates for ACRE – a program that may or may not pay.
Still, it’s the formula for implementing the ACRE program, starting in 2009, that has some farmers excited and deficit hawks nervous—especially if commodity prices slump and farm payments start to go through the roof. Depending on where USDA establishes the price triggers, growers who enroll in ACRE could enjoy a substantial safety net.
Participation is far from being a no-brainer, as many had expected, says Kansas State Extension Ag Economist Art Barnaby. This is an extremely complex program that requires two separate triggers to be met before payment will be issued. The ACRE program will depend on the market, but it is far more likely to generate payments on corn, wheat, soybeans and grain sorghum than the counter-cyclical or marketing loan provisions. Register for this webinar
Rural, Farm and Ranch Land Values 