Mixed bag on ACRE signup
October 21, 2009
HADDONFIELD, NJ (DTN) – First-year signup for the Average Crop Revenue Election Program (ACRE) attracted about eight percent of the total eligible farms and 13 percent of eligible base acres, but popularity of the program varied widely among commodities and farming regions, a Farm Service Agency report showed Tuesday.
The final count was far below what economists and federal budget officials had initially anticipated when the farm bill was debated in 2008, but a respectable showing given administrative delays and the complexities of communicating the farm program option, some observers said. Based on crop conditions and prices at the time of signup Aug. 14, some economists had projected 2009 ACRE payments worth as much as $75 per corn acre in Illinois, but nothing in some states or crops.
“We’re pleasantly surprised given the slow start,” said Sam Willett of the National Corn Growers Association. “For a first-year program where you ask producers to forfeit 20 percent of their direct payments, where there was confusion about paperwork and landowner approvals, and where there was no national training program for FSA employees, this shows considerable progress.” Federal regulations, which were due 90 days after passage of the law, weren’t issued until December, he noted.
Of the 128,620 farms enrolled in ACRE in 2009, 82 percent raised corn, 75 percent raised soybeans and half raised some wheat. States with the largest number of base acres enrolled were Illinois, Nebraska, Iowa and South Dakota.
One surprise was the state of Texas, where drought ravaged yields this year and where some economists predicted ACRE could generate maximum wheat payments worth $36 per acre. However, less than one percent of the state’s eligible farms enrolled in ACRE.
The low signup in Texas wasn’t due to lack of effort, said Joe Outlaw, co-director of the Agricultural and Food Policy Center at Texas A&M. He gave at least 50 speeches and other Extension presentations projecting big 2009 payments, the Center’s ACRE calculator handled 12,600 simulations, and yet less than one percent of the state’s eligible farms enrolled.
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“A lot of people just found ACRE had too many moving parts, even with good information.” Outlaw said. It is challenging to expect producers to guess what the national average price would be more than a year in advance, something an operator needed to do to simulate benefits. “People seemed scared to make the wrong choice,” he said.
Texans still produce more than half of the nation’s cotton crop, and cotton’s loan rate was too valuable to sacrifice for ACRE enrollment. “Almost every farm in the state has cotton base, so you couldn’t give it up for wheat coverage,” Outlaw said.
What’s more, growers in a state with extreme weather and a footprint the size of Texas faced the added risk that their yields wouldn’t correlate with the state average. For example, coastal cotton growers near Corpus Christi could be wiped out by hurricanes almost any year, but they would have little impact on the state’s overall yield and so would not likely trigger ACRE payments. The Lubbock area sets the gold standard for the state’s average cotton yield, Outlaw says, not Gulf Coast producers.
However, Midwest corn states and more monoculture wheat regions could find major benefits to ACRE, should prices and yields generate revenues far below the program’s trigger levels. If 2009 ACRE payments meet economists’ projections, “a lot of producers will regret not having enrolled,” said Willett.
Signup for the 2010 ACRE program ends June 1, 2010.
Tables showing the number of farms and base acres enrolled for each commodity by state can be found at http://www.fsa.usda.gov/dcp.