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Corn+Soybean Digest

Should Crop Producers Enroll in ACRE for 2010?

As authorized by the 2008 Farm Bill, producers on eligible farms may elect to participate in the Average Crop Revenue Election (ACRE) Program. ACRE is designed to provide revenue support to farmers as an alternative to the price support that farmers are used to receiving from commodity programs. Through the ACRE program, a state payment will be made when state revenue is less than the state guarantee.

How does a farmer decide whether or not to enroll in the ACRE program? To assist Illinois producers with this question, University of Illinois (U of I) agricultural economists have provided estimates of 2009 and 2010 ACRE payments for Illinois.

“These estimates should be useful as farmers make decisions concerning whether to enroll in ACRE for the 2010 cropping year,” says U of I Agricultural Economist Gary Schnitkey. “Producers must decide soon as the deadline for enrolling is June 1.”

According to Schnitkey, the 2009 state ACRE payment for corn is estimated at $27/acre, making payments very likely. “For ACRE to not make payments, the remaining monthly market average prices would have to average above $3.84/bu.,” he says.

The estimated 2009 payment for soybeans is $0/acre. “Prices would have to fall dramatically before ACRE would make soybean payments, averaging below $8.31 for the remainder of the marketing year.”

The state ACRE payment for wheat is estimated at $90/acre. “It is almost certain that ACRE payments will be made on wheat. In April and May, wheat prices would have to average above $23 per bushel for an ACRE payment not to be received.”

Schnitkey noted that farm-level payments may vary from the state ACRE payment. Before receiving a payment, a farm must meet a farm revenue benchmark. If this benchmark is met, a farm's ACRE payments will be adjusted based on the ratio of the farm's five-year history of yields to the state's five-year history of yields.

For producers currently enrolled in the ACRE program desiring an estimate of payments their farm will receive for its 2009 crop, an ACRE payment estimator tool is available from the farm analysis solution tools (FAST) section of the farmdoc website.

For 2010, expected state ACRE payments and percent chance of ACRE payments being made in Illinois have been estimated for corn, soybeans and wheat. Corn is estimated to have an expected state ACRE payment of $41/acre. Simulated yields and prices suggest that corn ACRE payments have a 51% chance of being made. The state ACRE payment for soybeans in 2010 is estimated at $14/acre and the percent chance of an ACRE payment is estimated at 36%. The state ACRE payment for wheat is estimated at $33/acre with an estimated chance of payment of 66%.

“Based on April 2010 price expectations, corn, soybean and wheat payments have a higher chance of occurring in 2010 than would be expected from an analysis using historical prices,” Schnitkey says. “From a standpoint of obtaining payments, 2010 is likely to be an opportune year to sign up for ACRE due to these higher chances of receiving ACRE payments. This is particularly true for farmers who plant a large amount of their acres in wheat and corn.”

For more information, visit contact Gary Schnitkey at 217-244-9595 or via email at [email protected].

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