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Wisconsin Farmers Thinking About ACRE for 2009 and Beyond

Wisconsin Farmers Thinking About ACRE for 2009 and Beyond

ACRE sign up deadline is Aug. 14.

Microsoft Word - KS Edited Final Version, Risher, 4-28-09

Farmers all around the U.S. are thinking about the new ACRE program created by the 2008 Farm Bill. The signup deadline for ACRE this year is August 14, so farmers must make their decisions soon. The signup process for ACRE this first year will take longer than signing for the DCP program in the previous years, so farmers need to get started sooner.

"ACRE at first seems more complex than the current DCP program," says Paul Mitchell, agricultural economists with University of Wisconsin-Extension. "Farmers will have to spend a little time making sure they understand how it works and then decide if it's the better option for them."

County FSA offices have fact sheets and other materials to help farmers understand the details, plus the farm media are beginning to have more about ACRE. In addition, Mitchell has prepared two new UW-Extension fact sheets specifically for Wisconsin farmers. 

The first, "Overview of ACRE for 2009," summarizes many of the program's details, including state yield guarantees for Wisconsin and how FSA has clarified several rules regarding silage. The second, "Thinking about ACRE for 2009," outlines some advantages of ACRE for Wisconsin farmers to think about as they make their decisions.

"I wanted to make sure Wisconsin farmers were aware of a few key advantages that I found missing in the available materials on ACRE," says Mitchell, "so I wrote them up and it became 'Thinking about ACRE for 2009.' " These fact sheets are available from your county Extension office, or online: www.aae.wisc.edu/mitchell/extension.htm.

FSA has clarified several rules concerning silage that were still unclear last winter and spring when farmers first starting hearing about ACRE. The 'silage effect' is important in Wisconsin since 25-30 percent of planted corn acres are harvested for silage. The bottom line, according to Mitchell, is that farmers growing silage should definitely take a look at ACRE, as the FSA has come a long way to making ACRE work for these farmers too, not just grain farmers. 

Another advantage is that farmers enroll eligible crops in ACRE according to the acres they planted this year, not according to the crops that established their base acres years ago. This is an important advantage for ACRE, since farmers can shift program benefits to the crops they currently plant. For example, some farmers may have oat base acres though they no longer grow oats, or they may plant more soybeans than are reflected in their base acres. According to Mitchell, this flexibility under ACRE will be especially advantageous to some farmers, as it will allow them to shift program benefits from low benefit crops such as oats to high benefit crops such as soybeans or corn. 

Finally, farmers should note that ACRE will determine state guarantees and ACRE payments based on some pretty good market prices. Prices used for ACRE will still likely be around $4/bu for corn and pretty close to $10/bu for soybeans, even with the current softening of grain prices. This will occur because the high prices from last summer and earlier this year are part of the ACRE price calculation. ACRE prices will likely to be relatively good for 2010 as well, since those prices will also include the high prices enjoyed earlier this year.

In addition, the ACRE state guarantee cannot change more than 10 percent from the previous year, so even under a worst case scenario that markets collapse in 2009; ACRE guarantees will remain high for several years. The implication is that for the next few years, ACRE will provide better protection against low commodity prices than the current DCP program. As a result, according to Mitchell, the only cost farmers will likely face is the loss of 20 percent of their direct payments. If markets collapse and prices fall, ACRE will more than pay this cost back, and if prices remain high or increase, farmers will not really need the additional 20 percent in direct payments. 

Interested farmers should contact their county FSA office as soon as possible to get more information and to see how well ACRE can work for their farms. "Every producer will have a totally different situation and the ACRE rules will work differently for each of them," says Greg Biba in the Wisconsin state FSA office. UW-Extension agents can also help farmers work through examples based on their farm. The key is for farmers to work through the information and make their decision soon.

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