farmgate: Making The ACRE Decision: NOT ANOTHER ONE?!
You fussed and fidgeted at your computer. You tossed and turned in your bed. Finally you threw your hands up in the air and drove to the FSA office and signed up for ACRE. And on August 14 you thought the pressure of making decisions were over. After all this was a four year commitment and crop insurance is only one year. But alas, your angst may rise again, if you are one of those farmers who are eligible to make another ACRE decision. OH, NO! NOT AGAIN!
USDA has not yet announced how many farm operators and landowners signed up for the ACRE Program, but the final count may only be 25% of those who had been participating in the Direct and Counter-cyclical Programs. So there will be fewer farmers who have to make the next ACRE decision, which deals with priority of crops receiving ACRE payments. Initially, if you are only raising one crop, such as 100% corn or 100% wheat, you do not have to worry about making a crop priority decision. Secondly, the eligibility question focuses on how much you have planted, compared to your base acres. If you have planted 20% more than your base acres, then you have a decision to make about crop priority. If you have not planted more than 120% of your base acres, then you have escaped the decision-making.
Since that decision needs to be made by September 30, if you are eligible to assign a payment priority to your crop, you will need to brush up on the decision-making process. That is outlined by University of Illinois economist Gary Schnitkey in his recent newsletter. And Schnitkey says you can make the decision to not decide, leaving “no priority” as your choice, which he says is appropriate. If that is your choice, ACRE payments will be received in proportion to planted acres.
However, if you are eligible, and want to maximize your revenue, compare your operation to the examples provided by Schnitkey and decide which fits best. He says the amount of ACRE payments will vary widely by crop, and will vary from farm to farm, depending on the ratio of farm historic yields to state average yields. And he adds, “Crop priority can be changed each year. Hence, choices made in 2009 can be changed in later years if expected payments look different in future years.”
If your decision is to make corn your first priority, ACRE payments will be received on the maximum number of corn acres. That would be beneficial if your state’s ACRE payment rate for corn is more than it is for soybeans. However, if your state has a lower ACRE payment rate for soybeans than corn, and you have soybeans as your top priority, your payment will be smaller.
The bottom line is that ACRE payments are made on acres and if you are eligible to establish a crop priority, you will probably want to select the crop that is getting the highest payment per acre.
Summary:
Although sign-up for the ACRE program is past for the 2009 crop, those farm operators and landowners who did enroll may have the choice of making a decision of whether to list corn, soybeans, or wheat as their top priority for receiving payments. ACRE payments are based on acres, and if the objective is to maximize revenue, the decision would be to give the priority to the crop that has the highest payment rate per acre. Not all farms will be eligible; only those with planted acreage more than 20% larger than their base acres.
Posted by Stu Ellis on September 21, 2009 12:02 AM to farmgate