This document printed from the University
of Illinois Extension Stu's News at http://www.extension.uiuc.edu/macon/
Has ACRE become a head "ACRE" for USDA?
October 23, 2009
There are dozens, maybe hundreds, of low, mid, and high level government staffers in Washington who are pounding their heads on the walls right now. Collectively, they spent thousands of hours creating the Average Crop Revenue Election (ACRE) program as part of the 2008 Farm Bill. It was a major chore. There had to be balance among commodities, among geographic regions, and it had to be politically acceptable, within budget, and not inflame the international community. It was finally rolled out earlier this year and farmers were given until August 14 to sign up for the program.
Eight percent signed-up. Ooooops!
Only 13% of eligible program crop acreage was enrolled into ACRE. Oooooops!
ACRE was supposed to be the high tech version of farm programs to help farm owners and operators manage their revenue risk, without being encouraged to increase production and reduce world grain prices. After all, ACRE payments were not guaranteed, and to receive a payment from the ACRE program, yields had to be lower than a threshold average of historical farm yields and revenues had to be lower than a threshold level of revenue calculated for your state.
Was complexity one of the barricades to sign-up? Open the back of Granddad's pocket watch, and it may be simpler to understand the mechanism than to figure out the ACRE program. By far and away, ACRE has been the most complex farm program to originate in Washington in the history of farm bills. Actually, it may be easier to explain the Dairy program than ACRE.
Despite the complexity, many ag economists and farm management specialists at Land Grant Universities did their best to help sell the program to farmers. They made presentations, they published fact sheets, and they created web-based decision aids that would project ACRE payments, which were estimated at $65 to $70 per acre in Illinois for corn enrolled in the program. And many of those specialists who own farmland went out on the limb to say they had enrolled their own farms into the ACRE program. That just did not do the trick.
Was the four year commitment one of the barricades to sign-up? After all, once a farm was enrolled in the ACRE program it had to remain there for the length of the Farm Bill, and a switch to the alternative program was not allowed.
Was the easy money from revenue crop insurance a barricade to sign-up? Many farmers have learned the various revenue programs will almost always pay out, even if you are in Illinois which perennially subsidizes the big insurance indemnity payments for Texas farmers.
Was the problem of getting buy-in from land owners a barricade to sign-up? With the farm enrolled for four years in the ACRE program, future tenants would have less flexibility and may not agree to high cash rents if the ACRE program was not beneficial. ACRE was a serious problem for farm operators who had to sell the concept to farm owners who were not familiar with the concept.
Was the problem due to the yield records required by USDA for ACRE enrollment that became a barricade to acceptance? After all, ACRE required third party proof of yields that even went beyond what USDA's Risk Management Agency requires for crop insurance.
Was the problem due to the year long delay before an ACRE payment would be received, since anything earned from the 2009 crop would not be paid until October of 2010?
If there is any consolation, Illinois was one of the states with the greatest enrollment in ACRE, with 22% of acreage, surpassed only by Nebraska and South Dakota.
As Washington does a post mortem on the ACRE program enrollment, it will be interesting to watch the dynamics in the Senate Agriculture Committee, which did almost all of the creation of ACRE's details. That committee is now chaired by Sen. Blanche Lincoln of Arkansas, where only 2 farms out of more than 25,000 eligible signed up. What does that mean for the future of ACRE?
Stu's News is written weekly by former Extension Specialist Stu Ellis, who remains reachable at: shellis@uiuc.edu.