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2013 ACRE Program Decision

Written by: Kent Thiesse

The “Average Crop Revenue Election” (ACRE) Program was implemented by USDA for the 2009 crop year, as part of the 2008 Farm Bill), and continued for the 2010 to 2012 crop years. For 2013, eligible farm operators will again have the option to enroll in the ACRE Program, as an alternative to the current “Counter-Cyclical Payment” (CCP) Program. The ACRE Program will offer the potential of “revenue-based” payments, based on yield and price, as compared to current “price-only” CCP calculations. The official ACRE program information is available at County Farm Service Agency (FSA) offices, and on the USDA FSA web site at :  http://www.fsa.usda.gov/FSA

 

The 2008 Farm Bill, which was originally supposed to end in 2012, was extended by Congress for the 2013 crop year. Sign-up for the 2013 farm program started on February 19, and will continue through August 2, 2013, at local Farm Service Agency (FSA) offices. As part of the Farm Bill extension, the option to enroll in the ACRE program will also be available for the 2013 crop year. Producers have until June 3, 2013, to sign up for the 2013 ACRE program at FSA offices.

 

Producers that previously enrolled in the ACRE program for the 2009, 2010, 2011 or 2012 crop year do not have to remain enrolled in ACRE for 2013, and have a choice regarding the ACRE program for 2013. Similarly, farms that were not previously enrolled in ACRE can choose to enroll in ACRE program for the 2013 crop year. Producers must sign-up for the 2013 “Direct and Counter-Cyclical” (DCP) farm program, and must meet all program criteria, in order to be eligible for the ACRE program. New for 2013 … no land owner signatures are required for ACRE enrollment on cash rental farm units.

 

Direct payments will be reduced by 20 percent for farms enrolled in the ACRE program for 2013. Direct payments to all producers in the DCP program for 2013 will be reduced by 8.5 percent due to the Federal budget sequester that was enacted earlier this year. Total reduction in direct payments in Southern and Western Minnesota will usually be about $3.00 to $5.00 per crop base acre for corn and soybeans on farm units that are enrolled in the ACRE program.

 

The ACRE price guarantee for all crops is the national average price for the previous two years, which is based on the 12-month marketing period for corn and soybeans from September 1 in the year of harvest until August 31 the following year, and June 1 to May 31 for wheat and other small grain crops. The state yield guarantee for 2013 is the “Olympic average” state yield for the past five years (2008-2012), with the highest and lowest yield being dropped, and the three remaining yields being averaged. ACRE revenue guarantees can not vary up or down by more than 10 percent from one year to the next. In Minnesota for 2013, this will likely result in a corn revenue guarantee of $757.61, a soybean revenue guarantee of $471.24 per acre, and a wheat revenue guarantee of $298.41 per acre.

 

There are two “revenue triggers” that must be met before ACRE payments will be made, one based on actual state revenue for a given crop in a particular year, and the other based on actual farm-level revenue for that crop in the same year. In order for a producer to receive a payment under the ACRE program, the “actual revenue” for both the state and farm-level must be lower than the corresponding established revenue guarantees for a given year. The actual revenue is based on the actual 12-month average price (Sept. 1 – Aug. 31 for corn & soybeans) for a crop in the year of production, times the actual state average yield, and actual farm yield, respectively. If both “revenue triggers” are reached, the ACRE payment will be made for that crop on that FSA farm number for the given year.

 

ACRE Decision Summary For 2013

Following are some key points to consider regarding the ACRE Program for 2013 :

  • Producers are encouraged to analyze situations and scenarios that are more favorable for ACRE enrollment for 2013, as well as situations where the best option may be continuing with the traditional DCP farm program. The national average price threshold to reach ACRE payments at average yields in Minnesota for the 2013 crop year for corn will likely be around $4.50 per bushel, and near $11.75 per bushel for soybeans, rising to around $5.00 per bushel for corn, and just above $13.00 per bushel for soybeans, with a 10 percent yield decrease from the statewide average yield.
  • Remember, the later that planting is delayed in Minnesota past mid-May, especially for corn, the statewide average yield potential usually declines, which greatly improves the chances of ACRE payments. It appears that we may be headed for that type of year in 2013.
  • Also remember, that the national average price for corn and soybeans that is used to determine potential 2013 ACRE payments is from September 1, 2013 to August 31, 2014. Most analysts expect some price challenges in the next couple of years; however, pending 2013 weather scenarios could change the price forecasts in the coming months.
  • Even though the ACRE program has not paid out for corn and soybeans in Minnesota in past years, and will likely not result in an ACRE payment for the 2012 crop year, producers should not automatically “write-off” ACRE program enrollment for the 2013 crop year. The increases in the ACRE revenue guarantees for 2013 will increase the likelihood of ACRE payments for the 2013 crop year for corn and soybeans, as compared to previous years.
  • Current new crop prices for 2013 have been just above $5.00 per bushel for corn, and near $11.50 per bushel for soybeans, which are getting closer to the necessary 12-month national average price levels (9-01-13 to 8-31-14) needed to earn an ACRE payment for the 2013 crop year on corn and soybeans.
  • Kent Thiesse has prepared a more complete discussion of the 2013 ACRE program, including some analysis tables. To receive a copy of the ACRE information, please send an e-mail to : kent.thiesse@minnstarbank.com

 

The University of Illinois also has an excellent spreadsheet for analyzing potential 2013 ACRE payments for various crops in Minnesota and other States on their FarmDoc web site. The spreadsheet can be accessed at :  http://www.farmdoc.illinois.edu/fasttools/index.asp

 

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Note --- For additional information contact Kent Thiesse, Farm Management Analyst and

              Vice President, MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960) ; 

              E-mail --- kent.thiesse@minnstarbank.com)  Web Site --- http://www.minnstarbank.com/