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Decision Time: Producers consider ACRE
Buckeye Farm News
Recently-released details on important Farm Bill programs will allow farmers to make firm decisions for the coming year, but there are still new options to think about.
In a letter to USDA, American Farm Bureau and other agricultural organizations said lower crop prices, tight credit and jumps in input costs led to cash strains for farmers.
Providing some relief, the sign-up period for the Direct and Counter-cyclical payment (DCP) Program began Dec. 22 and will run through June 1, allowing producers to request a 22-percent advance direct payment for eligible commodities.
The optional ACRE Program provides a safety net based on state revenue losses rather than prices.
After much debate between Congress and USDA, ACRE’s revenue guarantee will be based upon the two most recent years for which any information on U.S. prices is available. So for the 2009 crop year, the guarantee will be calculated using the average of U.S. cash prices for the 2007 and 2008 crop years.
“The decision by USDA to use recent year data was important,” said Ohio Farm Bureau Federation Senior Director of National and Regulatory Affairs Adam Sharp. “Given market volatility, the use of this data was critical in making the program more attractive for growers.”
According to USDA, producers may enroll in DCP now, request advanced direct payments, then later modify to enroll in the ACRE program, or wait to enroll in both at the same time in the spring.
Ohio State University Professor Carl Zulauf has provided factors farmers should consider about ACRE:
- Yields and prices annually updated based upon a five- and two-year moving average, respectively.
- Revenue guarantee can't decline more than 10 percent annually.
- Payments based on actual planted acres, not historical base acres.
- Direct income payments are reduced by 20 percent.
- 30 percent lower loan rate.
- Revenue target declines if and when market revenue declines.
- Once enrolled, farmers are locked in through 2012.