July 7, 2008
AMES, Iowa - Analysis by researchers at the Center for Agricultural and Rural Development (CARD) at Iowa State University suggests that most U.S. farmers will find Average Crop Revenue Election (ACRE) much more attractive than current commodity programs.
ACRE is a new commodity program included in the Food, Conservation and Energy Act of 2008 - the 2008 farm bill. This new commodity program presents farmers with a choice of covering their eligible crops over the period of the new legislation, 2009-2012. Farmers can continue to enroll in traditional commodity programs or they can participate in ACRE.
The CARD researchers created tools to show farmers how they would fare under new and old programs using different price and yield scenarios. Three calculators are offered, for corn, soybeans and wheat. The calculators are embedded in Microsoft Excel spreadsheets posted on the CARD Web site at www.card.iastate.edu/ag_risk_tools/.
Users of the calculators are instructed to enter specific data about their state, expected commodity price for the 2009/10 marketing year, 2008 marketing year price and 2008 average yield per planted acre. They also can enter program yields used to calculate direct and countercyclical payments.
The calculator then provides the 2009 ACRE price, ACRE yield and ACRE revenue guarantee. Further results show users the estimated payments they will receive under ACRE and under older farm programs given their calculator inputs.
A "what if" option allows users to check results of different combinations of expected prices and yield outcomes. According to CARD Director Bruce Babcock, almost all price scenarios favor enrollment in ACRE. "ACRE payments will be double the level of traditional programs even if commodity prices drop back to levels last seen in 2005." He said traditional commodity programs generate slightly more payments only if market prices in 2009 through 2012 remain above 2007 and 2008 average levels.