Saturday, November 21, 2009

Farm Programs

Under the new Farm Bill, producers of USDA program crops such as corn, soybeans, or wheat have the option to enroll in the ACRE program. This is an alternative to the traditional counter-cyclical (CC) program. This program is very important for farmers to decide on as ACRE is irrevocable for the life of the current farm bill, which ends in 2012. There are many factors in producers decision between the two programs. Here are some of the basics of ACRE compared to CC:
  • 80% of the DCP Direct Payment Rate
  • 70% of the Market Assistance Loan Rates
  • All producers on farm must agree to ACRE (landowners and producers)
  • Must meet both "triggers"; State and Farm revenue must be below averages
  • State ACRE Guarantee cannot change by more than 10% from the previous year
In my opinion, I believe that in year 1 and 2 ACRE will probably be a better fit than the traditional system because of historic revenue numbers from 2007-2008. After that, I don't have a crystal ball to know where the markets will go. There is a good hypothetical calculator for your farm at that goes into more detail if ACRE would be beneficial to each producer.

With all this being said, the farm economy is still showing strong signs. Commodity prices are still historically high, land values continue to hold, and demand for cash renting has continued to rise. This year probably doesn't show the promise of 2008 farm revenues, but there is a good chance that it could resort back to a year like 2007. Let's keep hoping.