Authorized by the 2008 Farm Act, the Average Crop Revenue Election (ACRE) program is the first revenue-based, income-support program that calculates payments using recent market prices and a producer’s actual plantings. The payments are triggered when a farm’s revenue and State revenue (price multiplied by yield per planted acre) fall below a calculated guarantee for a crop.

By contrast, other income-support programs are based on legislated rates and support levels, computed using a farm’s base acres and payment yields.Initial enrollment data as of October 2009 indicate that about 8 percent of farms with almost 13 percent of eligible base acres elected to participate in ACRE, which is less than might be expected given price- and yield-based analysis. However, enrolled producers must incur initial learning and negotiation costs and must forgo 20 percent of direct payments. These costs may be larger than the expected ACRE benefits for some producers in 2009 and beyond.

 As expected, ACRE enrollment is in regions that typically grow wheat, corn, and soybeans. The three crops comprise 96 percent of crops planted on ACRE-enrolled acreage. Remaining producers of eligible crops who did not elect to enroll in ACRE can still enroll in any of the next 3 years (until 2012), but those who do enroll must remainin the program through 2012.Had the ACRE program been available during crop years 1996-2008, this report shows that farmers would have benefited more from participating in 2002 Farm Act programs than in the hypothetical ACRE program. The report further suggests that, for 2009-12, producers of corn, soybeans, wheat, and rice are likely to benefit more from the ACRE program than from the price-based, income-support programs. Initial enrollment data suggest that factors aside from expected market prices and yields entered into the enrollment decision such as producer risk preferences and initial learning and negotiation costs. Data indicate that about 8 percent of farms with almost 13 percent of eligible base acres elected to participate in ACRE, which is less than might be expected given price and yield-based analysis alone.

Read the full ERS report here.

SOURCE: USDA.