Average Crop Revenue Election (ACRE)
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The Average Crop Revenue Election (ACRE) Program is a new
program in the 2008 Farm Act, administered by USDA's Farm Service
Agency (FSA). Beginning with the 2009 crop year, producers can sign
up for this optional, revenue-based counter-cyclical program, which
is an alternative to receiving counter-cyclical payments (CCPs).
However, participation in ACRE reduces direct payments (DPs) and
lowers marketing assistance loan rates.
Program Overview
Producers can enroll in ACRE any year during crop years 2009-12.
A producer must enroll all covered commodities (wheat, corn, grain
sorghum, barley, oats, upland cotton, rice, soybeans, other
oilseeds, dry peas, lentils, small chickpeas, and large
chickpeas) and peanuts for a participating farm. Upon enrollment,
the farm is enrolled in ACRE for the remainder of the 2008 Farm
Act, which ends with crop year 2012. After enrollment, a farm is no
longer eligible to receive CCPs. Also, as a condition for the
farm's enrollment in ACRE,
direct payments (DP) for the farm are based on 80 percent of
the legislated DP rate, and
marketing loan benefits are based on 70 percent of the
legislated national marketing loan rate.
The ACRE program provides participating producers a revenue
guarantee each year based on market prices and average yields for
the respective commodities. The guarantee is based on State-level
planted
yields and national market prices, but payments depend on
State- and farm-level planted yields and national market
prices.
ACRE Payment Triggers
Participants in the ACRE program are eligible for State-based
revenue coverage for a covered commodity or peanuts that reflects
historical yields and prices. ACRE payments can be triggered by a
decrease in national average market prices or State-planted yields.
Enrolled producers are eligible for ACRE payments if:
- ACRE actual State
revenue < ACRE program
guarantee
AND
- ACRE actual farm revenue
< ACRE benchmark farm
revenue
ACRE Definitions
- ACRE actual State
revenue = ACRE actual State yield per planted acre
x ACRE national average market price
- ACRE program
guarantee = 90 percent of (ACRE benchmark State
yield x ACRE guarantee price)
- ACRE benchmark State yield = State-level, 5-year Olympic
average yield per planted acre
- ACRE guarantee price = National average market price for the 2
preceding crop years
- ACRE actual farm
revenue = Actual commodity farm yield x ACRE
national average market price
- ACRE benchmark farm
revenue = 5-year Olympic average farm crop yield
per planted acre x (ACRE program guarantee price) + crop insurance
premiums per acre
ACRE Payment Calculations
ACRE payments, if triggered, equal the product of the
following:
- Lesser of: a) ACRE program guarantee--ACRE actual State
revenue, OR b) 25 percent of ACRE program guarantee
- 83.3 percent (in 2009-11) or 85 percent (in 2012) of the
planted or considered
planted acres on the farm
- Farm-specific relative productivity ratio: farm 5-year Olympic
average crop yield per planted acre / ACRE benchmark State
yield
Other ACRE Guarantee Provisions
- The ACRE program guarantee for a crop year cannot change by
more than 10 percent from the guarantee for the previous crop year.
Since the ACRE program starts with the 2009 crop year, this
provision first applies in the 2010 crop year.
- For States in which at least 25 percent of acreage planted to a
covered crop or peanuts is irrigated and at least 25 percent of
acreage planted to a covered crop or peanuts is nonirrigated, the
Secretary must calculate separate guarantees for irrigated and
nonirrigated acreage.
Planted or Considered Planted Acre Limitations
- The total number of planted acres for which producers on a farm
may receive ACRE payments may not exceed total base
acreage for all covered
commodities and peanuts on the farm.
- If total planted acres to all covered commodities and peanuts
on a farm exceed the farm's total base acreage, producers may
choose which planted acres to enroll in ACRE.
Payment Limitations and the ACRE Program
ACRE program participants are subject to the following payment
limitations:
- ACRE program payments: $65,000 plus the amount that DPs are
reduced (20 percent) under ACRE. Also, since payment limitations
are per person while ACRE enrollment is per farm, total ACRE
payments and CCPs per person may not exceed this amount.
- DPs: $40,000 minus the amount that DPs are reduced (20 percent)
under ACRE.
Economic Implications
Producers have one opportunity to enroll all of their covered
commodities and peanuts in the ACRE program any year during crop
years 2009-12. When electing to participate in ACRE, producers
trade off the loss of CCPs and the reductions in DPs and marketing
loan benefits with ACRE revenue protection. Producers will base
their participation decisions in part on the historical variability
in State-level yields and the expected variability of national
prices.