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 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.

Last updated: Friday, November 02, 2012

For more information contact: Joseph Cooper, Robert Dismukes, Anne Effland, and Erik O'Donoghue