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Waiting on ACRE decision may be best

By Matt Reese

Now that the window has opened for producers to once again consider enrolling in the Average Crop Revenue Election (ACRE) program, Ohio State University Assistant Professor and Extension Educator Chris Bruynis offers some advice — wait.

“Wait and see what happens during the spring. If we plant the country fence row to fence row in corn, the probability of an ACRE payment increases as prices will fall,” he said. “There is also a box producers need to check on the form when signing up for Direct and Counter-Cyclical Payment Program that acknowledges that direct payments may not be made if there are insufficient funds.”

The possibility of insufficient funds for the Direct and Counter-Cyclical Payment Program (DCP) may make some farmers think twice about their decision to take the DCP payment and be done.

“The cost of ACRE is 20% of direct payments and with the possibility that 20% of nothing may occur, the cost is zero — on the average it would amount to $3.72 per acre,” Bruynis said. “I am not super excited about either option, and I suggest waiting until May to sign up before the deadline to make a decision. As of today, FSA cannot process any applications because the software is not ready. It could be mid-March before they are ready to handle the sign-up.”

Since the original farm bill rules required farmers that elected ACRE to remain in that program until the Farm Bill expired, when the farm bill was extended early this year, many were left wondering if they were still in ACRE. According to the Farm Service Agency:

“The 2013 DCP and ACRE program provisions are unchanged from 2012, except that all eligible participants in 2013 may choose to enroll in either DCP or ACRE for the 2013 crop year. This means that eligible producers who were enrolled in ACRE in 2012 may elect to enroll in DCP in 2013 or may re-enroll in ACRE in 2013 (and vice versa).”

FSA began sign-ups for DCP and ACRE for the 2013 crops on Feb. 19, 2013. The DCP sign-up period will end on Aug. 2, 2013; the ACRE sign-up period will end on June 3, 2013.

With this in mind, all corn, soybean and wheat growers have a decision to make and it may be best to wait and watch the numerous factors that could influence the decision prior to then.

“Farmers may want to delay making the decision to elect a farm program until later in the spring once planting intentions (and possible planting progress) are known. Projected harvest prices will reflect the planting intentions resulting in a better estimate of crop revenue. Having a good crop revenue estimate for Ohio and each farm will allow farmers to make a better decision of the potential benefits of enrolling in ACRE,” Bruynis said

Based on 2011 and estimate 2012 prices and the cap and cup rules in the ACRE program, Bruynis said the estimates revenue guarantees for 2013 are expected to be $688 (corn), $534 (soybeans), and $393 (wheat). Using average yields for these crops (157 corn, 47.5 beans, and 63 wheat) the corresponding average market year price that crops would need to be below for an ACRE payment to trigger would be $4.38 corn, $11.24 soybeans, and $6.24 wheat. The average market year price is determined from harvest 2013 until harvest 2014 for the respecting crops.

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