2009 Crop Program Signup Underway, ACRE Enrollment Coming in Spring

By Jane Fyksen Crops Editor
Friday, January 2, 2009 9:04 AM CST

USDA opened enrollment for the 2009 Direct and Counter-Cyclical Payment Program last week. Signup will continue until June 1. Producers who are eligible for the DCP federal crops program will also be eligible to enroll in the Average Crop Revenue Election (ACRE) Program. The ACRE enrollment will begin this spring; an exact date is not yet announced.

The ACRE program will provide a new, optional risk management tool for farmers. The program delivers payments to producers facing losses in crop revenue caused by adverse weather conditions and declining prices. Program participants accept a reduction in Loan Deficiency Program rates and a decrease of 20 percent in direct payments.

Sign-up for the 2009 DCP program for farms with base acres began Dec. 22 online and at local USDA service centers. USDA urges producers to make use of the eDCP automated website to sign up. However, they are also welcome to visit any Farm Service Agency office to complete their 2009 contract. The June 1 deadline is mandatory for all participants. USDA will not accept any late-filed applications.

The electronic DCP (or eDCP) service saves producers time, reduces paperwork and speeds up contract processing at FSA offices, according to USDA. It can be accessed at www.fsa.usda.gov/dcp. To access this service, producers must have an active USDA eAuthentication Level 2 account, which requires filling out an online registration form at www.eauth.egov.usda.gov followed by a visit to the local USDA Service Center for identity verification.

USDA computes program payments using base acres and payment yields established for each farm. Eligible producers receive direct payments at rates established by statute regardless of market prices. For 2009, eligible producers may request to receive advance direct payments based on 22 percent of the direct payment for each commodity associated with the farm. USDA has been issuing advance direct payments as of December 2008.

Counter-cyclical payment rates vary depending on market prices. Counter-cyclical payments are issued only when the effective price for a commodity is below its target price. The effective price for each covered commodity and peanuts equals the direct payment rate plus the higher of the national average market price received by farmers during the 12-month marketing year or the national average loan rate.

As noted, producers who are eligible for the DCP program will also be eligible to enroll in the new Average Crop Revenue Election (ACRE) Program. The enrollment period for ACRE will begin in the spring. Producers may first enroll in the DCP Program, elect to receive advance direct payments and then later modify their enrollment to include the ACRE program, or they may wait and elect to enroll in DCP and ACRE at the same time this spring.

The optional ACRE program provides a safety net based on state revenue losses and acts in place of the price-based safety net of counter-cyclical payments under DCP. A farm's payment is based on a revenue guarantee calculated using a five-year average state yield and the most recent two-year national price for each eligible commodity. For the 2009 crop, the two-year price average will be based on the 2007 and 2008 crop years.

An ACRE payment is issued when both the state and the farm have incurred a revenue loss. The payment is based on 83.3 percent (85 percent in 2012) of the farm's planted acres times the difference between the state ACRE guarantee and the state revenue times the ratio of the farm's yield divided by the state expected yield. The total number of planted acres for which a producer may receive ACRE payments may not exceed the total base on the farm.

In exchange for participating in ACRE, in addition to not receiving counter-cyclical payments, a farm's direct payment is reduced by 20 percent, and marketing assistance loan rates are reduced by 30 percent.

The decision to enroll in the ACRE Program is irrevocable. The owner of the farm and all producers on the farm must agree to enroll in ACRE. Once enrolled, the farm shall be enrolled for that initial crop year and will remain in ACRE through the 2012 crop year.

Direct payment rates and maximum counter-cyclical rates for 2009 are:

- Wheat - $3.92, target price; 52 cents, direct payment rate; $2.75, loan rate; $3.27 minimum effective price; 65 cents, maximum counter-cyclical payment rate

- Corn - $2.63; 28 cents; $1.95; $2.23; 40 cents

- Grain Sorghum - $2.57; 35 cents; $1.95; $2.30 27 cents

- Barley - $2.24; 24 cents; $1.85; $2.09; 15 cents

- Oats - $1.44; 2.4 cents; $1.33; $1.354; 8.6 cents

- Soybeans - $5.80; 44 cents; $5.00; $5.44; 36 cents

- Other oilseeds - $10.10; 80 cents; $9.30; $10.10; zero cents.

The National Corn Growers Association (NCGA) applauds USDA’s release of the rule to implement ACRE, a program authorized as part of the 2008 farm bill.

The two-year price average for the 2009 crop will be based on the 2007 and 2008 crop years. NCGA and other agriculture groups encouraged USDA to use prices from the most recent crop years to calculate the price component of the program.

“We are pleased to hear the announcement about the ACRE Program,” NCGA President Bob Dickey says. “This is a very important piece of the 2008 farm bill to NCGA members, especially during a time of uncertainty and volatile commodity markets.”

The American Soybean Association (ASA) is also happy with the announcement of details for sign-up under the ACRE program by USDA. ASA also strongly advocated for the use of 2007 and 2008 Season Average Prices (SAPs) because this will provide soybean farmers with a revenue guarantee about $71 higher per acre than if USDA had used 2006 and 2007 SAPs for soybeans.

According to ASA President Johnny Dodson, a soybean producer from Halls, Tenn., "This decision will provide an average revenue guarantee of $422 per acre for 2009 crop soybeans, based on a national average yield of 41.7 bushels per acre on planted acres." The ASA President adds that "this will make ACRE a viable program option for many soybean farmers in 2009 and beyond."

"Based on the Season Average Price for 2007 soybeans of $10.70 a bushel and the current ERS estimated SAP of $9.85a bushel for 2008, the revenue guarantee for 2009 crop soybeans will be based on an average two-year price of $10.13 per bushel," Dodson continues. "Based on average yields, the guaranteed price of $422 per acre is $71 higher than the level that would have applied if USDA had used 2006 and 2007 SAPs for soybeans.

ASA urges all soybean producers to examine the ACRE Program carefully in deciding which safety net best serves to protect their farm income.

U.S. Senator Tom Harkin (D-Iowa), chairman of the Senate Committee on Agriculture, also welcomed USDA’s announcements. USDA previously suggested that ACRE may be implemented using lower commodity prices to set the revenue guarantee benchmarks than are specified in the bill, which would reduce the income protection and benefits of the program to farmers from what was enacted, according to Harkin.

"Today's announcement is a win-win for producers across the country - a new revenue protection option that comes at an opportune time for next year's planning," says Harkin. "This new farm bill program offers a good opportunity for farmers and…we are seeing the law carried out by USDA as it was written and intended.”

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