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Go ACRE or DCP? —

By Staff | May 29, 2009

With tax season behind them and planting season nearing an end, Farm Service Agency directors are hoping ag producers will monitor a statewide webcast on June 15, designed to help them to decide if they wish to enroll in the new ACRE program.

The Average Crop Revenue Election, was created by the new Farm Bill passed a year ago.

Aaron Moore, director for the FSA office based in Fort Dodge, said that ACRE acts similarly to an insured revenue crop program. It features the existing direct payment program, but that revenue is cut by 20 percent.

In addition, the cyclical-counter payment program, based on the national cash price of grain, is eliminated for those in the ACRE program, being replaced by a similar program based on the state’s and local farm’s revenue history.

The webcast will be shown at 7 p.m., June 15. Most counties’ Extension offices and Farm Bureau offices will host the program, but producers can also monitor from their own computers by logging onto www.iowafarmbureau.com.

Vance Bauer, a grain producer from rural Gowrie said that he plans to use the extended the deadline for more time to research the pros and cons of the ACRE program.

Producers can enter the ACRE program in any year of the Farm Bill’s life, but must stay in it for the duration of the Farm Bill, Moore explained.

The deadline for interested in enrolling in ACRE has been extended into Aug. 14. Those who have filed papers to elect themselves into ACRE, and who are also in the direct payment program, must meet the paperwork deadline, Moore cautioned, because it’s possible they could be bounced from both ACRE and DCP.

“It’s a complicated process,” Moore said, “and we want to be sure (producers) understand if they get nothing back to us, they could lose both contracts.”

Those who are currently in the DCP program and have no intention of enrolling in ACRE need to do nothing, Moore added.

Most Iowa producers are currently enrolled in the DCP, which also carries the possibility of receiving a cyclical-counter payment if commodity market prices bottom out. Currently, the CCP is paid out if corn drops below $2.35 and $5.36 in soybeans.

In contrast the ACRE program will set target prices based on the 2007 and 2008 grain prices. “There is more of a chance that they’ll get a payment with ACRE than they will with CCP,” Moore said, for 2009 crops.

In addition, a counter-cyclical payment is established on a farm’s base acres established back in the mid-1980s. An ACRE payment will be based on the number of acres of corn or soybeans that were planted during the program year, Moore explained.

There are trade-offs with ACRE

Producers who enroll in ACRE, Moore said, will see their direct payment contracts reduced by 20 percent. In addition, those who use the nine-month marketing assistance loans, who see those loans cut by 30 percent for all commodities grown on their farm.

Producer Bauer said that that particular 30 percent drop may be a deal breaker for many producers, since this loan is often used for cash-flowing farm operations during the growing season. A 30 percent cut in those funds, he said, may leave a producer with not enough money to function.

For those considering enrolling in ACRE, they must document their historical farm revenue from grain, based on an average over the past five years – 2003 to 2008.

This revenue can be established in two ways, Moore said. Producers can either accept the county’s average yield, which is yet to be determined; or they can certify their actual yields using insurance records, loan deficiency payments records or other documents, such as warehouse ledger sheets.

The state’s average yields over the past five years are 171 bushels for corn and 50.5 bushels for soybeans.

ACRE enrollees must re-establish their yield history each year. The 2010 program, for instance, will use yield numbers from 2004 to 2009.

Contact Larry Kershner at (515) 573-2141, ext. 453, or by e-mail at kersh@farm-news.com.

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