Grain Bins


SDCGA urges producers to support ACRE provisions

Posted on September 12, 2008

Before producers even have a chance to fully understand new provisions in the next Farm Bill, a key component could be compromised.

The U.S. Secretary of Agriculture will soon be releasing a new rule in the Federal Register on how it intends to implement some key provisions of the 2008 Farm Bill, including the optional Average Crop Revenue Election Program (ACRE). Should USDA decide in favor of the average farm gate prices for 2006 and 2007, rather than 2007 and 2008 as “the most recent years” for the 2009 crop state revenue guarantees, participation in the new safety net program is likely to be substantially reduced.

“This is unacceptable. In making final implementation decisions on the ACRE program, USDA must uphold the original intent for the provisions in the Farm Bill and use 2007 and 2008 as the first baseline for the ACRE program,” said Bill Chase, president of the SDCGA. “In today’s market climate as margins have narrowed considerably and with steep increases in input and energy costs, using antiquated data would be disastrous to our ag producers.”

ACRE is an elective program that producers can choose to enroll in at any time during the term of the next farm bill. Participation in the ACRE program involves trade offs for producers including a 20 percent cut in participants’ direct payments and a 30 percent cut in marketing loan rates.

The underlying purpose of the ACRE program is to provide an optional farm safety net that is more in tandem with actual market conditions. By moving the ACRE guarantee price to 2006, the Department would make market signals more remote from actual planting decisions and significantly diminish the program’s effectiveness.

Clearly stated under the ACRE statute is the directive to use the “most recent 2 crop years.” The ACRE program will begin in the 2009 crop year, requiring USDA to use 2007 and 2008 in determining the ACRE price guarantee.

Comparing the differences in the two sets of marketing years, the Food and Agriculture Policy Research Institute (FAPRI – University of Missouri) prepared the following average price scenarios:

06-07 07-08

Corn $3.65 $4.85
Wheat $5.37 $6.62
Soybeans $8.29 $11.48

“When ACRE was passed in the farm bill, the intent of Congress was to use 2007 and 2008 crop market prices for the baselines. USDA must keep the commitment Congress made to producers and accurately reflect the language of these critical provisions in the new ACRE program,” said Chase. “The SDCGA encourages growers to contact Sens. Johnson and Thune and Rep. Herseth Sandlin to urge USDA to use the 2007 and 2008 crop marketing years to ensure a viable ACRE program.”

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