Agricultural News
ACRE Program could be a viable option for the 2011 crop year
Wed, 18 May 2011 10:07:22 CDT
The 2011 ACRE program may be an attractive option for Oklahoma wheat producers. The deadline to enroll in the ACRE program for the 2011 crop year is June 1, 2011. The ACRE program was established in the 2008 Farm Bill to protect against short term declines in revenue by protecting against both price and yield risk. For ACRE payments to be made, both a state and farm level trigger must be met. For the state trigger to be met, the state ACRE revenue guarantee must be greater than the actual state revenue. For the farm trigger to be met, the farm ACRE revenue guarantee must be greater than the actual farm revenue. Once both triggers are met, a producer enrolled in ACRE is eligible for an ACRE payment. Farm Director Ron Hays talked with Dr. Jody Campiche, Assistant Professor and Extension Economist at Oklahoma State University, about the opportunity and possibility for farmers to become involved in the ACRE program and receiving payments for their crops in the 2011 growing season.
Producers who select the ACRE program will not be eligible for counter?cyclical payments (CCP) and will receive a 20 percent reduction in direct payments (DP) and a 30 percent reduction in marketing loans. Producers must enroll all base acres on a farm, but do not have to enroll all farms in ACRE. Producers can enroll in ACRE in any year between 2009?2012, but once enrolled, must remain in ACRE for the remainder of the period the 2008 farm legislation is in effect. Producers who did not enroll in the ACRE program for the 2009 or 2010 crop year will need to enroll in the ACRE program by the June 1 deadline to be eligible for the 2011 ACRE program.
Based on current conditions across Oklahoma, the 2011 Oklahoma wheat yield will likely be quite low. Recent forecasts for the 2011 Oklahoma wheat yield range from 20.5 to 22 bushels per acre. The yield could be even lower as Oklahoma wheat producers continue to face additional weather issues. However, since ACRE protects against declines in revenue, the 2011 national average marketing year price is also an important (and unknown) factor in the ACRE equation. The 2011 price will likely be much higher than in recent years (due to conditions in both the U.S. and world wheat markets) and will be the primary determinant of a 2011 ACRE payment. The USDA World Agricultural Supply and Demand Estimates (WASDE) report published on May 11, 2011 provides a forecast of $6.80 ? $8.20 for the 2011 average U.S. wheat price.
Since many Oklahoma producers received substantial ACRE payments for the 2009 crop year, it is important to discuss a few of the differences between the 2009 payment and potential 2011 payment. In 2009, producers received large ACRE payments due to a combination of low prices and low yields. The 2009 ACRE revenue guarantee (benchmark state yield * ACRE guarantee price * 90%) was also higher than the 2011 guarantee (Table 1). In addition, the 2009 national average marketing year price was much lower than the forecasted 2011 price.
Click here for more information on ACRE from Dr. Campiche's Agricultural Policy News Newsletter
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