Factors Influencing ACRE Program Enrollment
by Andrea Woolverton and Edwin Young
Economic Research Report No. (ERR-84) 43 pp, December 2009
Authorized by the 2008 Farm Act, the Average Crop Revenue Election (ACRE) program is the first revenue-based, income-support program that calculates payments using recent market prices and a producer’s actual plantings. The payments are triggered when a farm’s revenue and State revenue (price multiplied by yield per planted acre) fall below a calculated guarantee for a crop. By contrast, other income-support programs are based on legislated rates and support levels, computed using a farm’s base acres and payment yields. Had the ACRE program been available during crop years 1996-2008, this report shows that farmers would have benefited more from participating in 2002 Farm Act programs than in the hypothetical ACRE program. The report further suggests that, for 2009-12, producers of corn, soybeans, wheat, and rice are likely to benefit more from the ACRE program than from the price-based, income-support programs. Initial enrollment data suggest that factors aside from expected market prices and yields entered into the enrollment decision such as producer risk preferences and initial learning and negotiation costs. Data indicate that about 8 percent of farms with almost 13 percent of eligible base acres elected to participate in ACRE, which is less than might be expected given price and yield-based analysis alone.
Keywords: Average Crop Revenue Election, ACRE, 2008 Farm Act, farm bill, commodity programs, risk management, income support
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