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Average Crop Revenue Election: A Revenue-Based Alternative to Price-Based Commodity Payment Programs

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  • Joseph C. Cooper

Abstract

This article develops a stochastic model of the Average Crop Revenue Election (ACRE) program, which offers revenue-based commodity payments under the 2008 Farm Act. Our analysis shows that adding ACRE revenue payments to gross revenue reduces downside revenue risk for corn, wheat, and soybean farmers in 2009 on average by 16%, 21%, and 23%, respectively. Results indicate that farms with higher expected yields and lower variance of yields tend to benefit the most from ACRE. Integrating federal crop insurance with ACRE lowers insurance premiums from 10% to 40%, depending on the crop and location. Copyright 2010, Oxford University Press.

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  • Joseph C. Cooper, 2010. "Average Crop Revenue Election: A Revenue-Based Alternative to Price-Based Commodity Payment Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1214-1228.
    • Handle: RePEc:oup:ajagec:v:92:y:2010:i:4:p:1214-1228
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    File URL: http://hdl.handle.net/10.1093/ajae/aaq048
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    Cited by:

    1. Liu, Xuan & Duan, Jun & van Kooten, G. Cornelis, 2015. "An Evaluation of the Effects of Changes in the AgriStability Program on Producers’ Crop Activities: A Farm Modeling Approach," Working Papers 201654, University of Victoria, Resource Economics and Policy.
    2. Simone Pieralli & Ignacio Pérez Domínguez & Christian Elleby & Thomas Chatzopoulos, 2021. "Budgetary Impacts of Adding Agricultural Risk Management Programmes to the CAP," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 370-387, June.
    3. Claassen, Roger & Bowman, Maria & Breneman, Vince & Wade, Tara & Williams, Ryan & Fooks, Jacob & Hansen, LeRoy & Iovanna, Rich & Loesch, Chuck, 2017. "Conservation Compliance: How Farmer Incentives Are Changing in the Crop Insurance Era," Economic Research Report 261814, United States Department of Agriculture, Economic Research Service.
    4. Cooper, Joseph C. & Delbecq, Benoit A. & Davis, Christopher G., 2012. "Fiscal and Farm Level Consequences of “Shallow Loss” Commodity Support," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124199, Agricultural and Applied Economics Association.
    5. Cooper, Joseph & Delbecq, Benoît, 2014. "A multi-region approach to assessing fiscal and farm level consequences of government support for farm risk management," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 3(3), pages 1-23, December.
    6. Zhang, Hongliang & Antle, John, 2016. "Assessing Climate Vulnerability of Agricultural Systems Using High-order moments: A Case Study in the U.S. Pacific Northwest," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236233, Agricultural and Applied Economics Association.
    7. Liu, Y. & Ker, A., 2018. "Is There Too Much History in Historical Yield Data," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277293, International Association of Agricultural Economists.
    8. Xuan Liu & Jun Duan & G. Cornelis van Kooten, 2018. "The impact of changes in the AgriStability program on crop activities: A farm modeling approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 650-667, June.
    9. Gerlt, Scott & Thompson, Wyatt & Miller, Douglas, 2014. "Exploiting the Relationship between Farm-Level Yields and County-Level Yields for Applied Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-18.
    10. Ifft, Jennifer & Cooper, Joseph C. & Kuethe, Todd H., 2012. "The Impact of Risk and Farm Program Design on Cash Rents," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124334, Agricultural and Applied Economics Association.
    11. Arriola, Christine & Dismukes, Robert & Coble, Keith H. & Ubilava, David & Cooper, Joseph C., 2011. "Alternatives to a State-Based ACRE Program: Expected Payments Under a National, Crop District, or County Base," Economic Research Report 262235, United States Department of Agriculture, Economic Research Service.
    12. Cooper, Joseph & Hungerford, Ashley & O'Donoghue, Erik, 2015. "Interactions of Shallow Loss Support and Traditional Federal Crop Insurance: Building a Framework for Assessing Commodity Support Issues for the Next Farm Act," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205310, Agricultural and Applied Economics Association.
    13. Hongliang Zhang & John M. Antle, 2018. "Weather, Climate and Production Risk," IRENE Working Papers 18-01, IRENE Institute of Economic Research.
    14. Eric J Belasco & Joseph Cooper & Vincent H Smith, 2020. "The Development of a Weather‐based Crop Disaster Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 240-258, January.
    15. Luckstead, Jeff & Devadoss, Stephen, 2016. "Implication of 2014 Farm Policies for Wheat Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235362, Agricultural and Applied Economics Association.
    16. Claassen, Roger & Carriazo, Fernando & Cooper, Joseph C. & Hellerstein, Daniel & Ueda, Kohei, 2011. "Grassland to Cropland Conversion in the Northern Plains: The Role of Crop Insurance, Commodity, and Disaster Programs," Economic Research Report 262239, United States Department of Agriculture, Economic Research Service.
    17. Joseph Cooper & Carl Zulauf & Michael Langemeier & Gary Schnitkey, 2012. "Implications of within county yield heterogeneity for modeling crop insurance premiums," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 134-155, May.
    18. Jesse Tack & Keith Coble & Barry Barnett, 2018. "Warming temperatures will likely induce higher premium rates and government outlays for the U.S. crop insurance program," Agricultural Economics, International Association of Agricultural Economists, vol. 49(5), pages 635-647, September.

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