Understanding Acre for Cotton

The Food, Conservation, and Energy Act of 2008 was passed into law on May 22, 2008 with veto override votes in the House of Representatives and the Senate (House 2008). A difference between the 2002 and the 2008 bills is the newly instituted revenue-based counter-cyclical program called the Average Crop Revenue Election (ACRE) program available beginning crop year 2009. The ACRE program is offered as an alternative to the counter-cyclical payment (CCP) program that was in place during the 2002-2008 period. Beginning with the 2009 crop year, producers will have the option to enroll their farm in either the CCP program or the ACRE program. If ACRE is elected, producers cannot change program participation for the duration of the 2008 farm bill (ERS 2008). This is a very complex decision due to the number of variables that must be considered and depends on the individual farm situation. It requires that farms, rather than crops or commodities, enter the program, so that the decision relies on the impacts of program choice on farm income. That aside, understanding commodity situations is a first step toward understanding and making decisions on individual farm situations. The purpose of this briefing paper is to provide assistance in understanding the differences between the ACRE and CCP programs for one crop, cotton, in one state, Texas. The briefing paper will also show the results of a comparison between CCP and ACRE payments using a sample of actual farm data.