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Factors Influencing ACRE Program Enrollment

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  • Woolverton, Andrea E.
  • Edwin, Young

Abstract

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.

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File URL: http://purl.umn.edu/55954
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Bibliographic Info

Paper provided by United States Department of Agriculture, Economic Research Service in its series Economic Research Report with number 55954.

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Date of creation: Nov 2009
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Handle: RePEc:ags:uersrr:55954

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Related research

Keywords: Average Revenue Crop Election; ACRE; 2008 Farm Act; farm bill; commodity programs; risk management; income support; ERS; USDA; Agricultural and Food Policy; Crop Production/Industries;

References

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  1. Cooper, Joseph C., 2009. "Payments under the Average Crop Revenue Program: Implications for Government Costs and Producer Preferences," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(1), April.
  2. Cooper, Joseph C., 2009. "Economic Aspects of Revenue-Based Commodity Support," Economic Research Report, United States Department of Agriculture, Economic Research Service 55838, United States Department of Agriculture, Economic Research Service.
  3. Young, C. Edwin & Skully, David W. & Westcott, Paul C. & Hoffman, Linwood A., 2005. "Economic Analysis of Base Acre and Payment Yield Designations Under the 2002 U.S. Farm Act," Economic Research Report, United States Department of Agriculture, Economic Research Service 33594, United States Department of Agriculture, Economic Research Service.
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Cited by:
  1. Mitchell, Paul D. & Rejesus, Roderick M. & Coble, Keith H. & Knight, Thomas O., 2010. "A Real Options Framework for Analyzing Program Participation as Human Capital Investments: The Case of the Average Crop Revenue Election (ACRE) Program," Staff Paper Series 547, University of Wisconsin, Agricultural and Applied Economics.
  2. Edwards, William M., 2011. "Iowa Farmers’ Decisions to Enroll in the Average Crop Revenue Election (Acre) Program," Staff General Research Papers 33990, Iowa State University, Department of Economics.
  3. Mitchell, Paul D. & Rejesus, Roderick M. & Coble, Keith H. & Knight, Thomas O., 2011. "Analyzing Farmer Participation Intentions and Enrollment Rates for the Average Crop Revenue Election (ACRE) Program," Staff Paper Series 560, University of Wisconsin, Agricultural and Applied Economics.

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