IDEAS home Printed from https://ideas.repec.org/p/ags/umaesp/42980.html
   My bibliography  Save this paper

Provisions and Potential Impacts of the Average Crop Revenue Election (ACRE) Program

Author

Listed:
  • Olson, Kent D.
  • DalSanto, Matthew R.

Abstract

The Average Crop Revenue Election (ACRE) program is a new, optional safety net for farmers provided by Congress in the Food, Conservation, and Energy Act of 2008 (commonly called the farm bill). Choosing this new safety net is not an obvious choice. Farmers who choose to elect this program also must accept a 20% reduction in direct payments and a 30% reduction in marketing assistance loan rates. In this paper, we describe the general provisions and calculations of the ACRE and counter-cyclical payment (CCP) programs and present our estimates of potential payments under the two programs. If prices are expected to remain at or above the ACRE price guarantee, CCP is the best choice since government payments are expected to be lower under the ACRE program—as shown in the first price scenario. However, if national market prices fall sufficiently, the ACRE program becomes the best choice since ACRE payments will be higher—as shown in the third price scenario. The national market price does not have to be much lower for ACRE to be the preferred choice—as shown for wheat-soybean farms in the third price scenario. It is essentially impossible to describe simple rules of thumb or breakeven prices to help farmers decide whether to sign up for ACRE or stay with CCP. This difficulty is due to several factors: the complexity of the program rules, the requirement to sign up all program crops on a farm, the potential government payment for only one crop even though direct payments and loan rates are cut for all crops, the uncertainty of future prices and yields, and the variation in how an individual farm’s yields vary in relationship to its State yields.

Suggested Citation

  • Olson, Kent D. & DalSanto, Matthew R., 2008. "Provisions and Potential Impacts of the Average Crop Revenue Election (ACRE) Program," Staff Papers 42980, University of Minnesota, Department of Applied Economics.
  • Handle: RePEc:ags:umaesp:42980
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/42980/files/p08-07r.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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 Papers 92896, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.

    More about this item

    Keywords

    Agricultural and Food Policy; Crop Production/Industries;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:umaesp:42980. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/daumnus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.