Analyzing Farmer Participation Intentions and Enrollment Rates for the Average Crop Revenue Election (ACRE) Program

The 2008 Farm Bill created the Average Crop Revenue Election (ACRE) program as a new commodity support program. We analyze actual county-level ACRE enrollment rates and a mail survey of farmers just before the ACRE sign-up deadline in Mississippi, North Carolina, Texas and Wisconsin. As discussions begin regarding the next Farm Bill, an understanding of the factors affecting ACRE participation can provide guidance as program changes are discussed. Our empirical analysis of the survey suggest that initial farmer plans to switch to ACRE in 2009 were driven by producer perceptions of whether or not ACRE would pay more than existing programs and whether or not it would provide more risk protection. On the other hand, planning to stay with existing programs in 2009 and possibly switching to ACRE later was driven more by producer risk aversion and perceptions about the effect of yield and price variability on income risk in the coming years. Membership in organizations such as National Farmers Union, National Farmers Organization, and the Grange was consistently and strongly associated with intending to stay with existing programs in 2009. Consistent state and crop effects were also found. Texas and Wisconsin producers were more likely to plan to wait and possibly switch to ACRE later and cotton growers strongly intended to stay with existing programs in 2009, likely due to the large „cost‟ of giving up the relatively larger direct payments for cotton and price expectations that made counter-cyclical payments more likely. Our empirical analysis of actual, county-level ACRE enrollment rates suggests that crop effects were again important – cotton areas had low enrollment rates, wheat areas had high enrollment rates, and counties with more diversity in crops had higher enrollment rates. In addition, regions where farmers believed yield variability would be an important source of risk also had higher enrollment. Programmatic knowledge and transactions costs also mattered for ACRE enrollment. Counties with greater participation in current farm programs had higher ACRE enrollment rates, as more growers were likely more familiar with how farm programs worked and/or received more educational efforts. Similarly, as all owners and operators must sign ACRE election forms, counties with a greater proportion of farmers renting land and/or buildings had lower enrollment rates.