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2009 ACRE payments big in a few states, with few takers in most

DANIEL LOOKER 10/01/2010 @ 11:34am Business Editor

This week USDA released its final weighted average price for 2009 crops covered by ACRE, the last piece of information the agency needs before making payments this fall.

Kansas State University ag economist Art Barnaby promptly plugged the numbers into his calculations in order to release his own estimates of per acre payments that enrolled farmers might collect in some states (if the farm itself also had a drop in revenue in 2009). Barnaby’s numbers show wheat producers getting most of the ACRE payments, with corn and grain sorghum and soybeans triggering payments in a few states.

This is the first test of how ACRE, or Average Crop Revenue Election, works in practice. The 2009 crop was the first that producers could enroll in the program. Signup was low, about 8% of eligible farmers nationwide and 13% of the base acres in commodity programs.

Barnaby’s tables show that, as expected Oklahoma wheat, Texas wheat, and Washington wheat were at the maximum.  The highest payment in a major wheat producing state is $115.48 an acre in Idaho. Signup was also fairly high in the Pacific Northwest wheat states, Barnaby said. As expected there was no Colorado wheat payment.  Unexpected was a “small” wheat payment for Kansas  ($7.56 an acre) and Nebraska, but no wheat payment in North Dakota.

“Illinois was the only Corn Belt state that had a payment and it was pretty small, $25.17,” Barnaby told Agriculture.com.

There was no corn payment in Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin.  In the irrigated/dryland states there were no corn payments generated in Kansas and Nebraska.  Irrigated Colorado corn generated an ACRE payment but no dryland payment, while Texas dryland corn generated a payment but not irrigated.

Barnaby’s tables show some states eligible for high corn payments. The highest was $149.61 an acre in Connecticut, where the state yield was only 123 bushels an acre in 2009. However, no one will collect.

“We have not had any signup for the ACRE program,”  said Marsha Jette, the state’s FSA executive director. That’s for both 2009 and 2010.

And there’s a logical reason, added program specialist Marilu Soileau. “In Connecticut there’s hardly any farms that harvest corn for grain. It’s all going to silage to harvest for dairy farms.”

A few other states that grow irrigated corn did trigger payments. In Colorado, irrigated corn is eligible for $20.25 an acre, but dryland corn triggered no payments.

Barnaby said that Texas triggered payments on several crops, but there, too, FSA won’t be spending much. Only about one percent of eligible farms enrolled in ACRE there in 2009.

Several barriers may have contributed to low interest in ACRE, or the Average Crop Revenue Election program.

It has a cost -- you give up 20% of your direct payments to enroll. It’s more complicated than other commodity programs. Payments kick in only if a state has a 10% drop in revenue, a combination of each state’s yields calculated by USDA’s Farm Service Agency and average prices calculated by USDA’s National Agricultural Statistics Service.  And an individual farm has to have lower revenue to collect even if a state has potential payments. Finally, there’s a long lag time for payments. That’s because the revenue calculation is based on the marketing year that starts September 1 for corn and soybeans and June 1 for wheat. A late signup in 2009, in August, gave wheat producers an advantage. They already knew their yields, corn and soybean farmers didn’t.

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