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New ACRE program, flexible cash leases match up well, specialist says

Agriculture.com Staff 08/13/2008 @ 10:13am

Starting next year, farm revenue "triggers" will be a large part of payments from the new Average Crop Revenue Election (ACRE) program.

Then, why not use a similar set of triggers to structure farmland leases, like a flexible cash lease agreement? The number of this type of alternative to standard cash leases may see a boost in the next year, as more farmers using ACRE may be better able to make the transition.

The basic requirements for a flexible cash lease are about the same as those for ACRE, says Iowa State University Extension Farm Management specialist Steve Johnson.

"Once tenants and landowners understand that, beginning in 2009, revenue triggers at both the state and farm levels are a major portion of the new ACRE payment, they will see that leases could be structured in a similar fashion," Johnson says. "These revenue concepts will be incorporated by both tenants and landlords to write multi-year leases that benefit both parties through the 2012 crop year, the last year of the ACRE program."

Another common thread is recorded farm yields. A flexible cash lease agreement requires the landlord receive payment based on yield and revenue. The same data's needed for ACRE, and participation in the federal program will mesh well with structuring a flexible cash lease agreement, Johnson says.

"Farms that enroll in ACRE in 2009 will likely need to prove their actual farm yields by FSA farm number beginning with the 2004 crop year. That's because ACRE requires the use of both state and farm yields using a five-year Olympic average for planted acreage. For some farms, the easiest year to prove yields will be 2008 when scale tickets, settlement sheets, grain bin measurements, and yield monitor data can be segregated by FSA farm number during and immediately following harvest," Johnson says. "However, the FSA regulations pertinent to ACRE and farm yields have yet to be written and likely will not be completed prior to the 2008 harvest."

Starting next year, farm revenue "triggers" will be a large part of payments from the new Average Crop Revenue Election (ACRE) program.

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