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U.S. Senator agonizes over ACRE decision, too

As the August 14 deadline nears for this year's chance to enroll in the new farm program, ACRE (Average Crop Revenue Election), you're not alone if you’re undecided.

The vast majority of U.S. farmers eligible for the program haven't signed up. U.S. Senator Chuck Grassley and his son Robin also haven’t decided whether to enroll the family’s farm into ACRE, Grassley said Tuesday.

"We talked about it on Saturday and we don't know what to do," he told Agriculture Online during his weekly telephone press conference with ag reporters. "We're still looking at it."

Grassley said he suggested several sources to his son for advice, including Farm Bureau and Extension.

There is no shortage of information if you're looking for it.

Kansas State University ag economist Art Barnaby will hold a webinar on ACRE on August 4. Click here for more information.

In an e-mail message Tuesday, Barnaby also recommended a National Corn Growers Association paper that farmers can use to explain ACRE to their landlords.

"While this is a corn example, Oklahoma wheat producers who are expect[ing] the maximum ACRE payment may be able to use the paper to explain ACRE to their landlords," Barnaby writes. "Also with the decline in prices, many ACRE models are starting to show potential corn ACRE payments of $100 or more per acre. NASS will release a new price on July 30 and their first yield estimate on August 12. This will give corn, grain sorghum and soybean producers more information to make their final ACRE decision. The August 12 NASS yield report could be a game changer in some states."

The National Agricultural Statistics Service report at the end of this month (July 31 on the NASS website), will give you the average price for corn and soybeans for the first 11 months of the 2008 marketing year. Add that to the 2007 price and you’ll have a pretty good idea of the price component of the ACRE revenue guarantee. On August 12, the NASS estimate of the 2009 corn crop will be factored into the WASDE (World Agricultural Supply and Demand Estimate) that will include a projection of prices during the 2009 marketing year that starts September 1.

That actual NASS average price for corn for the 2009 crop, which no one knows at this point, will be used to determine whether farmers enrolled in ACRE will get payments sometime in the fall of 2010. A lot could happen to change prices -- continued cool weather and an early frost might bump them up. Some growers worry about inflation taking off. But NASS price projections are often close to the mark and Extension experts are pointing to a strong likelihood of an ACRE payment.

Even using the July WASDE report and futures prices indicating a 2009 corn price of $3.25, Michigan State University ag economist Jim Hilker sees a good chance for ACRE corn payments in that state.

"Even if the state and your farm has an average yield, just the lower prices expected relative to the past two years will trigger ACRE payments of $68.48 per acre if prices do average $3.25 and you have a similar yield to the state yield," he writes in a recent outlook report. "If you're Olympic average ACRE yield is higher than 138 than you will have even higher payments and vice versa."

Farms with a higher average yield might have a better chance of triggering a payment and, under ACRE program rules, they're eligible for slightly higher payments, explains Iowa State University Extension farm management specialist Steve Johnson.

"There's a Productivity Index that adjusts the final ACRE payment," Johnson says. "It benefits higher yielding farms. It's not a large multiplier, usually 1% to 5%. (ie. Iowa farm yield of 175/171 = 2.34% adjustment higher. Remember all farm program payments (DCP and ACRE) are adjusted by 83.3% in 2009-11. That number adjusts to 85% in 2012."

Johnson has wrapped up his own workshops on ACRE, but he's still getting questions from farmers. Here are two from a northwest Iowa farmer that he answered Tuesday:

Question #1: We can prove a 5-year farm Olympic average yield on our farm of over 200 bu/A for corn. How does this impact our ACRE enrollment decision?

Answer: This farm benchmark yield is divided by state benchmark yield to create a productivity index. In this case, if there is an ACRE payment it would be multiplied times nearly 17% as a part of your productivity index calculation. ( 200 bu/A divided by 171 bu/A = 116.96%.) Also, you can create a large farm revenue guarantee that will be much easier to trigger when subtracting the farm's actual revenue in 2009. This is true, even with large yields anticipated for your part of the state. If you can prove a 200 bu/A benchmark farm yield, you can still likely produce up to 240 bu/A on this farm in 2009 and still trigger ACRE at the farm level.

Question #2: It also looks like if there would be an ACRE payment, our high proven yields on corn would work in our favor. In your opinion, do you feel we have a very good chance of getting our 20% DP or more back in the form of an acre payment in the next four years?

Answer: Yes, based on July 20th cash price estimates for the 2009-10 marketing year you would get all the DP back the first year. However, you'd only get it on the acres planted to corn. Also, the farms you enroll in ACRE have a state guarantee of $571/A for 2010. That's because the state revenue guarantee can't drop by more than 10% from one year to the next. Math: $635/A Iowa corn revenue guarantee times 90% = $571/A corn guarantee for 2010.

Click here to see more at Johnson's website.

As the August 14 deadline nears for this year's chance to enroll in the new farm program, ACRE (Average Crop Revenue Election), you're not alone if you’re undecided.

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