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Schafer: Barriers remain for ACRE implementation

The farm bill's newest, big program after the permanent disaster program that started this year may be ACRE, the average crop revenue election that farmers have the option of signing up for on their 2009 crops.

At a press conference Thursday, Agriculture Secretary Ed Schafer acknowledged that ACRE has a few barriers.

"We can't deliver the ACRE program on the current equipment and software we have in place," Schafer said. USDA had asked Congress for $200 million to put the new farm bill into effect. It got $55 million, Schafer said.

He hopes that Congress this fall will approve another $179 million to cover the costs of putting the law into effect.

Another bigger issue for farmers is how USDA will deal with setting the benchmark revenue for the new program. The farm law says it's supposed to be based on the national average price of the two previous crop years. So, for 2009 crops, you'd think that it would be average prices for 2007 and 2008. But Schafer seemed to confirm rumors Thursday that the Department is considering using '06 and '07 prices, obviously a much lower benchmark.

"We have some difficult issues, like the base years we're going to use," Schafer said. The Congressional Budget Office has estimated ACRE costs based on a different two years than members of Congress, who favor using 07 and 08, he said.

On Friday, Senator Tom Harkin, Chairman of the Senate Agriculture Committee, disagreed with Schafer.

"One of the key distinctions of the ACRE program is that it uses recent commodity prices to calculate the program benefits. This distinction was critical for ACRE supporters to ensure that program benefits would be relevant to the producers who use the program," Harkin said in a statement released to Agriculture Online. "It was very important to ACRE proponents to have a strong correlation with real revenue experience. The closer the price data is to the current year the better. For that reason, USDA should use 2007 and 2008 prices to implement this program."

Harkin's staff also said that the CBO did not use '06 and '07 prices to estimate the cost of the ACRE program.

Kansas State University Agricultural Economist Art Barnaby recently dealt with this issue in his Ag Manager web page.

"The final rule on prices used to set the strike price in ACRE will have a big impact on the effectiveness of ACRE as a risk management tool for farmers," Barnaby wrote in a recent report.

He agrees that the intent of Congress seems to be to use '07 and '08 prices, but the law also says the strike price (the two year average) should be set "as determined by the Secretary," which may give USDA more latitude.

Schafer said not all of the rules for new USDA programs will be done before he leaves office in January and that a committee of career USDA administrators will continue working on them.

He's not certain when farmers will be able to sign up for ACRE, but, he said, "rather than having an artificial deadline, we're sying farmers will be able to sign up retroactively."

The farm bill's newest, big program after the permanent disaster program that started this year may be ACRE, the average crop revenue election that farmers have the option of signing up for on their 2009 crops.

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