Assistant Professor & Extension Economist ACRE Update Dr. Jody Campiche Assistant Professor & Extension Economist Agricultural Policy

2009 ACRE Payment $95 million in ACRE payments to Oklahoma producers (starting in November 2010)

2009 ACRE Payment Rates

2009 ACRE Crops Planted on ACRE Farms Acres Barley 716 Canola 7,478 Corn 97,449 Cotton 2,254 Grain Sorghum 48,222 Minor Oilseeds 2,497 Oats 2,664 Peanuts 185 Pulse Crops 430 Soybeans 50,356 Wheat 2,381,326

2009 ACRE Payment

2009 OK ACRE Payments County Contracts $millions Garfield 10.5% $10.2 Kingfisher 7.3% $6.5 Blaine 6.0% $4.9 Canadian 5.3% $4.3 Caddo 4.7% $2.8 Washita 4.4% $4.0 Grant 4.0% $4.5 Alfalfa 3.9% $4.9 Woods 3.7% $4.0 Major 3.5% $3.4 Noble 3.4% $2.8 Dewey 3.1% $2.6 Cimarron 3.1% $4.9 Cotton 3.0% $2.6 Kiowa 2.8% $3.2 Texas 2.6% $4.5 Jackson 2.3% $2.8 Kay 2.0% $2.5 Custer 2.0% $2.8 Red Circle - > $1.6 million Green Circle - $1 - $1.5 million Blue Circle - $100K - $650K No Circle - < $100K

2010 ACRE Enrollment Low enrollment for 2010 2009: 12,233 farms (24.88% of total farms) 2010: 12,402 farms (24.98% of total farms) 169 farms in 2010

2010 Estimated ACRE Payment Rates Based on current price estimates, the only crop that may have a 2010 ACRE payment is oats ($3.50/acre) 2010/11 marketing year average prices are not final for any crops…

2011 ACRE Payment May be a good option for Oklahoma wheat producers Deadline is June 1, 2011 (for producers who did not enroll in 2009 or 2010) 2011 OK wheat yield forecast – 20.5 bu/acre

2011 Wheat ACRE Payment Unknown factor: 2011/12 national average marketing year price May be higher than in recent years due to conditions in the U.S. and world wheat markets Forecast: $6.50-7.25/bu

2011 Wheat ACRE Payment ACRE Guarantee $187 $151 The low 2011 State yield may lead to a high ACRE payment We have a different situation than in 2009 ACRE guarantee was higher in 2009 Benchmark state yield was higher Previous 2 year national average marketing year prices were higher 2009 marketing year average price was lower   2009 2011 ACRE Guarantee $187 $151                             Guarantee Price $6.63 $5.24 Benchmark State Yield 31 bu/acre 27.5 bu/acre      National Avg marketing year price $4.87 $6.50-$7.25      State Yield 22 bu/acre 20.5 bu/acre  

2011 Wheat ACRE Payment Producers could still get a 2011 ACRE payment if the yield is low enough (and the price doesn’t go much higher than $6.50) Price $6.00 $6.50 $6.75 $7.00 $7.25 ACRE Payment $36/acre $24/acre $17/acre $10/acre $4/acre

2011 Wheat ACRE Payment Wheat Direct Payment Loss in Direct Payment 20% * $15 = $3/acre * 2 (2011 & 2012) = $6/acre

2011 Cotton ACRE Payment

2011 Cotton ACRE Payment

2011 Cotton ACRE Payment 2011 ACRE Guarantee Price: $.727 (average of $0.629 & $0.825) 2011/12 Actual Price: ?

What does this mean for an ACRE payment? The ACRE payment is based on a moving average price The high 2010 price will increase the ACRE guarantee for 2011 A high 2011 price will increase the guarantee for 2012 If the price drops for the 2012 marketing year, the revenue guarantee will be higher than the actual revenue

What does this mean for an ACRE payment? 2009 Actual Price: $0.629 2010 ACRE Guarantee: $517.55 (I) $209.91 (NI) Actual Price: $0.825 2011 ACRE Guarantee: $569.31 (I) $230.90 (NI) 2012 ACRE Guarantee: $625.90 (I) $253.99 (NI)

Questions? Jody Campiche 528 Ag Hall Stillwater, OK 74078 jody.campiche@okstate.edu 405-744-9811 Ag Policy Newsletter http://www.agecon.okstate.edu/agpolicy/index.asp?type=newsletters ACRE newsletter will be posted after the latest USDA 2011/12 price forecast is published tomorrow (May 12) ACRE Decision Tool http://www.agecon.okstate.edu/agpolicy/decisionTool_comm.asp