1. Assistant Professor/Grain Markets Specialist
ACRE
Webcast
May 13, 2010
Chad Hart
Assistant Professor/Grain Markets Specialist 1

2. Average Crop Revenue Election (ACRE)
ACRE is a revenue-based counter-cyclical payment program
Based on state and farm-level yields per planted acre and national prices
Producers choosing ACRE agree to 20% decline in direct payments, 30% decline in loan rates, and no CCP payments

3. Farmer Choice
Starting in 2009, producers will be given the option of choosing ACRE or not
Can choose to start ACRE in 2009, 2010, or beyond
Once you’re in ACRE, you stay in ACRE until the next farm bill
If you sign up for ACRE, you must do so for all eligible crops
Deadline for sign-up, June 1

4. ACRE Settings ACRE is based on planted acres
Total acres eligible for ACRE payments limited to total number of base acres on the farm
Farmers may choose which planted acres are enrolled in ACRE when total base area is exceeded
Choice needs to be made by Sept. 30

5. ACRE Set-up for 2009 Iowa Corn
Year
Yield per Planted Acre
(bu./acre)
2004
181.0
2005
173.0
2006
166.0
2007
171.0
2008
169.0
Olympic Average
Year
Season-average Price ($/bu.)
2007
4.20
2008
4.06
Average
4.13
So the expected state yield is bushels per acre and the ACRE price guarantee is $4.13 per bushel.

6. ACRE Set-up for 2009 Iowa Soybeans
Year
Yield per Planted Acre
(bu./acre)
2004
49.0
2005
52.0
2006
50.5
2007
2008
46.5
Olympic Average
Year
Season-average Price ($/bu.)
2007
10.10
2008
9.97
Average
10.04
So the expected state yield is 50.5 bushels per acre and the ACRE price guarantee is $10.04 per bushel.

7. ACRE Guarantees ACRE revenue guarantee Is the state-level guarantee
= 90% * ACRE price guarantee * Expected state yield
For 2009: Corn $635.61/acre Soy $456.32/acre
National 2-year average
State 5-year
Olympic average

8. ACRE Guarantees ACRE Farm revenue trigger Is the farm-level guarantee
Checked once the state triggers
= Expected farm yield * ACRE price guarantee Producer-paid crop insurance premium
Farm 5-year Olympic average
National 2-year average
Current premium for farm

9. ACRE Payment Triggers State trigger: Farm trigger:
When state computed revenue is below ACRE Revenue Guarantee
Farm trigger:
When farm computed revenue is below ACRE Farm revenue trigger
Need both triggers to receive an ACRE payment

10. ACRE Computed Revenues
ACRE actual revenue
= Max(Season-average price, ACRE Loan rate) * Actual state yield per planted acre
ACRE actual farm revenue
= Max(Season-average price, ACRE Loan rate) * Actual farm yield per planted acre

11. ACRE Payments Payment rate
= Min(25% * ACRE revenue guarantee,
ACRE revenue guarantee – ACRE actual revenue)
Payments made on 83.3% of planted acres in , 85% in 2012 (up to total base acres)
ACRE payment adjustment: Payment multiplied by ratio of Expected farm yield to Expected state yield
Set at the state level

12. Using Latest USDA Corn Projections
2009 ACRE revenue guarantee = $635.61/acre
$4.13/bu. * bu./acre * 90%
2009 Proj. ACRE actual revenue = $655.20/acre
$3.60/bu. * bu./acre
No payments under this scenario
Would need price to fall to $3.49 to trigger payments
Current futures (5/12/10) point to a season-average price of $3.55

13. Using Latest USDA Soy Projections
2009 ACRE revenue guarantee = $456.32/acre
$10.04/bu. * 50.5 bu./acre * 90%
2009 Proj. ACRE actual revenue = $479.75/acre
$9.50/bu. * 50.5 bu./acre
No payments under this scenario
Would need price to fall to $9.03 to trigger payments
Current futures (5/12/10) point to a season-average price of $9.46

14. Looking Beyond 2009
The ACRE revenue guarantee is updated each year using the same rules
5 year Olympic average for yields
2 year average for prices
But the ACRE revenue guarantee can not change by more than 10 percent (up or down) from year to year

15. ACRE Set-up for 2010 Iowa Corn
Year
Yield per Planted Acre
(bu./acre)
2005
173.0
2006
166.0
2007
171.0
2008
169.0
2009
182.0
Olympic Average
Year
Season-average Price ($/bu.)
2008
4.06
2009
3.60
Average
3.83
The 2009 yields and prices are USDA’s May 2010 estimates.
So the expected state yield would be bushels per acre and the ACRE price guarantee would be $3.83 per bushel.

16. 2010 Iowa Corn ACRE Guarantee
By formula, the ACRE revenue guarantee would be $589.44/acre
90% * $3.83/bu. * bu./acre
But the ACRE revenue guarantee can not change by more than 10%
2009 guarantee = $635.61/acre
Allowed range is $ to $699.17
So 2010 proj. guarantee is $589.44/acre

17. ACRE Set-up for 2010 Iowa Soybeans
Year
Yield per Planted Acre
(bu./acre)
2005
52.0
2006
50.5
2007
2008
46.5
2009
Olympic Average
51.0
Year
Season-average Price ($/bu.)
2008
9.97
2009
9.50
Average
9.74
The 2009 yields and prices are USDA’s May 2010 estimates.
So the expected state yield would be 51.0 bushels per acre and the ACRE price guarantee would be $9.74 per bushel.

18. 2010 Iowa Soybean ACRE Guarantee
By formula, the ACRE revenue guarantee would be $447.07/acre
90% * $9.74/bu. * 51.0 bu./acre
But the ACRE revenue guarantee can not change by more than 10%
2009 guarantee = $456.32/acre
Allowed range is $ to $501.95
So 2010 proj. guarantee is $447.07/acre

19. ACRE Payment Rate Matrix ($/acre)
Price
Yield
$2.70
$2.90
$3.10
$3.30
$3.50
$3.70
$3.90
$4.10
$4.30
155
147.36
139.94
108.94
77.94
46.94
15.94
0.00
159
128.34
96.54
64.74
32.94
1.14
163
116.74
84.14
51.54
18.94
167
138.54
105.14
71.74
38.34
4.94
171
127.74
93.54
59.34
25.14
175
116.94
81.94
11.94
179
106.14
70.34
34.54
183
95.34
58.74
22.14
187
84.54
47.14
9.74
For Iowa corn in 2010, based on May 2010 price and yield projections

20. ACRE Payment Rate Matrix ($/acre)
Price
Yield
$7.95
$8.15
$8.35
$8.55
$8.75
$8.95
$9.15
$9.35
$9.55
47.0
73.42
64.02
54.62
45.22
35.82
26.42
17.02
7.62
0.00
48.0
65.47
55.87
46.27
36.67
27.07
17.47
7.87
49.0
57.52
47.72
37.92
28.12
18.32
8.52
50.0
49.57
39.57
29.57
19.57
9.57
51.0
41.62
31.42
21.22
11.02
0.82
52.0
33.67
23.27
12.87
2.47
53.0
25.72
15.12
4.52
54.0
17.77
6.97
55.0
9.82
For Iowa soybeans in 2010, based on May 2010 price and yield projections

21. Information and Decision Tools
DCP and ACRE signup going on right now
So whether you are staying with CCP or moving to ACRE,
you have a form to fill out by June 1
ACRE information and tools are available at:
USDA – Farm Service Agency:
Iowa State:
Illinois:
Missouri:

22. Forms and Records Forms Records Election: CCC-509 ACRE (fill out once)
Enrollment: CCC-509 (fill out each year)
If you do not fill out the enrollment paperwork, you are not in the program
All producers, including landowners, must sign the election form
Records
Must annually report acreage and production to FSA
In proving historical farm yields, producers must present production records for continuous years (no gaps are allowed)

23. Forms and Records Records
The farm yields will be the higher of the proven farm yield or 95% of the county average yield determined by FSA (NASS county production/FSA county acreage)
Zero production reports are allowed
Crop insurance and NAP production reports will work
Commercial receipts, settlement sheets, warehouse ledger sheets that are reliable and/or verifiable will work
Loan and LDP records will work
Production data for 2009 needs to turned in by June 30, 2010

24. Example of Production Records

25. Final Notes Signup deadline is June 1
Holds whether you are staying with CCP or moving to ACRE
Current projections have smaller 2010 ACRE guarantees
But these guarantees are still way above historical averages
And given trend yields and current price estimates for 2010, ACRE would be close to triggering payments for Iowa crops

26. Thanks for your time!
My web site: Iowa Farm Outlook: Ag Decision Maker: