October 21, 2011 issue 42 MidAmerica Farm Publications

pennings policy MidAmerica Farm Publications

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NCGA Proposes ACRE Modifications For 2012 Farm Bill

Bill was the Nation Corn Growers As- sociation (NCGA) with its Average Crop Revenue Election (ACRE) program. While it was able to sell its program to Congress, it was less successful with farm- ers and landlords. Only 13 percent of total base acres were enrolled in the ACRE program. In “A New Farm Pro-

O

gram Option: Average Crop Revenue Election (ACRE),”

Shields, Analyst

Dennis in

ne of the farm groups that was able to get its policy concept in- corporated into the 2008 Farm

To eliminate potential duplication of payments

with crop insurance the maximum payment is

5-year average revenue. This average is calculated using a state Crop Report- ing District (CRD) trigger based on the crop insurance harvest price for the CRD. The use of the CRD for making the benchmark calculation is a com- promise between ACRE’s use of state- level numbers and the desire of farmers to use county level numbers. Farmers pre- fer the smaller area be- cause of

the wide

reduced from 25 percent under ACRE to

10 percent under ADAP.

Agricultural Policy for the Congressional Re- search Service summarizes ACRE as follows: “The ACRE program pays a farmer when two conditions are met: (1) state-level revenue for a crop falls below a guaranteed level, and (2) the farmer experiences an individual crop revenue loss. (Payments for each crop are calculated separately.) If farmers select ACRE, they forgo 20 percent of their direct payments under the Direct and Counter-cyclical Payment Program (DCP), and commodity loan rates under the Marketing Assistance Loan Pro- gram are reduced by 30 percent. Also, ACRE participants are not eligible for counter-cyclical program payments under DCP.... “Once a farm is enrolled in ACRE, the

program applies to all eligible crops on that farm. A farmer who operates more than one farm may elect to enroll one or all of the farms in ACRE. Impor- tantly, once a farm is enrolled in ACRE, it must remain in the program for sub- sequent crop years (the program covers crop years 2009 through 2012).” The reductions in Direct Payments

and Loan Rates and the multi-year commitment were likely stumbling blocks to ACRE enrollment for many producers. For the 2012 Farm Bill, the NCGA is

proposing a modification of ACRE that they call the Agriculture Disaster As- sistance Program (ADAP). The new pro- gram takes into account not only the criticisms of ACRE, but also the lower funding levels that are being bandied about as a part of the deficit reduction program that Congress has imposed on itself. “Agriculture is prepared to take a proportionate and equitable share of budget cuts provided that everything is on the table,” the NCGA said in a press release

loads/useruploads/adap_summary_9- 9-11.pdf). ADAP calls for the elimination of the

Counter-Cyclical Payment Program. In addition, it calls for a 30 percent re- duction in Direct Payments. This re- duction would provide $15 billion in deficit reduction over the next 10 years. ADAP sets a benchmark based on a

variation in average yields (and thus rev- enue) from one part of a state to another. The maximum cover-

age of benchmark rev- enue is increased from 90 percent under

ACRE to 95 percent under ADAP. To eliminate potential duplication of pay- ments with crop insurance the maxi- mum payment is reduced from 25 percent under ACRE to 10 percent under ADAP. Under ACRE the program guarantee could not change by more

than 10 percent per year. The 10 percent limit is e l i m i n a t e d under ADAP. To date, ACRE

has found more support among corn farmers than producers of other crops, particularly cot- ton. Because cotton has a higher Direct Payment level than other crops, cotton farmers felt that ACRE did not offer enough protection for them to join the program.

Research Assistant Professor at APAC, University of Tennessee

DR. HARWOOD D. SCHAFFER

∆ DR. DARYLL E. RAY: Blasingame

Chair of Excellence in Agricultural Pol- icy, Institute of Agriculture, University of Tennessee DR. HARWOOD D. SCHAFFER: Re-

search Assistant Professor at APAC, University of Tennessee

DR. DARYLL E. RAY Agricultural Economist University of Tennessee

∆ Contact Dr. Daryll E. Ray or Dr. Harwood D. Schaffer at the UTʼs Agricultural Policy Analysis Center by calling (865) 974-7407,faxing (865) 974-7298, or emailing dray@utk.edu or hdschaffer@utk.edu For more info, visit: www.agpolicy.org

(http://www.ncga.com/up-

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