Agricultural and Food Policy
 Agri Outlook Radio
Number 179
Policy: A New Revenue Election Program Added to the 2008 Farm Bill (2:42 minutes)
Audio/Video Script:
Robert Coats, Ph.D.
Extension Economist and Professor
University of Arkansas, Division of Agriculture
A new revenue election program was added to the 2008 farm bill. The new
revenue election program is called the Average Crop Revenue Election Program
which is referred to as the ACRE program. The ACRE program becomes available
with the 2009 crop year.
Beginning with the 2009 crop year producers of cotton,
food and feed grains or other covered commodities will have the option to
participate in a state-level revenue protection program instead of the
counter-cyclical program. If a producer chooses to participate, then the
producer must agree to a 20 percent reduction in direct payments and a 30
percent reduction in loan rates on enrolled farms.
In return for participating
in the program the producer is eligible for a state-based revenue guarantee by
commodity equal to 90 percent of the product of a state average yield per acre
for the previous five years (after dropping the highest and lowest years) times
the national average price for the previous two years for the commodity. If
actual state per-acre revenue is less than the guarantee and if a producer
suffers an actual revenue loss for the crop on the farm, then producers will
receive an ACRE payment equal to the difference between the state per-acre
revenue guarantee and the state actual revenue calculation paid on 83.3 percent
(85 percent for 2012) of the acres planted to the covered commodity on the farm.
A number of analysts are working on analyzing the impact of the Average Crop
Revenue Election Program. Dr. Art Barnaby at Kansas State University has
developed tables that show the historical payouts under ACRE for soybeans, corn,
wheat and grain sorghum for all states and Art is in the process of publishing
rice and cotton analysis.
University of Arkansas Economists are working on an ACRE farm decision making
model to help our producers more completely access the impact of the Average
Crop Revenue Election Program.
This has been Robert Coats Extension Economist University of Arkansas
Division of Agriculture.
Dr. Art Barnaby
Crop Insurance: Risk Management Strategies
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