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daniel looker
Frequent Contributor

ACRE in Illinois

Looks like Illinois will be ground zero for ACRE payments in the Corn Belt on last year's crops. U of I is estimating corn payments of $27 per acre and wheat payments at $90 an acre. And almost of fourth of the state's farms signed up for ACRE last year.

 

What are you guys in Illinois hearing about this?

 

And is anyone thinking about signing up for ACRE for 2010 before the June 1 deadline?

 

I just finished writing up the views of some farm management folks on ACRE for 2010. They seem to be stronger advocates of signing up. To see what they're saying, click here.

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5 Replies
cz4586
Frequent Contributor

Re: ACRE in Illinois

The thing about ACRE that seems to get ignored is the payment limit.  It's $65,000 per person (or entity if you're a USDA drone) .  So all this talk of $90/acre payment on wheat, or $323/acre revenue guarantee on corn for 2010 sounds nice.  But if you have what is even a modest sized farm these days, the payment limit will cut you off well below these so-called guarantees.

 

So comparing it to DCP is interesting and useful, but assuming it provides any revenue protection or insurance is mistaken. 

patriot3031376
Veteran Contributor

Re: ACRE in Illinois

The payment limit is not ignored. I am gambling $4 an acre direct payment for a possible $90/a payment from ACRE. I will take those odds.

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remrafMT
Visitor

Re: ACRE in Illinois

Patriot, excellent answer.  2009 wheat counter cyclical payment $0.00.  2009 wheat ACRE payment $90.00.  I think ACRE wins.  Plus the limit is not $65,000, its $65,000 plus 20% reduction in DP and DP is reduced by 20%.  Further, with DCP your limit is 40,000.  with ACRE its $73,000 if your maxing out DP, so you can get more by being in ACRE.

Jim Meade / Iowa City
Senior Advisor

Re: ACRE in Illinois

I get the feeling some people are jawboning for ACRE.

 

I have to admit that as I get older and closer to retirement, I think of less and less government involvement.

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daniel looker
Frequent Contributor

Re: ACRE in Illinois

Jim,

 

I can't disagree. Government programs just seem to get more complicated with each farm bill. 

 

However, if you sign up for ACRE, in a way you're going to get less government support most years because you're giving up 20% of your direct payment. In a sense, that's less government involvement. Most years, ACRE won't pay. And right now, it doesn't look likely. But it could protect you against a catastrophic crash in revenue. Last year, it didn't pay on corn in Iowa because both yields and prices rose more than the experts expected. Higher yields and higher prices in Iowa are unusual. The opposite, lower yields and lower prices, is also unusual. But I can think of a scenario where that could happen: Let's say we're on the cusp of the much-feared double-dip recession. Oil prices continue dropping, and ethanol demand along with it, and corn prices. Then, for some reason I can't imagine yet, yields are low, too. Under that scenario, $3 corn futures and a lot of pain would be possible. Do I think that's likely? No. But that's why you buy crop insurance revenue products. And that's why ACRE could help a little more. If you're able to self insure, that's great. 

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