Why you didn't sign up for AC RE

[4wd]

Quote:

"if you are like the average guy"

I don't know what you are talking about.  Everything I farm is under the same FSA farm number, both my rented farms and owned. I was told they all have to go in ACRE.

Quote:

"ACRE will blow those two programs out of the water when the time comes and that maybe this year for several states."

There you go, using phrases like "when the time comes" and "maybe".

In order to qualify for the 'maybes' in ACRE 'when the time comes',  I will have to give up a portion of my CCP, and loan amount,  (of which I KNOW the $$$ amounts)   for sure.  And, not just for one year, but for the years left on the contract (3yr- I think now).

I think it foolish to give up hard earned gains in program benefits for unknown maybes and when the time comes. What if the time never comes? What if lthe maybes never happen? For sure I have to give up presently avail program $$$ in the hopes of the unknown, unseen bird in the bush.

And you never addressed why a farm must be signed up for such an extended time, like it or not, regardless of the future.

No, It was explained clearly enough for me to make my decision.

I say Send the ACRE back up to DC for chopping. You can explain to them how much it may mean to the farmer when the time comes as the budget cutters ax it.

[ksfarmboy]

What I meant by average guy is that most people have multiple FSA farm numbers. Not sure how you have the same farm number on both the cash rent and owned ground unless you are cash renting from yourself. In that situation if a person has different FSNs they can choose which they want to go into the program.

The reduction on the Fixed Direct payments is 20% or about $3-5/Acre. Yes that is lost revenue, but is that really making that large an impact to your farm's revenue? Probably not. $3-5/Acre could be realized very quickly if both the state and your individual farm trigger. As far as, "I will have to give up a portion of my CCP, and loan amount,  (of which I KNOW the $$$ amounts)   for sure." I believe you mean the Fixed Direct Payment, not CCP. Because CCP is eliminated if you go into ACRE. Loan Rate, who cares if it goes to Loan Rate. You give up 30% of loan rate. Do you know how CCP is calculated? Just in case you do not, CCP rates for corn and beans are $2.63 & $5.80 respectively. Those are the triggers, to actually get a payment you subtract the Direct payment rate from those triggers and that is when you actually get a CCP payment. So in corn it would be $2.63-$.28= $2.37/bushel before it pays penny for penny down (today we are at $4.63). Beans would be $5.80-$.44=$5.36/bushel before it pays penny for penny down (today we are at $10.49).

Do you expect the market to drop to $2.37 or $5.36?

The reason why the farm stays signed up in the program is because that is the time period they designated the program to last until. Similar to a pilot program. You still have to sign up every year for the DCP payments, but why would it matter being the program for multiple years? If anything goes to the DC chopping block it will be the DCP payments all together. Patience and understanding programs like these will pay out dividends to those that sign up. Another thing to consider is the lower payment limits in the DCP if you are in CCP vs. ACRE having higher limits per entity.

Now why would you not sign up for ACRE and stay in CCP? These programs supplement your revenue, not be your only source of revenue.

[4wd]

Yes, thank you for correcting me. DP, not CCP, and I do not wish to take less.

You'll have to talk to the gals in the FSA office why I have everything under one farm number. They did it, and I'll bet I am not the only one.

I use the loan, and cannot justify a 30% reduction in my loan money I take out after harvest. I see not why they even mess with the loan. It is payed back to the gov within 9mo with interest.

It matters a lot that the farm is signed up for multiple years. I can opt out of the regular program any year. Can't get out of ACRE. The reason you give, " that is the time period they designated the program to last until",  is a poor excuse. They could have just as easily made it a year to year sign up.

As an improved safety net, ACRE is not. As a way to wean the producer off the existing program, it is. How many signed up the past couple of years are happy with it and would jump back to the old way if they could? Just too many maybes, ifs, speculation on payments, while taking away what already is being offered, along with tying up the farms with a long term contract which may not be the best.

[wt510151]

4.63 and 10.49? Are you talking CME prices or market prices? From what I understood you only made money off ACRE when there was a large price difference from one year to the next.

[ksfarmboy]

Yes, those are CME board prices. Have to compare apples to apples.

It is a combination of price and yield for both the state and you to trigger a payment. Not just price drop alone. They calculate into a $ value to trigger.

[ksfarmboy]

Actually, being signed up in the program for the entirety or a new farm bill is a better calculated risk for the govt. If they know how many farms are in the program over that time frame they would have a better handle on their budget for the program.

Do you not agree that the ACRE program would trigger a payment before CCP?

If you think CCP would trigger before ACRE remember the triggers:

CCP is $2.63-.28=$2.35 on corn, $5.80-.44=$5.36 on beans.

ACRE is $3.72 on corn, $9.05 on beans.

Pretty easy for me to see why the program is better, but I guess you do not. This has been a good discussion and I am glad you are doing what is best for your farming operation. I just wanted to make sure that all the facts are presented. Do I like giving up some FDP money, no. But, I am willing to give up a little for a bigger return and better safety net.

I do not do the loan program so it would not affect me at all.