ACRE To Be or Not to Be
For many farmers, the new Average Crop Revenue Election (ACRE) program is about as easy to understand as learning a new language for the first time. I have read several articles and listened to a couple of slide shows on the program.
You have until mid-August to make up you mind regarding the election for this year which will lock you in until 2012.
At the FarmDoc site, they have a very good slide show that lasts about 20 to 30 minutes that gives a good synopsis of how the program will work. Based upon their analysis, over the last 31 years, farmers growing corn would have had ACRE payments in about 10 of the 31 years. This average payment would have been about $53 per acre. Electing ACRE would cost you about $5 per year, so getting a $53 payment every three years might be a good deal.
For growing soybeans, the ACRE program would have resulted in an average payment of $37 per acre for only 5 out of 31 years. For soybeans, the benefit of the ACRE program appears to be much less than corn.
Also, with the higher corn and soybean prices for 2007 and 2008, these numbers may be actually higher since there is a 10% cap on the increase or decease in the revenue targets.
I think for many farmers this may be a very good put insurance on your crop. There is no excuse for not understanding if it will work best for your farm. You can elect this coverage on a farm by farm basis.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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