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Dr. Jody Campiche Oklahoma State University May 16, 2013

ACRE vs. DCP. Dr. Jody Campiche Oklahoma State University May 16, 2013. ACRE vs. DCP. American Taxpayer Relief Act extended the ACRE program for the 2013 crop year Deadline for ACRE enrollment: June 3, 2013 Deadline for DCP enrollment: August 2, 2013

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Dr. Jody Campiche Oklahoma State University May 16, 2013

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  1. ACRE vs. DCP Dr. Jody Campiche Oklahoma State University May 16, 2013

  2. ACRE vs. DCP • American Taxpayer Relief Act extended the ACRE program for the 2013 crop year • Deadline for ACRE enrollment: June 3, 2013 • Deadline for DCP enrollment: August 2, 2013 • Can enroll in ACRE or DCP (regardless of what you were previously enrolled in) • Must re-enroll in either ACRE or DCP (even if you were in ACRE last year)

  3. 2008 Commodity Programs - Reminder • Direct Payments • Paid on historical base acreage – not tied to current prices or production • Average $15/acre payment for wheat • CCP • Paid on historical base acreage and current prices • Target price program • No CCP payments on wheat • ACRE • Based on a state and farm level trigger • Payment based on state benchmark yield (not individual or county)

  4. ACRE Details • Alternative to the DCP program • Designed to protect against short-term revenue loss (from a decrease in yield, price, or combination of both) • Paid on planted acres (up to # of base acres) • Enroll by FSA farm # • Do not have to enroll all farms in ACRE • State level revenue guarantee • Based on the five-year state Olympic average yield and the two-year national average price

  5. DCP vs. ACRE

  6. What is the ACRE Program? • Two triggers must be met for an ACRE payment • 1) State Trigger • Actual State Revenue < State ACRE Guarantee • 2) Farm Trigger • Actual Farm Revenue < Farm ACRE Guarantee

  7. State Trigger

  8. State ACRE Guarantee • 90% • times • Benchmark State Yield • times • ACRE Guarantee Price

  9. Actual State Revenue • Actual State Yield • times • 2013 MYA Price • (not final until June/July 2014)

  10. Farm Trigger

  11. Farm ACRE Guarantee • Benchmark Farm Yield • times • ACRE Guarantee Price • plus • Crop Insurance Premium (per acre)

  12. Actual Farm Revenue • Actual Farm Yield • times • 2013 MYA Price • (not final until mid to late 2014)

  13. Benchmark Farm Yield • Olympic average of 2008-2012 farm yields • Drop the highest and lowest and average the remaining three • Example: • 2008 40 • 2009 36 • 2010 45 (highest) • 2011 20 (lowest) • 2012 39 • Farm Benchmark Yield = average (40,36,39) = 38.3

  14. Benchmark Farm Yield • Several options: • Certify your own yield data • If you certify yield data and it is higher than the county average, your yield will be used to calculate the benchmark farm yield • Use 95% of the ACRE county plug yield • Use a combination of both

  15. Benchmark Farm Yield • Can only prove yields back to the 1st “break in continuity” • What is a “break in continuity” • Any year when yield evidence is not available excluding years when the crop was not produced on the farm • For any years preceding the “break in continuity”, 95% of the ACRE plug yield will be used

  16. Benchmark Farm Yield • It is in the producer’s best interest to certify yields and establish a high benchmark yield • Higher benchmark yield • Higher farm revenue guarantee • More likely to meet the farm trigger • Higher ACRE payment if the farm benchmark yield > state benchmark yield

  17. Sequestration – Automatic Cuts • 8.5% cut to 2013 direct payments

  18. 2013 ACRE vs. DCP

  19. 2009/10 Average U.S. Direct Payments

  20. 2009/10 Average CCP Payments for Cotton

  21. What do you lose in DP due to sequestration?

  22. What do you lose in DP if you enroll in ACRE?

  23. 2013 Maximum ACRE payments

  24. ACRE for Wheat

  25. 2013 Wheat Estimates

  26. ACRE vs. DCP for Wheat Breakeven Point (21.8 bu/acre)

  27. ACRE vs. DCP for Wheat $2.72

  28. ACRE vs. DCP for Wheat $2.72

  29. 2013 Wheat

  30. ACRE vs. DCP for Irrigated Cotton

  31. ACRE: Irrigated Cotton Max ACRE payment $171/acre Breakeven Point (968 lbs/acre) $9.15

  32. ACRE: Irrigated Cotton Breakeven Point (800 lbs/acre) $9.15

  33. ACRE vs. DCP for Non-Irrigated Cotton

  34. ACRE vs. DCP for Non-Irrigated Cotton Breakeven Point (390 lbs/acre) $4.17

  35. ACRE vs. DCP for Non-Irrigated Cotton Breakeven Point (325 lbs/acre) $4.17

  36. Enrolling in ACRE: Things to Consider • Are you willing to give up 20% of your direct payments to potentially get an ACRE payment for the 2013 crop year • Get the 2013 DP in October 2013 • Get the 2013 ACRE payment in Oct/Nov 2014 • Wheat producers will have a better idea of the state wheat yield after May 10

  37. Enrolling in ACRE: Things to Consider • When you put a farm in ACRE, every crop on the farm is enrolled in ACRE • Even if wheat may receive a 2013 ACRE payment, need to consider loss in DP for all crops on the farm

  38. Enrolling in ACRE: Things to Consider • For each FSA farm #, how many acres are you planting compared to your base? • ACRE is only paid on planted acres • May not want to enroll a farm in ACRE if you are planting much less than your base

  39. ACRE Decision Tool • http://agecon.okstate.edu/agpolicy/decisionTool_comm.asp

  40. ACRE Decision Tool

  41. Benchmark Yield

  42. ACRE Decision Tool

  43. ACRE Decision Tool

  44. 2013 House vs. Senate Farm Bill

  45. House vs. Senate Commodity, Crop Insurance, and Livestock Programs

  46. 2013 Senate vs. House Farm Bill • No CCP payments, ACRE payments, or DP payments after 2013 (with the exception of cotton in the House bill) • House phases out direct payments for cotton in 2014 and 2015 • New revenue and price protection commodity programs • Livestock Disaster Assistance – would cover 2012 and 2013 losses • Senate bill combines Livestock Disaster Program and NAP

  47. 2013 Senate vs. House Farm Bill • New county based average yield insurance to supplement individual policy (SCO & STAX)

  48. 2013 Senate vs. House Farm Bill • Supplemental Coverage Option (SCO) • Government subsidy – 65% (reduced from 70% in 2012 drafts) • Stacked Income Protection Plan (STAX) for cotton • Government subsidy -80% • Coverage of revenue loss between 10%-30% • House removed reference price that was included in 2012 draft

  49. 2013 Senate Farm Bill Agriculture, Reform, Food and Jobs Act of 2013 • Similar to 2012 draft – but added back in counter-cyclical payment program • Choose between 2 commodity programs: • (1) Agriculture Risk Coverage - ARC (revenue coverage) • -individual (65% of planted acres) • -county coverage (85% of planted acres) • (2) Adverse Market Payments (price coverage)

  50. 2013 Senate Farm Bill Agriculture, Reform, Food and Jobs Act of 2013 • Adverse Market Payments • Actual price = higher of national average marketing year price or loan rate • Reference Price = target prices in 2008 farm bill (except rice and peanuts) • Payment rate = reference price – actual price • Payment amount = payment rate * payment acres * payment yield

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