What is in this article?:
- June 3 is deadline for choosing ACRE as revenue-protection plan
- Odds pretty low
• What makes the decision challenging is that producers can't possibly know by the enrollment deadline whether ACRE or DCP will have the highest returns.
• That won't be determined until crop yields and prices are known after harvest.
Odds pretty low
"Right now, I would put the odds of triggering soybean ACRE payments for the 2013 crop due to low prices at maybe 20-30 percent," Hurt said. "For corn, the odds of triggering an ACRE payment might only be 10-15 percent."
It takes two triggers for ACRE payments to happen. First, the state actual crop revenue for corn or soybeans has to be lower than the state revenue guarantee, which currently is $712 per acre for Indiana corn and $546 per acre for soybeans.
Second, an individual farm has to have lower revenue than the ACRE revenue guarantee for that farm.
When growers enroll in ACRE, they are enrolling all of the crops on that farm, including corn, soybeans and wheat, but payments are made to individual crops. For example, there could be an ACRE payment on soybeans, but not wheat.
According to Hurt, the biggest cost associated with enrolling in ACRE is the 20 percent reduction in direct payments.
"Purdue estimates this is about $2 to $3 per acre for soybeans and about $4 to $6 per acre for corn on average-quality land," he said. "The potential benefit is protection against low revenues that could come from low yields, low prices or a combination of the two."
What makes the decision challenging is that producers can't possibly know by the enrollment deadline whether ACRE or DCP will have the highest returns. That won't be determined until crop yields and prices are known after harvest.
"This spring, the best producers can do is look at the cost to be in ACRE, examine the odds that prices or yields will be low enough to trigger ACRE payments and decide if they are willing to forego some of their direct payments for the added revenue protection that ACRE provides," Hurt said.
"The odds of triggering ACRE payments for 2013 appear to be low, but if they do trigger, payments could be high — especially if prices collapse."