Skip to content

Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

Texas A & M University’s Agricultural Food Policy Center (AFPC) has developed a decision aid for cotton producers considering ACRE.

The 2008 farm bill provided producers the opportunity to choose to replace counter-cyclical payments (CCPs) that are triggered only by low prices with a revenue based payment, referred to as the Average Crop Revenue Election (ACRE) payment that is triggered by low prices, low yields or both.

Producers choosing to continue receiving CCP payments would continue to receive direct payments and be eligible for loan deficiency payments and/or marketing loan gains. This choice is referred to in this Decision Aid as selecting the DCP program.

The ACRE Decision Aid is provided to assist farm operators and landlords in analyzing the ACRE vs. DCP decision. The 2008 farm bill offers farmers the option to continue receiving DP, CCP, and LDP/MLG payments (DCP), or receive average crop revenue election (ACRE) payments, with a 20% reduction in DP and a 30% reduction in loan rates for LDP/MLG. The decision to elect ACRE is irrevocable over the life of the farm bill. Signup is for each farm unit, so farmers do not have to elect ACRE or DCP for all farm units.

The decision to continue with DCP or elect ACRE must consider the farm’s yield risk, the state’s yield risk, and the national price risk for 2011-2012. The ACRE Decision Aid uses a farms’ data and simulates the farm for 500 different possible yields and prices based on historical risk for these variables, as well as the risk for state yields and national prices.

“In years past, ACRE has not been a good alternative for cotton producers. But this year, cotton producers should use this decision aid to see if they would be better off with ACRE. The recent high prices for cotton may turn the tide and provide producers a higher payment than they would possibly get by staying with the direct payment. This is particularly true if they grow sorghum or corn,” says James Richardson, Co-Director, Ag Food Policy Network.

The ACRE Decision Aid, developed at Agricultural and Food Policy Center and funded in part by Cotton Incorporated, attempts to take into consideration all of these factors including price and yield risk and the corresponding state and farm yield correlations. A copy of the decision aid is available at http://www.afpc.tamu.edu.

The deadline to sign up for ACRE or DCP is June 1, 2011.

Advertisements

Tags: , , , ,

%d bloggers like this: