Average Crop Revenue Election (ACRE)
(March 17, 2009 ) - Secretary of Agriculture Tom Vilsack wants to ship a portion of the money promised to farmers in the 2008 farm bill to child nutrition programs. Pitting identified farmers with gross sales over $500,000 against children participating in nutrition programs puts farmers at a definite public relations disadvantage. No one is against feeding children, least of all food producers.
The mere positing of such a "choice" suggests that agricultural policy is quickly approaching a crossroad-a crossroad that agricultural commodity policy has been moving toward for a couple of decades.
Navigation of agricultural policy's crossroad may be as significant for agriculture as the policy decisions to address the current financial crisis is for the economy as a whole.
In the case of policy for program crops, the crossroad decision is: Will agricultural policy toward commercial, program-crop agriculture continue its recent focus on transfer payments, many of which are politically tricky to defend. Or will agricultural policy be reformed to moderate extreme variations in crop prices and free farmers' from reliance on politically uncertain payments.
In some ways, the recent journey toward agriculture's crossroad parallels the happenings that led to the financial crisis.
(February 17, 2009) - Major changes in crop programs are usually accompanied by uncertainty on the part of farmers. The late passage of the 1996 Farm Bill and its radically new provisions had farmers scratching their heads as they struggled to understand AMTA payments (Agricultural Market Transition Act) and the Marketing Loan Program with its Loan Deficiency Payments and Marketing Loan Gain provisions.
By way of contrast, farm bills, like the 2002 legislation, that make only incremental changes are taken in stride. Farmers, along with their bankers and CPAs, know what to expect and the uncertainty is low.
The 2008 Farm Bill included a new program ACRE (Average Crop Revenue Election) that would reduce Direct Payments (by 20%), replace the Counter-Cyclical Payment program, and lower the rate for marketing loan payments (by 30%). Farmers must decide whether to switch to the ACRE program or continue to use the current set of payment programs.