What Does Enrolling A Farm In ACRE Mean For Cash-Rent Landlords?

Tenant will receive the ACRE payments if they are made on the farm, since this enrolled farm is on a cash rent lease.

Published on: Aug 25, 2009

FAQ: My brother and I are landowners. In conversation with our tenant about renewing our cash rent lease for 2010, the tenant said he wanted to enroll the farm in USDA’s new ACRE program, so we signed a power of attorney form and the tenant took it to the FSA office and enrolled our farm in ACRE. What does that mean for us—if an ACRE payment is made on the farm in the future?

Answer: Provided by Steve Johnson, ISU Extension farm management specialist.

ACRE is an irrevocable contract with FSA that lasts through the 2012 crop year. The tenant on your farm needed the landlord’s signature on the ACRE election form, which is called the ACRE 509 form. It commits the farm to being enrolled in the ACRE program through 2012. However, if you’ve signed an FSA power of attorney form, then your tenants can sign up this farm for the ACRE program.

You need to understand that it will be the tenant on the farm who will get a reduced direct payment at roughly $5 per acre annually. And, it will be the tenant who will receive the ACRE payments if they are made on the farm, since this enrolled farm is on a cash rent lease. On a crop-share lease, it would be different in that both parties assume some of the risk--so the ACRE payment would be shared in that case. That’s according to FSA rules.

With the ACRE program, it’s important for landowners to understand that ACRE is a commitment not just to the tenant, but rather for the farm to be in the ACRE program. This commitment to ACRE, once enrolled, is through the life of the current farm program, which runs through 2012 crop year.

If a farm is enrolled in ACRE in 2009 and you change tenants in a future year, that farm is still enrolled in ACRE through 2012. The next tenant will have to adhere to the ACRE program rules—which includes the reduced direct payment of 20% or about $5 per acre, in return for being eligible to receive an ACRE payment, should an ACRE payment be made—on corn or soybeans.

Also, keep in mind that the party “at risk” on the farm gets paid on planted acres, not on base acres. If there is an ACRE payment, these payments are made only if the actual revenue (price x yield) falls below the annual ACRE revenue guarantee. Both the state and farm revenue triggers must be met before an ACRE payment is made. When made, the ACRE payments are not provided until a year following harvest. This is when the marketing year average cash price is known, to calculate the actual revenue.

If you have specific questions or need details regarding USDA farm programs, contact your local USDA Farm Service Agency office. You can also get news and information about DCP, ACRE and other USDA programs at www.fsa.usda.gov.

Two Iowa State University Extension Web sites have farm program information and analysis. They are ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm and ISU Extension Specialist Steve Johnson's site at www.extension.iastate.edu/polk/farmmanagement.htm.

And be sure to read the regular column "Frequently Asked Questions about the Farm Program" that appears in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com