FAQ: I enrolled in USDA's ACRE program in 2009. Is an ACRE payment possible for 2009 corn? Iowa had good yields. Is the national price forecast still too high to trigger 2009 payments?
Answer: Provided by Steve Johnson, Iowa State University Extension farm management specialist.
The World Agricultural Supply and Demand Estimates or WASDE report USDA issued April 9, 2010 updated the official balance sheet estimates and also the price projections for the 2009-10 crop marketing year. It still appears unlikely that Iowa will trigger 2009 Average Crop Revenue Election or ACRE payments for either corn or soybeans.
That's because the Iowa corn and soybean yields are too high for 2009 and the national cash price forecast to-date is still too high to trigger 2009 ACRE payments.
USDA's Farm Service Agency released final state yields for ACRE for 2009 on April 9, 2010. The Iowa corn yield was 182 bushels per acre and the soybean yield was 50.5 bu. per acre as an average for Iowa in 2009, according to USDA estimates. However, the drop in cash prices since the January 2010 USDA report was released has increased the potential for a 2009 ACRE payment slightly.
Corn more likely than beans to trigger payment
So the potential for a 2009 ACRE payment in Iowa still favors corn over soybeans. The state's ACRE revenue guarantee in 2009 for corn is $635.61 per acre. For soybeans, the 2009 ACRE revenue guarantee for Iowa is $456.32 per acre. To determine a potential ACRE payment, FSA subtracts the 2009-10 marketing year actual state revenue from the revenue guarantee.
As of April 9, the national cash prices for the 2009-10 marketing year are forecast by USDA at $3.60 per bushel for corn and $9.45 per bushel for soybeans. These are the midpoint prices used to determine the 2009-10 actual revenue for the potential state and farm ACRE prices.
The final price represents a weighted average of all cash bushels sold nationally during the marketing year (September 1, 2009 through August 31, 2010). The final national cash price will not be released by USDA until September 30, 2010, and 2009 ACRE payments if triggered, would be provided in October 2010.
It depends on corn prices in next five months
The Iowa ACRE trigger price for corn is now at $3.49 per bushel. If the final national average cash price falls below this price, the state level trigger will be met. While this amount is still below the USDA midpoint price of $3.60 per bushel from the latest WASDE report, the possibility of an ACRE payment on corn remains. Since this national cash price is a weighted average, the potential for an ACRE payment depends on the actual cash selling price for corn nationwide over the next 5 months.
The farm's actual revenue must also fall below the farm's revenue guarantee in 2009 in order to qualify for an ACRE payment. Even though many Iowa farms had large 2009 yields, it's still likely that farm revenue would be triggered if the national cash price falls low enough. A farm's final 2009 yield could be roughly 18% to 25% higher than the farm's benchmark yield and still trigger the payment at the farm level.
Remember, ACRE payments are determined at the state level but paid on planted acres. Thus, if an ACRE payment is triggered for 2009 it is adjusted to 83.3% of the planted acres of that crop on a farm enrolled in ACRE.
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