ACRE

2013 Signup?1
TheAmericanTaxpayerReliefActof2012extendedpartsofthe2008farmbillthroughSeptember30,
2013.OneoftheconsequencesofthatextensionwastheopportunitytoagainconsidertheAverage
CropRevenueElection(ACRE)program.Eachyearsince2009producershavehadtheoptionofsigning
eachFSAnumberedfarmintoACREfortheremainderofthefarmbill.Thefarmbillextensionleftus
withonemorechancetodecidetoparticipateinACREforasingleyear.
ACREprovidesproducerswithapaymentwhenboththestaterevenueandindividualfarmrevenuefall
belowcalculatedguaranteelevels.Paymentsarecalculatedforeachprogramcropindividually,butif
yousignupinACRE,itisforallcrops.ThelatesignupdatefortheACREgiveswheatproducersapretty
goodideaiftheirownrevenuewillfallbelowthefarmsACREbenchmark,leavingjustthestatewide
revenueestimatesinquestion.Producersareremindedthatthestatetriggermustbemetfirstbefore
thefarmtriggerisconsidered.
ThestateACREguaranteeforeachcommodityiscalculatedas:
StateACREGuarantee=90%X5yrOlympicStateAvg.YieldX2yrNationalMarketYearAverageprice.
Forthissingleyearanalysisonlytwovariablesarestillinplay;the2013statewheatyieldandthe2013
MYApricetoaveragewiththe2012MYAprice.Table1providesananalysisofestimatedpaymentsfor
different2013statewheatyieldsanddifferent2013MYAprices.Withaprojected2013MYApriceof
$7.02anda2013Statewheatyieldof20bu/ac,aproducercouldexpectanACREpaymentof$14.20.
ProducerscanusethistabletoestimatehowdifferentpricesorStateyieldswillaffectthe2013ACRE
paymentsforwheat.
Table1.SensitivityAnalysisof2013ACREpaymentforWheat
2013StateYield(bu/ac)
10
15
20
25
2013MYA
Payment$/Acre
Price($/bu.)
$6.02
33.37
33.37
31.12
5.54
$6.52
33.37
33.37
22.62
0.00
$7.02
33.37
33.37
14.12
0.00
$7.52
33.37
33.37
5.62
0.00
$8.02
33.37
31.21
0.00
0.00
$8.52
33.37
24.83
0.00
0.00

30
0.00
0.00
0.00
0.00
0.00
0.00

35
0.00
0.00
0.00
0.00
0.00
0.00

Table2presentsasimilaranalysisforthe2013nonirrigatedcottoncrop.Mostofthiscottonhasnot
yetbeenplantedandthevariabilityofTexasweatherpatternsandvolatilecottonpriceswillmake
estimating2013ACREpaymentsthisfaroutsomewhatdifficult.

BillThompson,StanBeversandDr.JoeOutlaw,TexasA&MAgriLifeExtensionService

Table2.SensitivityAnalysisof2013ACREpaymentforNonirrigatedCotton
2013StateYield(bu/ac)
100
150
200
250
300
2013MYA
Price($/bu.)
Payment$/Acre
$0.65
42.40
42.40
42.40
31.14
3.45
$0.70
42.40
42.40
42.40
20.52
0.00
$0.75
42.40
42.40
41.83
9.89
0.00
$0.80
42.40
42.40
33.33
0.00
0.00
$0.85
42.40
42.40
24.83
0.00
0.00
$0.90
42.40
42.40
16.33
0.00
0.00

350
0.00
0.00
0.00
0.00
0.00
0.00

IfaproducerelectstoenrollafarminACRE,totaldirectpaymentsforthatfarmwillbereducedby20%.
Loanratesforallcoveredcommoditiesarealsoreducedby30%,butatcurrentpricelevelsthispresents
nocosttoproducers.Aproducerwillneedtoestimate2013ACREpaymentsforallcovered
commoditiesonthatfarmtodetermineifthecostofACREexceedsanypotentialpayments.Table3
summarizestheratesusedincalculatingdirectpaymentsforselectcommodities.Tocalculatetheper
acrecostofsigningupinACRE,aproducerwouldmultiplyhisprogramyieldforeachcommoditybythe
appropriatefigurefoundinthefarrightcolumn.

Table3.DirectPaymentRatesandCostofACRECalculations.

DirectPayments
Crop
Full
80%
Corn($/bu)
$0.28
$0.224
Sorghum($/bu)
$0.35
$0.28
Wheat($/bu)
$0.52
$0.416
UplandCotton($/lb)
$0.0667
$0.05336
Barley($/bu)
$0.24
$0.192
Oats($/bu)
$0.024
$0.0192
Peanuts($/ton)
$36.00
$28.80

CostofACRE
20%
$0.056
$0.07
$0.104
$0.01334
$0.048
$0.0048
$7.20

SeveralinterestingpointscometomindinconsideringACREthisyear:1.)ThesignupdeadlineforACRE
isJune3,2013.2.)Signupisonlyfor2013cropyear,andparticipationinACREthisyearwillnotlimit
participationinanyfuturefarmprogramscurrentlybeingdebatedinWashington.3.)Thedroughthas
undoubtedlyaffectedtheTexaswheatcrop.Amorepessimisticviewof2013wheatprospectslikely
supportsACREsignup.4)Wheatpricesarewellbelowlevelsseenin2011and2012,makingitalittle
easiertocomeinunderstateandfarmrevenuethresholds.5.)Withsuchalargepercentageofworld
cottonstocksbeingheldinChinesewarehouses,weseeplentyofdownsidepricerisk,againincreasing
theprobabilityofcottonrevenuecominginundertherespectivethresholds.
ContacttheauthorsifyouwanttolookatothercommoditiesorhaveotherquestionsaboutACREin
general.
BillThompson

3256534576ext.286
wthompson@tamu.edu

StanBevers

9405529941ext.231
sbevers@tamu.edu