Roman Keeney, Assistant Professor Learning Tuesday—April 13, 2010 Policy Web Address: http://www.ag.purdue.edu/agecon/Pages/agpolicy.aspx
Jan 22, 2016
Roman Keeney, Assistant ProfessorLearning Tuesday—April 13, 2010
Policy Web Address: http://www.ag.purdue.edu/agecon/Pages/agpolicy.aspx
Overview the ACRE payment calculation Identify public access decision-aids
USDA’s Farm Service Agency Information http://www.fsa.usda.gov/FSA/webapp?
area=home&subject=dccp&topic=landing
Texas A&M/AFPC National ACRE decision aid http://www.afpc.tamu.edu/models/acre/
index.php
ACRE enrollment is by FSA farm number
Deadline is June 1 Payment basis is the actual planted
crops on the farm in a given year Number of program base acres still limit
payment base for ACRE ACRE payment is crop specific
E.g. you could receive a wheat ACRE payment but have no other crop eligible on the FSA farm
Item State Farm Definition
1 ACRE Yield 160 170 5 Year Olympic Average
2 ACRE Price $4.15 $4.15 2 Year Average
3 (Adjustments)
4 Pct. 90%
5 Ins. Premium $15.00
6 ACRE REVENUE $597.60 $720.50 = 1 x 2 x 4 + 5
7
8 Actual Yield 155 185 Bu/Ac on Planted and Considered Planted
9 Actual Price $3.78 $3.78 National Price
10 ACTUAL REVENUE $585.90 $699.30 = 8 x 9
11 Trigger Met? YES YES = YES if 6 > 10
ACRE payment basis BPMT = State guarantee – State actual
▪ Limit of 25% of the state guaranteeAdjustments
Base acre reduction (same as DP)▪ R = 83.3 % of base receives payments (85%
in 2012) Farm yield factor based on 5 year
olympic averages▪ F = Farm yield/State yield
Payment = F*R*BPMT
Link to FSA ACRE Site Background information, Fact Sheets Program parameter updates (prices,
yields)▪ Finalized at completion of 2008/2009 crop
market yr.Calculator
Useful for learning/explaining ACRE Less than ideal as a risk decision aid
InputsFarm: Acreage, Fixed Payment Yields and Acreage (DP,CCP), Current PlantingHistorical Yields: (Five years worth for farm and state)
Expectations: Yields for farm and state, national market prices
Operator
FSN/County
Crop Year: 2009 0.833
0 1025.0 125 137 0.0 1025.0 -$ 0.00
936.0 37 44 0.0 936.0 -$ 0.00
39.0 54 63 0.0 39.0 -$ 0.00
FSA Use Only: CI
Premium
Wheat
Corn
DCP Program Yields (if applicable)
Planted Acreage
Prev. Acreage
2009 Crop Insurance Premiums (enter only
one, if applicable)
Total or Per Acre
Table 1: Basic Farm Data
Counter-Cyclical
Direct
FSN Base Acreage (if appli-cable)
2009 Farm Data
Soybeans
Enter ALL crops w ith Base Acres
and Planted/PP Covered
Commodity Crops and Peanuts
(Use Drop Down Box)
2004 2005 2006 2007 2008 Average*172.30 159.70 161.30 166.10 166.00 164 164
52.60 51.90 51.10 49.70 47.50 51 51
59.90 73.30 66.30 53.70 65.00 64 64
Corn
Soybeans
2009 Actual Farm Yield *
FSA Use Only: BFY *
Actual Farm Yields (Production/Planted Acres)
Enter 5 previous years (2004 - 2008) OR Average (not both)2009 Benchmark Farm Yield (BFY) *
Table 2: Farm Yield Data
* Preliminary or Estimated
Wheat
Example price expectations
Corn not eligible for ACRESoybeans and Wheat are eligible for
ACRE
2009 Loan Rate
DCP Direct Rate
2009 Target Price
$ 4.0000 $ 3.7400 $ 1.9500 $ 0.2800 $ 2.6300 -
$ 10.5000 $ 8.7600 $ 5.0000 $ 0.4400 $ 5.8000 -
$ 6.2500 $ 5.3000 $ 2.7500 $ 0.5200 $ 3.9200 -
ACRE Guarantee
Price *
See Table 5 Information2009
Projected CC Rate
2009 Nat. Avg.
Market Price *
Corn
Soybeans
Wheat
Table 4: National
Data* Preliminary or Estimated
State Guarantee = $554.40State Actual = $561.00
Farm Guarantee = $656.00Farm Actual = $613.36
Loss on the farm but no payment due to the state guarantee
Just a scenarioUsefulness for making my decision
depends on how well I can forecast prices
Total
Corn $ 23,858 Soybeans $ 58,465 Wheat $ 900
ACRE Program
$ - $ 48,338 $ 167
Direct (80%) ACRE $ 23,858 $ 10,127 $ 733
$ 29,822
$ 916 $ 12,659
Counter-cyclical
Payment Comparison Direct
DCPTotal
$ 916
$ 29,822 $ 12,659
$ - $ - $ -
2000.01 2 3 4 5 6 7 8 9 10
State Trigger
Farm Trigger
Payment Acreage
%
Planted & PP Acres
Est. ACRE per acre
Potential Payment
Acres
Payment Acres
Farm Prod. Index Factor
SAG minus ASR
SAG x 25%
Corn no yes 83.3% 1025.0 $ - 853.8 $ - Soybeans yes yes 83.3% 936.0 $ 62.00 779.7 779.7 1.0200 $ 60.78 $ 118.13 $ 48,338 Wheat yes yes 83.3% 39.0 $ 5.15 32.5 32.5 0.9846 $ 5.23 $ 91.41 $ 167
Projected ACRE
Payment
Payment = Item 7 times Item 8 times (lessor of Item 9 or 10)
ACRE Payments
Max. Farm Eligible Acreage for ACRE (total base acres):
Link to CalculatorAccounting for uncertainty
Takes your forecast price and yield Uses historical estimates and your forecast
to generate a range of possible prices and yields
Randomly draws 500 yield and price combinations
Calculates payments 500 times and reports:▪ ACRE and DCP program payments
▪ Average, standard deviation, maximum, and minimum
Accounting for uncertainty means decision is less sensitive to our skill at forecasting
Easy to use interface Web-driven stepwise input sheets Calculations done in background (4 years
worth) Save farm data and consider alternative
scenarios▪ Prices, yields, acreage allocations
Extensive set of results for comparing DCP and ACRE
60 times out of 500, ACRE has lower payments. 440 times out of 500, ACRE has higher payments.