Many producers have spent the last several months studying the proposed Average Crop Revenue Election (ACRE) program, weighing ACRE against the DCP program on their farm operations. One of the frustrations of most students of the ACRE program has been that the rules for establishing yield benchmarks have been extremely vague. So vague in fact that a final decision on ACRE vs. DCP has been impossible. New guidelines released by USDA just days ago may be very helpful for producers that are still considering the ACRE program.
The recently released USDA rules state that producers that choose the ACRE program on a given farm unit may certify previous crop yields to establish the “Benchmark Farm Yield” which is a historical crop yield for the specific farm unit. For producers that recall updating crop yields for the 2002 farm bill, this may be the only opportunity that producers have to effectively “prove yields” during the course of the 2008 Farm Bill.
It’s in a producer’s best interest to establish a strong Benchmark Farm Yield because the higher the Benchmark Farm Yield the more likely it is that the farm trigger is met and the higher the payment per acre will be should both triggers be met. Producers need to do their homework ahead of time because once the Preliminary Benchmark Farm Yields are established, the producer can no longer plug in yield data for past years. The Benchmark will change with each passing year as each new crop year data is plugged into the equation.
How is the Preliminary Benchmark Farm Yield established?
The Preliminary Benchmark Yield will be based on the Olympic Average yield for the production years 2004-2008. The Olympic Average is the five year average excluding the highest yield of the five and the lowest yield of the five. The Olympic average will change each year based on updated yield information. Producers will be asked to certify program crop yields each year on each farm unit in order to update the Benchmark Farm Yield.
If a producer opts to enroll a farm unit in ACRE , there are two options by which to establish the Preliminary Benchmark Farm Yield. Option one is to use actual yield data. Acceptable yield proof will include actual settlements or weight tickets through a commercial grain facility or crop insurance data including NAP or the APH database. In situations where crop insurance units do not match FSA farm numbers, the best advice is to ask the local FSA office on specific cases or be content to accept a default yield equal to 95% of ACRE County Yield. FSA will not accept yield monitor data as evidence for substantiating yields.
Option two is do nothing as far as proving yields at which point a default yield equal to 95% of the ACRE County Yield will be used. For producers that do not have acceptable yield records including those producers that fed their grain to livestock, this will be the only option for establishing the Benchmark Farm Yield. ACRE County Yield is a figure determined by FSA based on average county yield for each crop year.
For Producers that would like to prove their yields, but lack some records, there is the opportunity to use the yield data that is available and plug the 95% of ACRE County Yield for other years. There is one significant restraint to this stipulation. The producer can only prove yields for years back as far as the first “break in continuity”. A break in continuity occurs in any year in which yield evidence is not available for the crop in question. This does not include years when that particular program crop was not produced on the farm. For any years preceding the break in continuity, the default yield equal to 95% of the ACRE County Yield will be plugged into the Benchmark Farm Yield calculation.
Nothing about the ACRE program is simple, but establishing Benchmark Farm Yields may be one of the easier concepts for producers to grasp. If good production evidence is available and farm yields are higher than the ACRE County Yield, producers can use the data to improve the Benchmark Farm Yield. If that evidence is not available, ACRE is still an option. In that case, the producer will be limited to using the 95% plug-in figure. In many instances, this is still a very good option. In fact, if a particular farm unit has historical yields below the county average, there is no financial benefit for the producer to prove yields. In those instances, accepting 95% of ACRE County Yield is a good option.
This article deals with just one facet of a very complex program. No producer can make the decision between DCP and ACRE based solely on Benchmark Farm Yields; however, understanding how Benchmark Farm Yields are established is key to making a sound choice on every farm unit. To research the ACRE program more thoroughly, look at the Farm Service Agency website @ http://www.fsa.usda.gov/dcp .