Wednesday, November 12, 2008

The ACRE killer?...

Desperate for farm program stuff to write about, analysts and ag media have focused on the byzantine ACRE program for paragraphs to fill empty policy pages. Only it's not working too well.
Some pretty good writers are trying their best to explain the new revenue-based ACRE farm program option in the 2008 Farm Bill.

But it's not working. This material just does not seem to cross the barrier between the outside air and the interior of my skull.

I feel like one of the king's subjects in the children's fable about the king's new suit, which is supposedly invisible to foolish people. People refuse to admit that the king looks naked, for fear that others will think them a fool. I wonder if the same thing is happening with the ACRE program. Will people think me foolish, if I just admit that I cannot understand this program? [More]
To be fair, I have only skimmed over the ACRE concept, but stopped once the flaw for me was revealed. At least, I think it's a game-over detail.
Producers on a farm with covered commodities and/or peanuts can elect to participate in the ACRE program for all covered commodities and peanut acreage on the farm. Once they elect to participate in ACRE, producers on the farm must remain in the program for the duration of the 2008 Act. [More]

This commandment seems problematic to me.  Although you can opt IN later, you cannot opt out, apparently. But farm payments attach to acres - not producers.  That's why when tenants change they pick up (or lose) the bucks.

So my question is: if my cash rent contracts are at most 3 year terms, how the heck can I obligate someone else's acres for the full 5 years of the Farm Bull Bill?  Or do I when I sign up? If it's up to the landowner, why bother explaining it to producers?

[To be fair, the answer to this is likely out there somewhere, but either way is a deal-breaker for me.  And frankly, until I get done, I haven't got the time to do the deep research.]

[No, I still have 100 acres - thanks for asking.]

For that matter, given the horrendous range of prices and events this year, is there one farmer left standing willing to predict the next 5 weeks, let alone 5 years?

5 comments:

Bill Harshaw said...

I wouldn't think it would be too hard for FSA to figure it out. They're used to using "succesion-in-interest" rules on multi-year contracts for other programs, so the same might apply for ACRE. That is, if you and the landowner sign the land up in the first year of the program, and your cash lease expires the next year, whoever leases the land after you could succeed to the ACRE program. Just one more complication to keep life interesting.

From Virginia said...

When I discussed the complexities of the program with the National Corn Growers, they promised that they would have their members posted at every FSA office to explain the program to growers during sign up. (Not)

Ol James said...

I got a different impression-
"Farmers are given almost complete flexibility in deciding which crops to plant. Participating producers are permitted to plant all cropland acreage on the farm to any crop, except for some limitations on planting fruits and vegetables. The land must be kept in agricultural uses (which includes fallow) and farmers must comply with certain conservation and wetland provisions"
and in Section 1104,sub-C, part 2a it might be possible to let the land be idle and take a 2 year average on the crop as long as the land was to return to an agricultural use. Perhaps you could enroll it into CRP acreage??
Mr. John, I may be wading in the deep end of the pool here, but the same language is in the previous Farm Bills.

John Phipps said...

guys:

I didn't make myself very clear. Suppose I'm one of the die-hard IL growers who thought this scheme up, and I have a lease for 2009 on 400 acres. My cash rent lease grants me all the payments, and at least at my office, the right to sign the farm up for five years.

I go bust because I paid $400/acre rent and only grossed $300 (bad joke there) and don't bid for the ground in 2010. The next tenant has no choice even if the ACRE program is a true loser payment-wise. (My understanding)

It's not getting or staying in - it's getting out that seems problematic. And with very few 5 year leases out there, shouldn't that decision reside with the landowner? And if it does, how can the payments go to the tenant?

From Virginia said...

My understanding is FSA will require landowner signatures in addition to the cash rent tenant's sgnature in order to enroll the farm in ACRE. You are correct, the Farm Bill says enrollment in ACRE is an irrevocable decision, and yes, the payments will be capitalized into the price/rent of land.