Don't choose the "default" option on 2009 farm programs without giving ACRE a close study, advises Ohio State University economist Carl Zulauf. Zulauf was one of the prime architects of the ACRE option in the new farm act, and he--along with the Farm Service Agency's ACRE experts-- will be a featured speaker on DTN's free Wednesday, July 1 webinar, "How to Make Your ACRE Choice" at 8 am Central.

No one can predict what prices will be over the next four years, Zulauf notes. While it's even way too early to know with certainty what the 2009 season-average price will be, grain producers can't assume that traditional farm safety nets will be adequate to buffer their income during bear markets.

One of ACRE's advantages is that it locks in a relatively high guarantee based on the past two years' national-average prices and can only adjust down 10 percent per year after that. It also protects growers on actual planted acres, not historical base acres, so it more accurately reflects your risks and input costs.

"ACRE’s annual update of its revenue guarantee (target) is especially important when costs are increasing faster than productivity, as has happened since 2005," Zulauf says. For Ohio and most other Midwest states, ACRE’s 2009 revenue target is estimated to exceed variable production costs for corn, soybeans and wheat while the counter-cyclical program’s implied guarantee does not.

Because ACRE’s revenue guarantee cannot decline by more than 10 percent per year, the revenue target will be higher for ACRE than the counter-cyclical program through the 2012 crop no matter what happens to price and yield over the next few years, Zulauf adds.

"A lot of people will interpret the recent run-up in prices as diminishing the chances of ACRE making a payment. They may think enrolling now doesn't make sense because of the $3 to $5 per acre they give in direct payments if they select ACRE," Zulauf says.

"I do not know for sure, but history shows that the recent price run-up does not tell us a lot about the resolution of price uncertainty in next year’s season average price (which is the key variable for ACRE). It is just way too early in the U.S. production cycle, especially for corn and soybeans, but also wheat given the lateness of the crop."

Joining Zulauf in the hour-long ACRE discussion will be the Farm Service Agency's top ACRE experts, Brad Karmen and Brent Orr, both of whom are deeply involved in writing ACRE regulations and FSA handbook rules. All three analysts will be available for questions, which can be submitted in advance. To register for the live event or rebroadcast, go to www.dtnpf.com/promo/webinars. The DTN webinar is co-sponsored by the National Corn Growers Association, the American Soybean Association and the National Association of Wheat Growers.

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