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When it comes to reform, there isn't much in the recently (almost) passed 2008 Farm Bill. However, one provision sought by the Administration and included in a voluntary form is the state-based average crop revenue elections (
Jon Doggett, vice president of public policy at the National Corn Growers Association, said the program encourages "good, responsible production practices" and addresses the real needs of the market while moving away from traditional subsidy programs.
The traditional program currently only protects against low prices, but not against low yields. For instance a drought devastated corn yields in
Carl Zulauf, extension economist at
Essentially farmers choosing to participate in the revenue-based countercyclical program (
Participants in ACRE will be eligible for state-based coverage with a revenue guarantee equal to 90% of the 5-year state average yield per planted acre (excluding the years with the highest and lowest yields) times the 2-year national average price for the covered commodity.
If the actual State revenue (yield per planted acre times the national price) is less than the revenue guarantee, and if the producers suffer a loss on their farm, then they will receive an ACRE payment equal to the difference between the State revenue guarantee and the actual revenue for the crop year up to 25% of the revenue guarantee.
The USDA criticized that the program was bloated and instead of being a supporter in the end, used it as ammunition behind President Bush's veto threat. The administration cited that as many as 90% of corn, soybean and wheat farmers would sign-up for the program. However, the Congressional Budget Office, the independent and official budget analyst of federal government, assumed dramatically lower participation rates after investigating and talking to experts.
A statement from American Farmland Trust and NCGA defended the program, saying "
In future blogs, I plan to look at who benefits the most from the program and what level of participation might be expected. It will be important for farmers to understand the costs of the program since once signed-up, producers have to remain in the program for the remainder of the life of the farm bill (2012).