December 21 , 2009
A new Microsoft Excel spreadsheet has been developed to estimate the amount of Average Crop Revenue Election (ACRE) payments a farm will receive for the 2009 crop. This ACRE Payment Estimator spreadsheet is available for download from the FAST section of farmdoc ( www.farmdoc.illinois.edu ).
ACRE Payment Estimator Spreadsheet
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Users of the ACRE Payment Estimator will enter their state and crop for which ACRE payment estimates are desired (see Figure 1). The program then will estimate the state ACRE payment. This estimate equals the state guarantee minus state revenue. The state guarantee is known for 2009 and equals the benchmark yield times a benchmark price. The Acre Payment Estimator includes state guarantees for corn, soybeans, and wheat for most states in the United States.
State revenue equals the state yield times the market year average (MYA) price. At this point, neither the state yield and MYA price is known with certainty. The Acre Payment Estimator projects both state yield and MYA price. State yields are projected using estimates released by the National Agricultural Statistical Service. MYA price is estimated with a combination of actual monthly and forecast prices, weighted by historical marketings. A forecast price equals futures price traded on the Chicago Board of Trade minus historical basis.
Through time, estimates of state yields and MYA prices will be updated as new information becomes available. Users of the Acre Payment Estimator can update there estimates by clicking on the “Update Database” button located at the top of screen of the ACRE Payment Estimator (see Figure 1). Clicking this button will pull data from the farmdoc website and put it in the Acre Payment Estimator . The date that the data were updated on farmdoc will be indicated in the “State and Crop Choice” box. In the example in Figure 1, data where updated on “12/17/2009”. The database on farmdoc will be updated at least monthly.
Users can adjust state ACRE payments to their farm situation by entering their farm yields (left side of Figure 1). The spreadsheet to check that the farm meets the two criteria necessary to meet ACRE payments: 1) state revenue must be less than a state guarantee and 2) farm revenue must be less than a farm trigger. If both triggers are met, the ACRE Payment Estimator will project the farm ACRE payment.
State ACRE Payment Estimates
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The ACRE Payment Estimator was used to project state ACRE payments for states in the Midwest using data and futures prices available on December 17, 2009. For corn, the state ACRE payment for Illinois is projected to be $0 per acre (see Figure 1). Using December 17 th information, Illinois' state yields is projected at 174 bushels per acre and the estimated MYA price is $3.72, yielding state revenue of $648 per acre. The $648 state revenue is above the $639 state guarantee, indicating that an ACRE payment will not occur. For corn, remaining monthly prices must average below $3.71 before an ACRE payment is received. Given that $3.71 break-even price is close to current market prices, there is a chance that prices decline, yielding an ACRE payment. Currently, all Midwest states have a forecast state ACRE payment of $0 (see Table 1).
For soybeans, ACRE payments in Midwest states are forecast at $0 per acre (see Table 1). In Illinois, ACRE payments will occur if remaining monthly prices average below $9.41.
In Illinois, a state ACRE payment of $90 per acre is projected for wheat. Remaining prices need to average below $9.73 for an ACRE payment to occur. An ACRE payment for wheat is almost certain. All states in the Midwest are projected to have wheat ACRE payments (see Table 1).
A new FAST spreadsheet, entitled the ACRE Payment Estimator has been released. This tool can be used to estimate 2009 ACRE payments. Currently, ACRE payments are not projected for corn and soybeans. Large ACRE payments will be made for wheat. Updating the database in the ACRE Payment Estimator throughout the cropping year will provide forecasts based on up-to-date yield and prices.
Submitted by: Gary Schnitkey, Department of Agricultural and Consumer Economics, University of Illinois