There is a higher chance of ACRE payments in 2009 as current projections of market prices are below benchmark prices used to calculate ACRE state guarantees for corn, soybeans and wheat according to U of I economists Gary Schnitkey and Nick Paulson.
"The state corn yield for 2009 in Illinois is currently projected to be between 165 and 170 bushels per acre and the projection for the average price is $3.75 per bushel. At these price and yield levels the average ACRE payment on corn acres in Illinois would be $16 per acre for 2009.”
"Average ACRE payments on corn acres in Illinois could easily be greater than $60 per acre at the low end of the projected price range or if state-average corn yields fall below current projections,” said Gary Schnitkey, U of I economist.
He says, given the current yield and price projections, the probability of receiving an ACRE payment on Illinois corn acres in 2009 is roughly 60 percent while the expected payment level is greater than $30 per acre.
For soybeans, the 2009 state soybean yield for Illinois is currently projected to be approximately 45 bushels per acre and the projection for the average price is $9.30 per bushel.
"At these price and yield levels the ACRE payment for soybeans in Illinois would be around $13 per acre. The average ACRE payment for soybeans could potentially exceed $45 per acre if prices or yields fall below these expected levels, and could approach $90 per acre at the low end of the price and yield ranges,” Schnitkey said.
Given the current yield and price projections for soybeans, the probability of receiving an ACRE payment on Illinois soybean acres is just under 60 percent with an expected payment level of about $17 per acre.
"The Illinois wheat yield for 2009 is currently projected to be around 56 bushels per acre while the midpoint of the most current WASDE price range is $5.30 per bushel. Average ACRE program payments would be $51 per acre at these price and yield levels. ACRE payments on wheat acres in 2009 could approach the $75 per acre payment limit if yields are below current expectations or wheat prices fall in the lower portion of the projected range,” he said.
Given current yield and price projections the probability of receiving an ACRE program payment on wheat acres in Illinois in 2009 is greater than 75 percent with an expected payment of just over $40 per acre.
The 2008 Farm Bill gives producers the option of choosing commodity program support under traditional programs or the new ACRE program. At this point, Schnitkey recommends choosing the ACRE option.
"The ACRE option will require producers to give up about $5 per acre in direct payments to be eligible for ACRE program payments. Moreover, given current price levels, the price-based programs in the traditional option are not expected to trigger payments between 2009 and 2012,” Schnitkey said.
"Based on historical experience for corn, soybean, and wheat acres in Illinois, the ACRE program is expected to generate payments that exceed the direct payments given up to enroll in the program over time.”
He says, the chance of ACRE payments being triggered for corn, soybeans, and wheat in 2009 is projected to be higher than average. This is due to the ACRE program price guarantees being above expected price levels for 2009 for corn soybeans and wheat.
"And expected yield levels projected to be below ACRE program benchmark yields due to wet planting conditions and less than optimal growing conditions in Illinois in 2009,” he said.