The ACRE program in 2008 was a compromise between those who believed that farm program payments should be targeted at revenue rather than price and those farmers, mostly from the South, opposed to replacing counter-cyclical payments with crop-insurance-based programs.

“The usefulness and acceptance by farmers of ACRE has been limited because of budget and political considerations,” says Babcock. “ACRE covers only 83.3 percent of planted acres rather than 100 percent. This makes it less suitable as a replacement for crop insurance.

“In addition, farmers who choose ACRE give up 20 percent of direct payments. Crop insurance industry leaders also believed ACRE would reduce farmer participation in crop insurance and their compensation from taxpayers. Thus there was no integration of ACRE with crop insurance and ACRE insured state revenue rather than country revenue.”

The latter, Babcock said, would make the program much more effective in protecting farmers against specific weather losses. Switching from a state ACRE to a county ACRE program could cost about what the federal government is spending on direct payments, depending on the coverage level.

“The projected total cost of a 90-percent program for the program crops is $3.78 billion; increasing the coverage level to 95 percent would increase projected annual costs to $5.4 billion,” says Babcock.

For more on Babcock’s analysis, see Costs and Benefits of Moving to a County ACRE Program.

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