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Success in the 2008 Farm Bill
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Policy Outcomes:
Subsidy
Reform

ACRE,A real safety net for farmers

success

The 2008 Farm Bill creates the innovative Average Crop Revenue Election (ACRE) pilot program, which fundamentally changes the way government farm support operates. 

Farms and ranches are inherently prone to variations in prices and yields. Government programs help protect our food supply, but the farm subsidies in the 2002 Farm Bill only protected price, not loss in crop yield, and were unwieldy, inefficient and supportive of only a few producers.

Developed and championed by AFT and the National Corn Growers Association, the new Average Crop Revenue Election (ACRE) program restores the concept that a farm safety net should provide help only when producers are in need after suffering from a loss beyond their control.

why ACRE is better

Tim Recker, farmer and president of Iowa Corn Growers Association

"ACRE has two major benefits. It serves the real world needs of farmers better, and it makes better use of our tax dollars by helping farmers only when there’s a real need."

-Tim Recker,
Farmer and president of the Iowa Corn Growers Association

The fundamental reforms brought about with ACRE include:

  • Market-orientation. Producers will move away from planting in response to government-set targets and toward market prices and account for market conditions before planting crops.
  • Farmers will be paid only when they face a real loss in revenue and there is a statewide average loss. Traditional subsidy programs allow producers to receive government payments regardless of financial loss. Under ACRE, producers must show a loss before receiving a payment.
  • ACRE requires farmers to be responsible for the first portion of any revenue loss. As designed, the producer absorbs the first 10 percent of any loss.
  • Reduction in Marketing Loan Program rates by 30 percent. This reduction begins to address one of our most troublesome international trade concerns, which has triggered WTO trade disputes. It doesn’t solve all of the United States’ international trade problems, but it is an historic step in the right direction. 
  • Cuts in direct payments by 20 percent to pay for the ACRE program. When coupled with savings from the marketing loan program, ACRE generates savings to help fund conservation, nutrition and other parts of the farm bill.
  • Enrollment is optional. Producers are not forced to participate. If they don’t like ACRE, they can stay in the current system.
  • Locks farmers into the program. Although it is a voluntary program, farmers who decide to participate, beginning in 2009, will enroll in the program for the life of the farm bill and cannot switch between programs.

Many heated discussions about farm subsidies played out in the media and on Capitol Hill during the 2008 Farm Bill debate. Proposals generally focused on three elements:

  1. Payment limits to cap the total amount of subsidies a person can receive;
  2. Cuts in direct payments; and,
  3. Reducing production distortions, eliminating unnecessary payments and fixing the “hole in the safety net” attributed to traditional counter-cyclical programs. 

All three types of reform are important but much of the debate focused solely on the first two areas. Perhaps more importantly, changing how subsidy programs operate is critical to achieving real reform that has a long-term impact. This is especially true for having an effect on international development. ACRE incorporates all three of these elements of reform. No other program or policy change does that.

learn more about how acre works

Iowa State Center for Agricultural and Rural Development (CARD) researchers have posted information to help farmers analyze program options. An in-depth analysis of how ACRE works along with downloaded calculators are available on their site.

 
American Farmland Trust