Costs and Benefits of Moving to a County ACRE Program

Bruce A. Babcock
May 2010  [10-PB 2]

Better integration of the different programs that comprise the farm safety net seems inevitable in the next farm bill given widespread public concern over the rapidly growing federal debt. With $5 billion in direct payments flowing annually to farmers who own or rent base acres without regard to farm income, $7 billion flowing to crop insurance companies over the last two years, and $2.6 billion flowing to cotton farmers in the last two years from programs that violate our trade commitments, there is substantial room for improvement. One path toward better integration would be to modify the ACRE (Average Crop Revenue Election) program so that it covers county revenue rather than state revenue. For approximately the same cost as the direct payment program, 100% of planted acres could be covered at a 95% coverage level. Accounting for county ACRE payments before crop insurance payments are made could easily reduce the cost of the crop insurance program by more than $4 billion per year.

Keywords: ACRE, agricultural risk, Average Crop Revenue Election program, crop insurance, direct payment program, farm bill, farm payments, SURE, Supplemental Revenue Assistance Payments Program.

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