William Edwards, Extension Economist

Iowa Farmers’ Decisions about Enrolling in Average

Crop Revenue Election (ACRE)

William Edwards, Extension Economist

Mail Survey April 2010

• Random sample of Iowa farm operators who received FSA commodity payments in 2007

• 3,384 surveys sent out• 363 returned (11%)

William Edwards, Extension Economist

90% received information about ACRE

Source of Information• FSA newsletters, personnel• Farm magazine, newsletter,

website or radio• Extension newsletter, web site• Extension presentation• Lender, farm manager, friend• Others (insurance agent,

market advisor, IA Corn Growers)

% Used Importance*89% 3.879% 3.1

68% 3.361% 3.261% 2.716% 2.5

* on a scale of 1 to 5

William Edwards, Extension Economist

25% used an electronic spreadsheet

Source• ISU Extension 52%• Farm Service Agency 30%• Own worksheet 4%• Illinois or Kansas Extension

4%• Unknown 10%

William Edwards, Extension Economist

FSA Farm Units (averages)

Owned Rented

Total

Operated in 2009 1.69 3.21 4.90

Enrolled in ACRE .36 .60 .96

% enrolled in ACRE*

24% 17% 20%

*11% of all FSA farm units in Iowa were enrolled in ACRE.

William Edwards, Extension Economist

FSA Units Enrolled--% of Respondents

Units Enrolled

Owned Rented Total

None 73% 79% 72%

Some 4% 8% 15%

All 23% 13% 13%

William Edwards, Extension Economist

Reasons to Enroll

• Wanted more risk protection • Believe ACRE payments will

exceed 20% of direct payment lost • Farm has high yield variability • Lender or farm manager advised it• Landlord wanted to enroll farm• Other

Importance*3.93.2

1.81.61.40.3

*scale of 1 to 5

William Edwards, Extension Economist

Reasons to Not Enroll• Program too complex • 20% of direct payment given up • Would lose loan deficiency payments • Too hard to explain to landlord • Unlikely to get a payment • Farm yields don’t track with state • Marketing loan rate will be lower • Lack farm yield information • Do not need more risk protection • Landlord did not want to enroll

Importance*3.83.63.03.02.92.72.42.22.12.1

* Scale of 1 to 5

William Edwards, Extension Economist

Risk Management Characteristics (versus data from

Census of Ag, RMA, IFBA)• 785 crop acres operated in 2009 (318)• 78% of gross income from crops (51%)• 86% of acres were insured (85%)• Average coverage level was 75% (76%)• 27% of crop was priced before harvest• Average debt/asset ratio was 28%

(25%)• Average operator age was 55 (54.5)

William Edwards, Extension Economist

*difference significant at 5% level ** difference significant at 1% level

Risk Management Characteristic

Did not enroll

Enrolled

some/all

Crop acres in 2009** 682 1,095

% gross income from crops**

76% 83%

% of acres insured* 85% 92%

Average ins. coverage level*

75% 77%

% of crop priced preharvest*

25% 30%

% debt-to-asset ratio 28% 27%

Age of operator 55 56

William Edwards, Extension Economist

** difference significant at 1% level on a scale of 1 to 5

Source of ACRE Information

Did not enroll

Enrolled

some/all

FSA newsletters, personnel 3.8 4.0Farm magazine, newsletter, website or radio

3.1 3.1

Extension newsletter, web site

3.2 3.5

Extension presentation** 3.0 3.7Lender, farm manager, friend

2.6 2.9

Others (insurance agent, mkt. advisor, IA Corn Growers)

2.5 2.5

William Edwards, Extension Economist

Suggestions for ACRE• Make it less complicated (40)• Eliminate it (12)• Eliminate all government farm programs

(7)• Don’t tie payment to state yield (7)• Make it part of crop insurance (5)• More education (4)• Various (15)

William Edwards, Extension Economist

Iowa Farmers’ Decisions about Enrolling in Average

Crop Revenue Election (ACRE)

Questions?