Abstract� In 2009 Iowa farmers had the opportunity to enroll in a new revenue support program called ACRE.� A survey showed that those who did enroll desired more risk protection and believed that payments from ACRE would exceed the value of direct payments forfeited.� Operators who did not enroll said the program was too complex, and they did not want to give up a portion of the direct payments.� Those who enrolled farmed more acres and depended more on crop production for their gross income, and were more likely to use crop insurance and pre-harvest pricing.�commodity; ACRE; farm program

Edwards, William M.

English

Research Papers in Economics

Why Was ACRE a No-Go with Iowa Farmers? 
 
In 2009 crop farmers in Iowa and other states faced the decision of whether to continue with the 
existing Direct and Counter-cyclical Program (DCP) offered by the Farm Service Agency (FSA) 
of the United States Department of Agriculture (USDA) or to enroll in a new program called 
Average Crop Revenue Election (ACRE).  The counter-cyclical payments and marketing loans 
(or loan deficiency payments) available under DCP helped mitigate commodity price risk, while 
ACRE offered producers a chance to protect against falling crop revenue.  However, they were 
required to give up some of the benefits of the old program, including a 20 percent reduction in 
the direct payments, a 30 percent reduction in marketing loan rates, and 100 percent of counter-
cyclical payments if they enrolled in ACRE.   Prices for the two primary crops grown in Iowa, 
corn and soybeans, were at high enough levels that counter-cyclical payments and loan 
deficiency payments were unlikely to be available, so producers had to choose between retaining 
a small, but certain, cash benefit (20 percent of the direct payments) each year, and possibly 
receiving a larger revenue deficiency payment if certain unfavorable combinations of prices and 
yields occurred in one or more of the next four crop years.  
The vast majority of DCP participants elected to continue with the existing program. 
Final USDA data show that nationally only 7.8% of the FSA farm units previously enrolled in 
DCP were enrolled in ACRE for the 2009 crop year. However, 13.0% of the eligible base acres 
were enrolled, which indicates that the farm units that were enrolled were larger than the ones 
that were not, on average. In 2010 the enrollment numbers increased only slightly, to 8.1% of 
farm units and 13.6% of eligible base acres. 
The Iowa Enrollment Decision To many university economists in the Corn Belt the choice seemed clear—the reduced direct 
payment was a small price to pay for establishing a new safety net at a much higher level than 
DCP offered. The tepid response from farmers was puzzling. In March 2010 a mail survey was 
sent to 3,384 Iowa farmers to find out what factors most influenced their choice to enroll in 
ACRE or not, and to see if any characteristics of their farming operations were significantly 
related to their decisions. 
Recipients were randomly selected from all Iowa producers who were enrolled in FSA 
commodity payment programs in 2008. The enrollment decision is made separately for each FSA 
defined farm unit. Generally each farm unit is associated with a different owner or operating 
entity. Names on the FSA list were sorted by the county in which the farm units were registered, 
so the sample was proportional to the geographic distribution of farms across the state. Usable 
replies were received from 356 producers, a response rate of 10.5%.  
The producers who responded to the survey were operating an average of 5.0 FSA farm 
units each, but the range was from one unit to 57 units. A large majority (72.5%) of the 
respondents reported that they enrolled none of the farm units that they operated in 2009 in 
ACRE, neither owned nor rented. Overall, respondents enrolled 20.0% of their FSA farm units in 
ACRE, whereas FSA reported that only 11.8% of the units in Iowa were enrolled. Apparently 
farmers who enrolled some units in ACRE were more likely to return the questionnaire than 
those who did not.  Only 12.6% of the respondents enrolled all their farm units, while 14.9% 
enrolled just some of their farm units in ACRE. They were more likely to enroll farms that they 
owned themselves (24.7% were enrolled) than farms they were renting from another owner 
(16.4% were enrolled).   
Sources of Information Respondents were asked to indicate their sources of information about ACRE and rank the 
importance of each one to their decision on a scale of one to five. Not surprisingly, FSA 
newsletters and FSA personnel were the most common source mentioned, by 87% of the 
respondents. The next most common source cited was the farm press, followed by Extension 
websites and articles, advice from lenders, farm managers or friends, and Extension meetings. 
The average ranking of the importance of each source by farmers who enrolled all or some of 
their farm units in ACRE was compared to the corresponding ranking by farmers who enrolled 
none of their farms. Farmers who enrolled at least some farms ranked Extension presentations as 
significantly more important than those who enrolled no farms, indicating that Extension 
specialists may have had a positive influence on the enrollment decision.   
Fifty percent of the respondents who enrolled at least some farms in ACRE used an 
electronic spreadsheet to analyze their decision, versus only 16% of those who enrolled no farms. 
Likewise, farmers who used an electronic spreadsheet program enrolled an average of 38% of 
their farm units, compared to a 16% enrollment rate for those who did not. This indicates that a 
quantitative analysis of the ACRE decision tended to influence operators to enroll. The most 
common sources of the spreadsheets used were Extension and FSA.  
Reasons for Enrolling 
Respondents who enrolled one or more farm units in ACRE were asked to rate the importance of 
their reasons for doing so. The percentage of the respondents who cited each reason and the 
average score given to it are summarized in table 1. Two reasons stood out from the rest: a desire 
for more risk protection against possible decreases in revenue, and a belief that the payments 
received under ACRE would exceed the value of the FSA direct payments given up over the four 
years of enrollment. High yield variability, advice from a farm lender or manager, and encouragement from a landlord were also cited by at least 80% of the respondents as reasons for 
enrolling, but were given less importance.   
Reasons for Not Enrolling 
On the other side of the coin, respondents who enrolled none or only part of their farms in ACRE 
were asked to rate the importance of various reasons for not enrolling (table 2). The factor that 
was most cited and clearly given the most importance was that the details of the program were 
too complex. The second most important reason for not enrolling was to avoid giving up 20% of 
the FSA Direct Payment. Several other reasons were cited by at least 75% of the respondents, but 
were given less importance.  Interestingly, a lack of farm level yield information was the fourth 
most cited negative reason, but was rated the least important. 
Respondents who enrolled no farm units in ACRE placed more importance on the 
complexity of the program, the partial loss of direct payments and possible loan deficiency 
payments, the low likelihood of receiving an ACRE payment, and a low perceived need for more 
risk protection. On the other hand, for those who enrolled at least some, but not all, of their farms 
the difficulty of explaining the program to their landlords was by far the most important reason 
cited for not enrolling more units. The difference of opinion between some operators and their 
landlords is further illustrated by the fact that respondents who enrolled only some of their farms 
enrolled 77% of the farms they owned, but only 32% of the farms they rented. In fact, a third of 
the respondents who enrolled only some of their farms enrolled all of the farms they owned, but 
none of the farms they rented. 
Farmer Characteristics 
Some information was gathered about characteristics of the farmers who answered the survey 
and some of the risk management tools that they were using. The farm operators who enrolled all or some of their FSA farm units, that is, those who were at least somewhat favorable toward 
ACRE, operated more FSA units, farmed significantly more crop acres, and derived a higher 
percent of their gross farm income from the production of crops than those who enrolled no farm 
units. Presumably they had more dollars at risk if prices or yields decreased substantially. They 
also insured a higher percentage of their crop acres, and chose a higher level of crop insurance 
coverage. Likewise, they priced a higher percentage of their crop prior to harvest than the group 
that did not enroll in ACRE, either with forward contracts or though the futures market. The 
average farm debt-to-asset level and average age of the two groups of operators did not differ 
significantly, though. The survey results showed that Iowa farmers who were making more use 
of other common crop risk management tools were also more likely to participate in the ACRE 
program. 
Comments 
Respondents were given the chance to make suggestions about how ACRE could better serve the 
needs of crop producers. About one-fourth of them included a comment, and half of the 
comments said to make the program simpler. Another 18% recommended discontinuing the 
ACRE program altogether or scrapping all government farm programs. 
Implications 
Programs for mitigating financial risk for crop farmers will be an important part of the next farm 
bill debate. The ACRE program will likely be modified or replaced with a new revenue safety 
net. The results of this survey show that in order to attract a high level of participation in ACRE 
or its successor the mechanics of the program need to be simple and transparent, and it should 
offer an expected benefit that clearly exceeds the value of any payments foregone. Program 
benefits need to be well articulated to landowners as well as tenants. Iowa producers who received information from Extension programs and utilized electronic spreadsheet decision tools 
were more likely to enroll in ACRE, implying that providing adequate resources for educational 
programs about new commodity programs may enhance the enrollment decision. 
For More Information 
Briggeman, B., and Campiche, J. (2010)  The New ACRE Program: Costs and Effects.  The 
Main Street Economist 2010 Issue II: 1-6. 
Edwards, W. (2011)  Iowa Farmers’ Decisions to Enroll in the Average Crop Revenue Election 
(Acre) Program.  Department of Economics, Iowa State University, working paper 11013. 
 
Reyman, D.  (2010)  ACRE Survey Results.  ASFMRA Update 5 (XVI): 5. 
Woolverton, A., and Young, E. (2009)  Factors Influencing ACRE Program Enrollment.  United 
States Department of Agriculture, Economic Research Service, Economic Research Report 
Number 84: 24-25. 
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Why Was Acre a No-Go with Iowa Farmers?

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Why Was Acre a No-Go with Iowa Farmers?

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