- The best risk management strategy is to enroll early in DCP.
- It is too early to forecast potential 2013 ACRE payments
Starting Feb. 19, producers can enroll in ACRE or DCP for the 2013 crop year. All eligible producers can enroll in ACRE or DCP regardless of whether or not they were previously enrolled in ACRE.
With the current uncertainty in Congress, the best risk management strategy is to enroll early in DCP. At this point in time, it is too early to forecast potential 2013 ACRE payments. However, once we have more information on 2013 ACRE payments, producers do have the option to change their election from DCP to ACRE prior to the June 3rd deadline (if ACRE seems to be a better option for their farm).
In previous years, producers had an incentive to wait until mid-May to make the decision to enroll in ACRE or DCP since more information was available to estimate ACRE payments (and this wasn’t a problem since funding was available for DCP and ACRE for the 2008 farm bill).
However, things are different now and there is a lot of uncertainty in Congress. Some have discussed the possibility of passing a farm bill this year and not distributing 2013 direct payments in October. In both the House and Senate version of the farm bill, direct payments were eliminated, so most producers were not expecting to receive direct payments for the 2013 crop year (assuming that a new farm bill was passed).
Now that the extension is in place and direct payments have been extended to the 2013 crop year, producers and lending agencies are depending on these payments to fulfill loan obligations. In many cases, farm loans would not have been possible without the inclusion of 2013 direct payments.
It is important to enroll in DCP as early as possible so that DCP contracts will be in place and Congress will understand the importance of 2013 direct payments to the agricultural industry. If producers wait to enroll, this could signal to Congress that fewer producers are depending on 2013 direct payments.