Get the Disaster Protection You Need
SURE and ACRE programs bring unknowns for farmers trying to insure crops
Compiled by staff
Published: Nov 15, 2008
This year there is a lot of confusion between Supplemental Revenue Assistance Payments (SURE) and the Average Crop Revenue Assurance (ACRE), especially with sign-up deadlines approaching and final rules not yet written.
Art Barnaby, agricultural economist at Kansas State University, explains although ACRE has received more publicity, SURE is designed as true revenue insurance and offers a "possibility of providing real protection."
From an administrative standpoint, SURE is more complicated than ACRE. Barnaby says SURE will require additional computer software for sign-ups and additional employees or contract some of the work out to get everything up to speed.
Final rules aren't written yet for SURE, but already deadlines have passed to insure 2008 and 2009 crops required for SURE eligibility. For SURE, farmers are being asked to make decisions about coverage without fully understanding how the program will fit in your farm.
There have already been changes since the September 16 close for 2008 crops and September 30 close for 2009 crops. If farmers failed to meet those deadlines for non-insured crop disaster assistance coverage (NAP) or insurance, then they are not eligible for SURE on 2008 or 2009 crops, Barnaby says. "Because these rules are not final there are going to be some mad farmers if they have losses but get no payments because of some technical error that they had no information. Congress may be asked to come back and do another fix," he said.
Here's what farmers need to know about SURE:
SURE is a whole-farm program, meaning it encompasses the entire farming operation -- all acres in all counties on the farm. In order to qualify, a farmer must have purchased crop insurance and non-insured crop disaster assistance coverage (NAP) for all crops grown on the farm unless the crop meets the de minimis test.
Eligibility for a payment from SURE also requires that a farm be in a county declared a disaster area or contiguous to such county, or the farm has experienced a 50% reduction in production due to adverse weather.
With SURE, eligible farms increase their coverage by 15% for crops with insurance and by 20% for crops with NAP. There is a 90% coverage cap.
SURE has no fee. The financial requirement is the purchase of crop insurance and NAP.
In most of the country, Dec. 1 is the cutoff date for paying the one-time $250 NAP fee on forage for 2009 crops, Barnaby said. Because SURE requires whole-farm insurance, the $250 may be worth the gamble.
"Farmers should go to their local FSA office prior to Dec. 1 and make sure they have everything covered to maintain eligibility for SURE," Barnaby says.
ACRE
At this point, Barnaby explains USDA is not forcing anyone to make decisions on the ACRE program before knowing the rules such as SURE. "There is no reason to run down and sign-up until things are more clearly defined on ACRE," he states.
By statute, the ACRE program guarantee price is the simple average of national average market price received by producers of the commodity "for the most recent two crop years." Press reports have indicated that USDA plans to make the price guarantee for the first year of ACRE based on 2006 and 2007 prices rather than 2007 and 2008 prices, with average prices much lower in 2006 than 2008.
ACRE program guarantee for CY 2010-12 cannot change by more than 10% from the guarantee for previous crop year. Barnaby says whether it is applied in 2009 or the year the farmer signs up could be a "game changer" in participation.
"If 2006 prices are used, my prediction is very few farmers will sign up," Barnaby says. "If 2008 prices are used, it will depend on their crops and where they are located." He continued that if the 06 price is used and the cap is in the year farmers sign up, he anticipates many would wait until 2010 to sign up for ACRE.
Barnaby expects the final ACRE rules before Christmas since sign-up is not needed until next spring. The Bush Administration could leave the rule writing for the next administration, but it would make sign-up pretty tight. Sometimes it can take as long as six months before a new president names his new secretary of agriculture. If similar delays are seen in 2009, it would be a USDA employee or acting secretary, not a political appointee, who could make the final call, if the Bush Administration decides to pass on writing the final ACRE rules.
Online resources
FSA SURE Calculator - www.fsa.usda.gov/Internet/FSA_File/sure_calculator.xls
ACRE Payment Calculator - www.card.iastate.edu/ag_risk_tools/acre/
Farm Bill Side-by-Side Comparison - www.ers.usda.gov/farmbill/2008
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Tagged: SURE, farm, usda, insurance, FSA
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