Transcript Why did crop producers enroll or not enroll in ACRE.ppt

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
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Source of Information % Used Importance*
FSA newsletters, personnel
89%
3.8
Farm magazine, newsletter,
79%
3.1
website or radio
Extension newsletter, web site 68%
3.3
Extension presentation
61%
3.2
Lender, farm manager, friend
61%
2.7
Others (insurance agent,
16%
2.5
market advisor, IA Corn Growers)
* on a scale of 1 to 5
William Edwards,
Extension Economist
25% used an electronic spreadsheet
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Source
ISU Extension
Farm Service Agency
Own worksheet
Illinois or Kansas Extension
Unknown
52%
30%
4%
4%
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
24%
17%
20%
% enrolled in ACRE*
*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*
3.9
3.2
1.8
1.6
1.4
0.3
*scale of 1 to 5
William Edwards,
Extension Economist
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Reasons to Not Enroll
Importance*
Program too complex
3.8
20% of direct payment given up
3.6
Would lose loan deficiency payments
3.0
Too hard to explain to landlord
3.0
Unlikely to get a payment
2.9
Farm yields don’t track with state
2.7
Marketing loan rate will be lower
2.4
Lack farm yield information
2.2
Do not need more risk protection
2.1
Landlord did not want to enroll
2.1
* Scale of 1 to 5
William Edwards,
Extension Economist
Risk Management Characteristics
(versus data from Census of Ag, RMA, IFBA)
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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
Risk Management
Characteristic
Crop acres in 2009**
Did not Enrolled
enroll some/all
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%
55
56
Age of operator
*difference significant at 5% level ** difference significant at 1% level
William Edwards,
Extension Economist
Source of ACRE Information
FSA newsletters, personnel
Did not Enrolled
enroll some/all
3.8
4.0
Farm magazine, newsletter,
website or radio
Extension newsletter, web site
3.1
3.1
3.2
3.5
Extension presentation**
3.0
3.7
Lender, farm manager, friend
2.6
2.9
Others (insurance agent, mkt.
advisor, IA Corn Growers)
2.5
2.5
** difference significant at 1% level
on a scale of 1 to 5
William Edwards,
Extension Economist
Suggestions for ACRE
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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?
William Edwards,
Extension Economist