Grand Rapids, MI | ecnefarmer - 8/7/2009 11:23
lorank, can tell me what the 2009 Nat. avg. market price you are using for corn in table 4 on the ACRE calculator, I have used the 3.66 amount for my calculations for our farm and with that the program is at break even with the DCP payment which tells me there is no benefit to the ACRE program this year and for the next three years we will be in a hole unless they would trigger. I also have plugged in 3.57 in then it would pay enough to be break even with the DCP payments over the next 4 years.
This is the challenge with the traditional calculators. You can run various senarios, and some will pay very large, and many will not pay at all. The trick is to have some idea of the liklihood of the different senarios.
This is what we do with our model. We don't use a single price, but rather run 1,000 different senarios. We pick from a "distribution" (think bell-curve) that allows us to pick more often near the center point that we choose, and fewer and fewer and prices go higher or lower.
To build this distribution, we are using two different assumptions and providing results for each. The first is setting the center at the WASDE forcast price of $3.75 for 2009, then the FAPRI forcast going forward. The second just assumes that that center point will stay at the same as the 2008 price level. If you look, I posted a graphic of the distribution we are using above. (although we do change the volitility depending on the farm situation)
We have quite a lot of time in developing this model, and the plug-in for Excel to do the simulation was ~$2,000. You can see why we have to charge for this :-)
Edited by lorenk 8/7/2009 15:31
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ACRE (again)
