Two policy issues related to agriculture in Illinois have been widely discussed in the state this year. The first is a new commodity program rolled out as a part of the 2008 Farm Bill, the Average Crop Revenue Election (ACRE) program. The second is the effect of H.R. 2454, the so-called cap-and-trade bill, on the agricultural sector in Illinois. Both issues revive old debates about the structure and form of U.S. agricultural policy and highlight the scope and complexity of modern farm legislation.

Farmers in Illinois have historically received support in three main forms: direct payments, countercyclical loans and marketing loan programs. Direct payments use past revenue data to assess seasonal payments to farmers regardless of the current level of commodity prices or farm incomes. Countercyclical and marketing loan programs provide support only when commodity prices fall below legislatively fixed levels. For example, countercyclical payments for corn are triggered at $2.35 per bushel or less, marketing loans at $1.95 per bushel. Additionally, ad hoc disaster assistance and federally subsidized crop insurance also supports farmers.

The ACRE program is designed to provide farmers revenue protection using a crop-specific revenue index based on recent state-level yields and national average prices. Coverage under the program is optional and, if elected, replaces the countercyclical program for the remaining life of the current farm bill (through 2012). ACRE carries many advantages over price-based support models. It can assist farmers in years when prices are high, but crop yields are low. Moreover, because payments are based on more recent prices, assistance is triggered at a much higher price level—especially important for the corn, soybean and wheat producers of Illinois. However, while ACRE payments are expected to surpass other aid models over time, it puts farmers in the situation of giving up certain assistance for contingent, and therefore uncertain, payments. This reason, and the 5-year commitment the program requires, has kept ACRE enrollment relatively low with less than 8 percent of eligible farms and 13 percent of eligible acres enrolled.

Cap-and-trade and related environmental regulation promises to lower current agricultural revenue streams while providing a new source of funds—offset payments. Cap-and-trade works by limiting corporate green house gas emissions and creating a market by which corporations exceeding limits can purchase credits to offset their excess pollution. The agricultural sector plays a relatively minor role in pollution when compared with industry and transport, but where it does pollute researchers believe it could relatively easily and cheaply curb emissions. This would allow farmers to provide offsets on the market, creating a new revenue stream while mitigating pollution and reaching emissions reductions goals.