Conservation Reserve Program controversy

by Josh Sosland
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While perhaps overshadowed by biofuels in public discourse over runaway markets, the Conservation Reserve Program remains controversial. Advocates call C.R.P. one of the U.S. Department of Agriculture’s most successful programs while detractors suggest C.R.P. has been a significant and unnecessary contributor to surging food prices.

Program proponents worry higher grain prices will discourage grower participation in the program in the years ahead. For critics, the higher prices mean adjustments should be made in the program immediately, allowing participating growers an opportunity to return C.R.P. land to production without penalty before their contracts expire.

Discussions of C.R.P. tend to become rapidly polarized and even caricatured, and in this review, Food Business News seeks to explain the program and provide the perspectives of the range of parties interested in C.R.P., from growers and the U.S.D.A., to wildlife groups, conservation groups and the grain industry.

Established in the mid-1980s when farm incomes were reeling, the C.R.P. originally was developed as a win-win solution to help reduce agricultural production while also advancing conservation interests. In fiscal 2008, 36.8 million acres of cropland was set aside for the C.R.P. program (versus about 320 million acres planted to all crops). Participating farmers are required to establish long-term, resource-conserving covers.

With commodity prices reaching record highs because of production shortfalls, the U.S. baking industry made its case for change earlier this year in a "March on Washington." Estimating that as much as one-third of C.R.P. acreage could be returned to production without sacrificing environmental goals, the American Bakers Association expressed support for a proposal to remove 7 million acres from the C.R.P. and urged the U.S.D.A. to exercise its authority to waive penalties for farmers seeking an early release from C.R.P. contracts.

Penalty-free withdrawal from the C.R.P. has a precedent. In the mid-1990s, in part because of high prices and a tight supply-demand situation, certain acreage enrolled in C.R.P. was allowed to exit without a penalty. Also in the mid-1990s, erodibility was replaced as the qualifying criterion for C.R.P. enrollment by an environmental benefits index, a more complicated formula that considered a host of conservation factors, including wildlife, water quality, air quality and erosion.

Penalty-free withdrawal doesn’t appear likely in the current environment. Officials of the U.S.D.A. have taken the position that the C.R.P. is a long-term program and should not be disrupted because of short-term market anomalies, even anomalies as dramatic as this year’s.

Mark Keenum, undersecretary of Farm and Foreign Agricultural Service, in February told The Wall Street Journal that within the U.S.D.A., "There are no intentions of allowing early-out of the C.R.P. program." Mr. Keenum added, "We don’t feel like the market situation or the price situation warrants that at this time."

To the degree market disruptions have raised domestic food prices by billions of dollars and prompted social unrest through much of the developing world, this response, confirmed in essence by Secretary of Agriculture Ed Schafer, has caused considerable head scratching within the grain and food industry.

Still, debate over C.R.P. extends well beyond questions over what constitutes extraordinary market prices.

The idea cropland in the C.R.P. could be easily plucked from the program because it does not meet appropriate standards for either environmentally sensitive or highly erodible was challenged by David E. Nomsen, vice-president of governmental affairs for Pheasants Forever, an advocacy group for hunters of pheasants, quail and other game.

"The current C.R.P. is far more targeted toward environmentally sensitive lands than the program established in 1985," said Mr. Nomsen, who is based in Garfield, Minn. "That’s an aspect of the issue that isn’t raised by the media. The changes were part of the 1996 reauthorization. Over 1.5 million acres in southern Minnesota and northern Iowa were basically removed from the program. Smaller parcels of land coming into the program tend to have extremely high environmental benefits."

Officials at the U.S.D.A. also emphasized changes in the C.R.P. in the mid-1990s aimed at strengthening the conservation credentials of the program.

John A. Johnson, deputy administrator for farm programs of the U.S.D.A. Farm Service Agency, conceded that much of the land in the program in the late 1980s had been "enrolled indiscriminately." He continued, "The complexion of the land in the program today is much different, with much more environmental value than in the early 1990s."

Mike Linsenbigler, deputy director of conservation division at the Farm Service Agency, defended the acreage under contract in C.R.P. as very different from the early 1990s and asserted critics are focusing on the erodibility index but not the complete environmental benefits picture.

"It’s one thing to say you can bring land back without soil erosion, but it’s another to say there won’t be other environmental effects," he said.

Over time, requirements for growers on C.R.P. land have been strengthened, Mr. Linsenbigler said. For instance, growers are required to enhance C.R.P. land from monoculture to cover that is more conducive to wildlife benefits, he said.

Still, with the broadening of the criteria, erodibility index scores have declined to an average of 11 from 13, Mr. Linsenbigler said.

"That reflects the geographic distribution impacted," he said. "Acres have started moving to the east, where water erosion was a great problem. But the E.B.I. scores have improved."

The National Grain and Feed Association has been at the forefront of groups suggesting for years that too much productive cropland is being tied up under C.R.P.

Without disputing the value of wildlife preservation and the other benefits of the C.R.P. to this effort, Kendell Keith, the chief executive officer of the N.G.F.A., said changes to the program would be beneficial.

Mr. Keith agrees with the U.S.D.A.’s contention that bringing C.R.P. acreage back into production would have only a marginal effect on the nation’s crop production. The 15 million acres that could be returned to production equate to less than 5% of total U.S. acreage planted to crops. It generally is believed this acreage would be less productive than the U.S. acreage overall.

"Still, we’re in a situation with such tight supply and demand that any increase could make a difference, in a poor weather year in particular," he said. "And portions of C.R.P. land can be farmed in an environmentally safe way. If you have a section (640 acres) with a 25-acre pothole, the land could be cut out into parcels with higher payments for qualifying acreage. We could do more for wildlife than we are doing today while still increasing production."

While it may never be easy to effect change in federal programs, Mr. Keith said forces resisting adjustments to the current C.R.P. setup extend beyond conservation and wildlife groups.

"Many landowners have grown very comfortable with the existing setup," he said. "They don’t want to go out and find a tenant farmer to cultivate 80 acres out of 160. They’d rather leave it all in the program and collect the check."

While many farmers have expressed support for early-out opportunities, the growing community in general is less supportive.

Daren Coppock, the chief executive officer of the National Association of Wheat Growers, agreed some land in the C.R.P. could be returned to production.

"There also is some land in there that should not come out," he said. "What we’re saying is, don’t go in there and mess with an agreement that already was written."

Asked whether there is a middle ground that could be found between C.R.P. advocates and critics, Mr. Nomsen of Pheasants Unlimited agreed discussions about the C.R.P. tend to become polarized quickly.

"The challenge is really a question of balance," he said. "We clearly don’t want to support changes that would undermine all of the other benefits we see from the C.R.P., especially in terms of soil erosion and water quality. It would be a step backward."

Additionally, Mr. Nomsen said the market considerations associated with bringing acreage out of the C.R.P. typically ignore the economic value of industries such as pheasant hunting, which he described as a billion dollar industry.

Still, critics have suggested it is not the role of the government to subsidize duck hunting. Asked to weigh the higher cost of food domestically as well as abroad (particularly in poorer nations) against those benefits and about the possibility that marginal increases in acreage could have made a major difference on prices in 2007-08, Mr. Nomsen urged that both sides of the issue be given consideration.

"Pheasant hunting is a strong tradition and important to a high quality of life," he said. "Hopefully we can find a balance through all of this.

"Clearly there are some acres in the program that are capable of being farmed. On the other side of the equation, there are acres that deserve protection that are not yet enrolled."

The idea of finding the right balance between production and conservation is not lost on the conservation community. Larry Clemens, assistant state director for conservation programs in Indiana for the Nature Conservancy, said the C.R.P. is highly valued but that rising food prices are a concern, too.

"We view C.R.P. and the 30-plus million acres as quite a gain for conservation over the past 20 years, particularly for water quality benefits and habitat improvements for a variety of species," said Mr. Clemens, who specializes in agricultural issues in the Midwest and nationwide. "Losing that habitat obviously is not a good thing for conservation, water quality and habitat. Finding the right mix of C.R.P. and production agriculture is critical right now because of commodity prices and food crises popping up around the world."

Asked whether he could conceive of a situation in which conservation groups would accept a cutback in C.R.P. acreage if the environmental impact was minimal, Mr. Clemens said it was possible.

"Ultimately, science needs to drive how we manage the C.R.P. and the land in the program," he said. "If the science is there, then it ought to be changed. We pride ourselves on using science to make decisions, and we would need to see the science."

Given the longstanding inability of the grain-based foods industry to effect a change in the C.R.P., is there any reason to think a change could be forthcoming in the near future?

"If there is a drought this summer, then the policy will change," Mr. Keith of the N.G.F.A. said. "This administration is betting on good weather. We are running with tight stocks on virtually every major commodity. The U.S. has been extremely fortunate on the weather over the last 15 years. If we have another 1988, my Lord! We had a 4-billion-bu carryover going into that year (versus 1.2 billion bus forecast for this year), and production in 1988 was 4.9 billion bus."

While the official position of the U.S.D.A. is that the supply-demand situation is not yet tight enough to warrant early release of acreage from the C.R.P., there are signs this position does not emanate from within the Department. One official said proposals to allow early-out have been proposed by the U.S.D.A.

"We’ve gone to three different Secretaries of Agriculture in this administration with early-out proposals and have been shut down each and every time," said one high ranking official who asked not to be identified. "What does that tell you?"

C.R.P. overview

The Conservation Reserve Program, a program of the U.S. Department of Agriculture, seeks to reduce soil erosion, improve water quality, establish wildlife habitat and enhance forest and wetland resources, according to the Department’s Natural Resources Conservation Service.

"It encourages farmers to convert highly erodible cropland or other environmentally sensitive acreage to vegetative cover, such as tame or native grasses, wildlife plantings, trees, filterstrips or riparian buffers," the Department said.

The Department describes the program as the "largest public-private partnership for conservation and wildlife habitat in the United States."

The payments in fiscal 2008 allowed producers to earn an average of $4,130 per farm enrolled in the program.

Included in the totals are 355,000 contracts (3.9 million acres) for C.R.P.’s continuous sign-up and 427,000 contracts (32.9 million acres) for general sign-up. Under continuous sign-up, producers may enroll high priority conservation practices such as filter strips and riparian buffers at any time without competition. Producers may offer land for C.R.P. general sign-up enrollment only during designated sign-up periods.

 Fiscal 2008 C.R.P. facts

C.R.P. rental payments — $1.8 billion

C.R.P. contracts — 782,000

C.R.P. farms — 441,000

Average annual rental payment — $49.49 per acre

Continuous sign-up acreage — 3.9 million

General sign-ups — 32.9 million acres

Total contracted area — 36.8 million acres

 Source: U.S.D.A., October 2007

March 2008 Status

Enrollment area — 34.7 million acres

12-month change — 2.1 million acres

Average rental payments — $51 per acre

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