Many farmers may opt out of Conservation Reserve Program

A federal program designed to protect environmentally sensitive farmland may be losing some of its luster.

Thousands of U.S. farmers have a decision to make this month, as they must choose to either keep their acres in the Conservation Reserve Program (CRP) or put those acres into crop production.

Conservation Reserve Program (Photo: usgs.gov)

Nationwide, there are 1.1 million acres in CRP contracts that will expire this month. Landowners holding those contracts will be weighing their options, making a judgment on whether to renew or to pull their acres out of the CRP program.

The number of CRP acres up for renewal jumps to 3.8 million acres in 2009, and then 4.4 million acres in 2010, according to a statement from U.S. Agriculture Secretary Ed Schafer in July.

Typically, the type of land that is enrolled in the CRP program is environmentally sensitive and erodible. The program was designed to keep those lands out of production to conserve soil and protect water resources, as well as to improve wildlife habitat. With millions of acres of farmland in CRP, the program also tends to protect against the overproduction of crops and can help maintain steady grain prices.

CRP has long had its detractors. Those critical of the program have called it a wasteful handout to landowners, paying farmers not to farm. Since its creation in the early 1980s, however, the program has been renewed every five years as a part of the federal farm bill. In 2005, the USDA spent approximately $1.7 billion in CRP payments to landowners.

Now that global demand is strong and commodity prices are high, many farmers may choose against renewing their CRP contracts to plant more corn and other grains. The CRP rental rates simply are notas lucrative as planting a field of corn.

In an interview last week with the Iowa Independent, Iowa Secretary of Agriculture Bill Northey said farmers are going to have some difficult decisions to make regarding CRP. Northey said some farmland may now be worth significantly more in cash rent than in CRP. For those farmers, he said, “it’s got to be really hard to keep it in CRP. You’ve got to really believe in [CRP] to keep it in, when you could be getting almost twice as much by farming it.”

With CRP rental rates not keeping up with the value of farmland, landowners will consider the bottom line.

“I run into some farmers out there that ask about it. I can see that they’re thinking about it,” said Northey. “They’re trying to figure out what to do.”

Opponents of alternative fuels such as ethanol have pointed to federal renewable fuels incentives as the reason farmers may choose to opt out of CRP. The demand for corn has increased because of ethanol, but landowners will consider other factors as well.

The penalties for taking land out of a CRP contract before the agreed-upon time can be steep. A farmer typically must return all payments received during the entire period of the CRP contract in order to be released early from the contract.

A simple lack of flexibility in the program may be what turns some farmers off. The USDA attempted this year to release CRP land for haying and grazing under its critical feed use program, but that action was mostly thwarted by a lawsuit filed by the National Wildlife Federation. Because of that lawsuit, it is now more difficult for the USDA to use its discretion and release CRP for feed uses when farmers really need it.