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Corn+Soybean Digest

Conservation Rewards?

The long-awaited Conservation Security Program (CSP) is being launched this summer. Some say it bears little resemblance to the program that was originally proposed in the 2002 Farm Bill. Others contend that the program doesn't deliver anywhere close to its promise of rewarding the best producers for their conservation efforts.

To live within its $41 million budget, Natural Resources Conservation Service (NRCS) is administering the program differently than originally proposed. Instead of offering the program nationwide this year, it's available only to farmers and ranchers in 18 watersheds throughout the U.S.

While your area might not have been eligible for this year's signup, all watersheds in the U.S. will be included within a proposed eight-year timeframe. The experiences of those who qualified this year could very well shape the program for the future.

Bob and Vickie Hanson farm 2,700 acres of corn and soybeans near Frost, MN, in the Blue Earth watershed. They began the application process, but found out they don't qualify because of past nitrogen (N) use. Vickie was willing to begin the application process — filling out more than 50 pages of forms and spending hours at the computer and the local NRCS office — because she thinks this type of program can play an important role in encouraging conservation.

“It takes so long for the earth to repair from bad practices and it takes a long time for customary practices to change,” says Hanson. “We knew moldboard plowing wasn't the best agronomic choice, but it took a while to come up with solutions that were economically feasible. Conservation programs are important because they encourage farmers to incorporate sound environmental practices without putting them at an economic disadvantage.”

She's concerned that most growers won't have time to apply or won't qualify. “There are too many hurdles for producers to overcome and too many obstacles that could prevent growers from participating even though they're good conservationists,” says Hanson. “The rules are too stringent to allow widespread inclusion.”

She believes the assumptions for N use are flawed. The maximum yield goal allowed in their watershed for corn is 185 bu./acre. “We don't fertilize planning for a bad year, we fertilize to optimize our yields,” she says. “If the program truly wants to reward the best producers this requirement falls short.”

Hanson says they could have adjusted practices to comply with the N requirements, but she didn't think it would make sense financially. Program payments may not have been able to offset the lost yield suffered by reducing N.

She was also concerned that they might have exceeded payment limits if they had qualified for Tier II (see page 10), which includes the entire operation. This could have also made it financially unfeasible for them to participate. She believes the government hasn't taken larger producers into account, even though they might be doing everything right.

Jim Good and his son Jeremy farm nearly 1,500 acres in the East Nishnabotna watershed in Southwest Iowa. They have decided not to enroll in CSP.

“When I first heard our watershed had been chosen, I felt like we'd won the lottery,” says Jim Good. “But after the informational meetings we've been trying to pencil out how we can make this work financially — and we just can't.”

Good says the N requirements are too stringent for his area of Iowa. He says reducing N to comply just doesn't pencil out financially.

“I think farmers are doing well on conservation and have given up a lot. We've put money into headlands, terraces and buffers. It's lost land to our farming operation and we still pay taxes on it, but we're willing to make the sacrifice to conserve the land,” he says. “If they want to reward me, the program seems like a good idea. But I shouldn't have to jump through all these hoops trying to qualify and make choices that are detrimental to my operation.”

Good says he's seen tremendous response as a result of the conservation practices he's incorporated on his land, but doesn't think CSP is the reward it first promised to be. He's disappointed in the rush to implement the program and the lack of specific information that made it difficult for him to determine whether or not the program was right for his operation.

He worked with Ken Shetler of Russell Consulting to weigh the financial pros and cons of participation. Shetler also farms in that area, but doesn't qualify for CSP because his land doesn't fall within the portion of the East Nishnabotna defined by this year's signup. In working with Good and other clients, the main concerns were the N requirements and convincing landlords to commit to lease their land to participating growers for five to 10 years.

“One of the challenges is that it's not clear how much money is available, so that's a big disadvantage for those growers trying to figure out if they can afford to participate,” Shetler says. “As I analyzed Jim and Jeremy's operation, at this time the structure of the program doesn't meet their financial and operational needs.”

He adds, “Progressive businessmen still need to maximize their gross dollars per acre to be profitable.”

Shetler also asked Troy Bruck, a crop production agronomist at Agriland FS in Harlan, IA, to look at the N formulas for the program.

“Our growers' soils are grid sampled and we apply variable-rate fertilizer. There are a lot of factors involved in N use that vary depending on each grower's management practices,” says Bruck. “But with the cost of anhydrous no one wants to apply more N than needed. No one I know is overapplying.”

He adds that there's some room for debate with CSP's N formula. It includes an N credit equal to last year's soybean yield. Bruck points out that it isn't universally agreed upon that an N credit should be given for soybeans. “That N credit based on soybean yield could make a huge difference in how much N can be applied,” he says.

NRCS Chief Bruce Knight is optimistic about the future of CSP.

“The biggest challenge for CSP is the expectation that it should be a full blown, mature program as it stands today,” says Knight. “It's important to keep in perspective that in its second year, this program will have as much total funding as our mainstay flagship program EQIP.”

CSP had some financial limitations in its first year, too. Total funding for the program was $41 million with a cap of 15% for administrative costs. This might seem like a lot of money, but Knight explains the impact.

“As an example, EQIP presently needs about 23-24% of every dollar for technical assistance, oversight, contract administration, delivery and consultation, and this program is designed to address specific resource concerns. CSP is supposed to accomplish a holistic comprehensive plan that's been directed by statute to hold down administrative costs to 15%,” he explains.

“If we had offered the program nationwide and 700,000 farmers needed 30 minutes to explain the program, we would have spent the $40 million and never consummated a contract,” he says.

Knight notes that offering the program to a limited number of watersheds and having applicants use a self-assessment form reduces the department's administrative costs. He also explains that, with a limited budget, the payment structure might not be exactly what growers were expecting either.

“We're consciously trying to manage the program to maximize enhancement payments that provide compensation for doing additional conservation on a longer-term, sustainable basis,” he says. “That means stewardship and maintenance payments may be smaller than some farmers and ranchers would have originally expected. We're trying to recognize existing conservation and provide incentives for new and additional conservation practices on working land.”

The good news for growers is that President Bush has proposed $209 million for CSP next year, while the House ag appropriations committee has proposed $195 million. Knight says either proposal provides enough funding for what he calls a “robust” program.

Another piece of good news for those who qualify next year: Knight anticipates that the next round of watersheds will be announced this fall.

“There are things I may need to do on my own farm (Knight farms in South Dakota) in anticipation of participation in CSP,” he says. “So the degree to which we make the watershed selection predictable allows farmers and ranchers to make some of those modifications to their operations as they prepare.”

While Knight knows there will be modifications to the program next year based on this year's experiences, he believes the program is headed in the right direction.

“CSP finally gives us the ability to recognize leading-edge conservationists, providing them rewards and encouraging them to keep developing cutting-edge technology that can transfer to other farmers,” he says. “That to me is far and away the strength of the program.”

Those who applied for this year's program will continue to work with their local NRCS offices to complete the information needed to determine if they qualify. NRCS has until Sept. 30 to process the applications and obligate the funds.

Three Levels Of Participation

There are three enrollment categories for the Conservation Security Program.

Tier I:

  • Address water and soil quality on part of the operation prior to acceptance.

  • Contracts are awarded for five years.

  • Maximum annual payment is $20,000.

Tier II:

  • Address water and soil quality on the entire operation prior to acceptance and agree to address one additional resource.

  • Contracts are awarded for five to 10 years.

  • Maximum annual payment is $35,000.

Tier III:

  • Address all resource concerns to a resource management system level on the entire agricultural operation before acceptance into the program and agree to additional enhancement activities.

  • Contacts are awarded for five to 10 years.

  • Maximum annual payment is $45,000.

For more information about CSP and other conservation programs, go to

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