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Corn+Soybean Digest

Early-Out For CRP?

As of the writing of this column, USDA was still reviewing the possibility of offering an “early-out” option for existing Conservation Reserve Program (CRP) contract acres for the 2009 crop year, in response to the current very tight grain supplies and the need for more acres of crop production in future years. USDA is likely to make a decision on releasing existing CRP acres very soon, in order to allow adequate time for producers to plan for the 2009 growing season. Eligibility of CRP acres for the “early-out” option will likely be determined by the environmental benefits index (EBI) assigned to each CRP contract. The other big question will be how many landowners will opt for an “early-out” option on eligible CRP acres, if that opportunity becomes available in the coming weeks. A big factor may be if the crop acres are eligible for all commodity farm programs under the new Farm Bill, and if all crop base acres and program yields are re-established. Following is the listing of expiring CRP acres on September 30 each year for the next five years:

> 2008 ----- 1.2 million acres
> 2009 ----- 3.9 million acres
> 2010 ----- 4.5 million acres
> 2011 ----- 4.4 million acres
> 2012 ----- 5.6 million acres

As of April 30, 2008, there was a total of 34.7 million acres enrolled in the CRP program, which is down from 36.8 million acres on September 30, 2007. CRP contracts expired on approximately 2.6 million acres on September 30, 2007; however, an additional 515,000 acres have been added to the CRP program since that time through Continuous CRP enrollment and CREP enrollments. Currently there are approximately 30.6 million acres under General CRP contracts, 2.9 million acres under Continuous CRP contracts, and 1.1 million acres under CREP contracts. There has not been a General CRP sign-up in the past couple of years, and no General CRP sign-up is planned in the immediate future. Sign-up for Continuous CRP is on-going, and will continue to be on-going under the New Farm Bill, which was just approved by Congress. Continuous CRP targets the most sensitive environmental land areas, such as filter strips, buffers, wetlands, etc. The CREP Program is a CRP partnership with State Conservation Programs, which target specific watersheds.

CRP contract holders with CRP contracts that expired in 2007, 2008, 2009, and 2010 were given the opportunity to extend their expiring CRP contracts for an additional 5-10 years. CRP contracts are normally 10 or 15-year contracts. 87% of the eligible acres that were set to expire on September 30, 2007, or 13.5 million acres, were re-enrolled back into the CRP program. For 2008-2010, 9.5 million CRP acres, or 78% of the eligible acres, have been re-enrolled back into the CRP program. It should be noted that the CRP re-enrollment period was a couple of years ago, before the current dramatic rise in grain prices, and improved profitability in crop production. It will be interesting if USDA offers the same CRP re-enrollment options to landowners in the future, the participation, and if the participation rate for CRP re-enrollment stays as high as it was a couple of years ago.

Some of those acres are continuous CRP acres that are on more highly sensitive environmental lands, which will most likely be offered for and encouraged for CRP re-enrollment by USDA. However, the majority of the expiring CRP acres in the coming years are General CRP acres, which may or may not be offered up for re-enrollment by USDA, and landowners may not be as willing to re-enroll the CRP acres, if commodity prices remain at high levels.

CRP Achievements
In 2006, CRP celebrated its 20th anniversary, and two decades of conservation success. CRP was originally established in the 1985 Farm Bill, and today has over 400,000 landowners participating, most of which are farmers and ranchers, and involves nearly 35 million acres under some type of CRP contracts. Some of the 20-year benefits of the CRP program cited by USDA include:

  • 450 million tons of soil erosion reduced annually.
  • 2 million acres of wetlands and buffers restored.
  • 48 million metric tons of carbon dioxide removed.
  • 170,000 miles of stream bank protected along rivers and streams.
  • An additional 2.3 million ducks produced each year from restored CRP wetlands.
  • Enhanced populations of pheasants, quail, and other wildlife species.
  • There are currently 34 Conservation Reserve Enhancement Programs (CREP) in 27 States

in targeted watersheds, which has generated an additional $ 1 billion in State and private funds for Federal conservation efforts through CRP.

Twelve States have over 1 million acres in CRP, which accounts for about 75% of the CRP acres in the U.S. Following is a listing in order of the top twelve CRP States, how many CRP acres were enrolled on April 30, 2008, and the (decline in CRP acres from September 30, 2007):

  • Texas ----- 3.9 million CRP acres (136,280 acre decline from Sept. 30, 2007)
  • Montana ----- 3.3 million acres (167,720 acres)
  • Kansas ----- 3.1 million acres (128,340 acres)
  • North Dakota ----- 3.0 million acres (361,920 acres)
  • Colorado ----- 2.4 million acres (36,893 acres)
  • Iowa ----- 1.8 million acres (142,069 acres)
  • Minnesota ----- 1.8 million acres (55,163 acres)
  • Washington ----- 1.5 million acres (15,059 acres)
  • Missouri ---- 1.4 million acres (134,455 acres)
  • South Dakota ----- 1.3 million acres (263,766 acres)
  • Nebraska ----- 1.2 million acres (98,069 acres)
  • Illinois ----- 1.1 million acres (24,854 acres)
The Future Of CRP
The recently passed New Farm Bill caps the maximum CRP acres at 32 million acres, compared to 39.2 million acres in the 2002 Farm Bill. The reduction from the current level of 34.7 million CRP acres down to a maximum of 32 million or less CRP acres can likely be easily achieved in the next few years, given the large number of expiring CRP acres from 2008-2012. Sign-up of additional CRP acreage under the New Farm Bill is likely to have an even stronger focus on the environmental benefits achieved on a given land parcel through CRP enrollment. The bottom-line is that the CRP program has over 20 years of success of protecting sensitive environmental lands, reducing soil erosion, improving water quality, and enhancing wildlife. The CRP program is very popular with farmers, the general public, and with policy makers, and CRP will continue to be a major USDA conservation program. However, economic pressures and the need for alternative fuels in the U.S. may lead to some changes in the CRP program, compared to what CRP has looked like in the past twenty years.
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