Boom in grain prices pressures idle-acre programs
Posted on Sunday, June 1, 2008
As grain prices have soared and costs of food and feed have escalated during the past year, many animal-agriculture and food-industry groups have called for more U. S. farmland to be used to produce more food, feed and fuel crops.
Several groups have asked the U. S. Department of Agriculture to change the Conservation Reserve Program, known as CRP, which pays farmers to idle cropland.
U. S. Agriculture Secretary Ed Schafer said last week that cutting hay and livestock grazing would be allowed this year on more than 24 million acres of Conservation Reserve Program land after the primary bird-nesting season ends in June. Schafer said he plans to decide “late this summer” whether to allow a “penaltyfree release” of land from long-term contracts for crop production in 2009.
Most people familiar with the Conservation Reserve Program in Arkansas say such a change would be unlikely to prompt landowners in the state to abandon the program, which pays them an annual rental fee to retire marginally productive land, much of which has been planted with hardwood trees.
“There’s almost no way that I could see us taking ground out of CRP to go back into production,” said John Naill III, a fourth-generation landowner whose family has about 1, 000 of its 2, 800 acres of farmland near Biscoe enrolled in the program.
Located along the White River in Prairie County, much of the land is low and prone to flooding about three years out of every 10, Naill said. Trying to take advantage of high commodity prices by farming such “bottom ground” would be foolhardy, he said.
“You have to have a good crop every year,” because of the high costs involved in producing a crop, Naill said.
About 400 acres of Naill’s farmland, which was enrolled in the Water Bank Program, a 1970 s precursor of the Conservation Reserve Program, is a hardwood forest that has become a haven for wildlife, he said.
The family also enrolled more than 100 acres of grassland in the Conservation Reserve Program about four years ago and planted approximately 500 acres of hardwood trees in early 2007. They also enrolled about 40 acres this year in the Conservation Reserve Program’s State Areas for Wildlife Enhancement, a program with special incentives for wildlife-habitat creation, Naill said.
Sign-ups for the wildlife-habitat program have been brisk in Arkansas despite high crop prices, said David Long, private land coordinator and agricultural liaison with the Arkansas Game and Fish Commission.
The program can turn marginally productive cropland, worth $ 2, 000 to $ 3, 000 an acre, into wildlife habitat worth up to $ 7, 000 an acre to hunting enthusiasts, Long said.
Scott House, who owns about 1, 200 acres of land near Cherry Valley along the L’Anguille River in Cross and Poinsett counties, agrees.
“The marginal ground that shouldn’t have been farmed, the CRP program can turn it into gold,” House said.
Last year he enrolled 50 acres in the program, moving dirt to create natural wetlands and planting several types of native grasses and oak trees. Similar enhancements have increased the appraised value of comparable farmland from $ 1, 100 an acre in 1997 to $ 5, 100 an acre last year, House said.
Wildlife artist Zettie Jones and her husband began using the program last year as part of their effort to return 400 acres of farmland to its pre-1970 conditions. The Jones’ land, 17 miles east of Stuttgart near Crocketts Bluff, consists of draws, bottoms and thickets that “should have never been cleared,” she said. “It was more trouble to farm than it was worth.” Nearly 20 years ago, the couple began planting trees, and in 2007 they enrolled 45 acres in the program, planting native grasses to attract quail. “I draw my inspiration from what’s here,” Zettie Jones said, stressing the importance of habitat for wildlife.
CHANGING TIMES The Conservation Reserve Program was initiated in 1985, when the value of U. S. farmland had crashed and the country was awash in commodity surpluses. The idea of taking environmentally sensitive acreage out of agricultural production and planting it in native grasses and trees to control erosion, improve water quality and provide wildlife habitat was a popular one.
As of March 28, 34. 8 million acres of U. S. farmland still were enrolled in 10- and 15-year contracts, according to USDA’s Farm Service Agency, which administers the program.
The 2002 Farm Bill capped the program at 39. 2 million acres, or about 10 percent of U. S. cropland, but that cap was reduced to 32 million acres in the recently approved 2008 Farm Bill.
Arkansas has approximately 232, 000 acres enrolled in the program, which equates to less than 5 percent of the 6. 5 million acres of soybeans, rice, cotton, wheat, corn and grain sorghum that were harvested statewide last year. Arkansas ranks 28 th in program enrollment, with fewer acres than each of the six neighboring states.
The state’s enrollment peaked at a little more than 246, 000 acres in 1994, when federal outlays statewide for the program reached almost $ 12. 3 million. The expiration of program contracts in the state will exceed 25, 000 acres in 2010 and 2018, with most other years from 2009 to 2021 ranging from 10 million to 17 million acres expiring.
Most of Arkansas’ program acreage is concentrated in six eastern counties — White, Prairie, Jefferson, Lonoke, Chicot and Arkansas — and the majority of the state’s program land is planted in hardwood trees.
Since 1985, several additional federal conservation programs have been created, including the Wetlands Reserve Program, which has 190, 000 acres enrolled in Arkansas; Environmental Quality Incentives Program, with almost 190, 000 acres in the state; Conservation Security Program; Healthy Forest Reserve Program; and the Wildlife Habitat Incentives Program. These programs, which tend to involve long-term easements and one-time payments, are administered by USDA’s Natural Resources Conservation Service. To be eligible for the Conservation Reserve Program, land must have a recent farming history, with crops grown in four of the past six years. Participants receive technical assistance, reimbursement for most of the cost of grass- and tree-planting, and annual rental payments for 10 years for grassland and pine trees, and 15 years for hardwood trees. Rental rates, which average about $ 50 per acre nationwide, depend on the soil type. To break a contract, a landowner must refund, with interest, all rental and cost-share payments that have been received and pay a 25 percent penalty on one year’s rental payment.
CALLS FOR CHANGE Many groups have been pushing the Bush administration to allow “early opt-outs” from program contracts without penalty, among them the Alliance for Agriculture Growth and Competitiveness, a group representing the beef, poultry, pork, diary, grain and feed industries. The group has been unsuccessfully lobbying the Agriculture Department since 2005.
“We’ve focused on trying to allow contract holders of non-environmentally sensitive cropland in the Conservation Reserve Program to have the option to react to market forces to come out of the contract early without a penalty,” said Bill Roenigk, chairman of the alliance and chief economist at the National Chicken Council.
In the early years of the Conservation Reserve Program, many acres of suitable cropland entered the program along with environmentally sensitive land, Roenigk said.
“We think the ‘conservation’ part is still good,” but “in today’s market, good non-environmentally sensitive cropland needs to come out of the ‘reserve’ and be put into production,” he said.
Roenigk estimates that if penalties were eliminated, 7 million to 8 million acres of farmland would leave the program, most of it Upper Midwest grassland that could produce corn and soybeans, helping to moderate the rising cost of animal feed.
Roenigk said he was encouraged by Schafer’s recent decision to allow haying and grazing on some program land, making available about 18 million tons of forage worth $ 1. 2 billion.
Opposing the alliance, however, are a number of groups including Ducks Unlimited, Pheasants Forever and the National Wildlife Federation.
The Conservation Reserve Program has been successful in breeding 2. 2 million waterfowl annually in the so-called prairie pothole region of North Dakota, South Dakota, Montana, Minnesota, Nebraska and Iowa, said Craig Hilburn, manager of conservation programs in Arkansas and Missouri for Ducks Unlimited.
Although changing the program to allow landowners to drop out early with no penalty would probably trigger few defections in Arkansas, such a change still could hurt the state, Hilburn said.
“Arkansas shoots over a million ducks a year,” many of which are bred in the prairie pothole region where potential Conservation Reserve Program defections are expected to be among the highest nationwide, he said.
During the past year, for example, contracts for about 1. 7 million acres in North Dakota expired, and farmers pulled about 400, 000 of those acres out of the program so they could plant wheat and corn. Those mostly grassland acres represented about 12 percent of North Dakota’s more than 3 million acres enrolled in the program.
Fewer ducks would hurt all Arkansas “businesses that rely on waterfowl hunting,” Hilburn said.
Many farming groups, such as the USA Rice Federation, have taken no position on the question of allowing penalty-free early-outs from the Conservation Reserve Program.
Others oppose the idea.
Bob Callanan, spokesman for the American Soybean Association, said his group “is not advocating that the USDA lift the restrictions on ‘early-outs’ for the CRP, but we did support the changes that have been made in the Farm Bill, which will reduce the number of CRP acres as those contracts are renewed.” Information for this article was provided by James MacPherson of The Associated Press.
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