Agriculture Department officials and some outside experts expect landowners to sign up for the land-idling Conservation Reserve Program in the largest numbers in at least a decade due to the slow farm economy.
It’s not clear, however, how much interest will be lowered or raised by a series of changes made to the 34-year-old program by the 2018 farm bill, including a new cap on payment rates that was intended in part to discourage landowners from taking valuable cropland out of production.
The general signup for CRP set to begin in December will be the first in four years and comes as farmers continue to struggle with low prices and commodity prices, issues that predated the ongoing trade war with China.
Enrollment could easily eclipse the 4.3 million acres enrolled in 2010, the largest in recent history, although it won’t come close to the 16.5 million acres accepted in 1997, the largest general signup since the program was created in the 1985 farm bill.
There is a lot of room for additional acreage, far more than there was when the last signup started in late 2015. Existing contracts on 800,000 acres of land were up this fall and contracts on an additional 5.2 million acres are scheduled to expire in September 2020.
As of the Farm Service Agency’s latest report in August, 22.35 million acres nationwide were enrolled in CRP, well under the existing cap of 24 million acres, and that limit is due to rise to 25 million acres in fiscal 2021, when contracts in this upcoming enrollment will take effect.
“With the amount of expiring contracts that just happened as well as what will happen in September 2020, there will be an opportunity for a fairly significant general enrollment CRP, maybe one of the largest in the last decade,” said Bill Northey, USDA’s undersecretary for farm production and conservation programs.
Dave Miller, chief economist at Decision Innovation Solutions, an agricultural consulting firm based in Ankeny, Iowa, said that given the “continued low prices and trade issues, i think there will be good interest in the CRP general signup.”
Jeff Swanhorst, CEO of St. Paul Minn.,-based AgriBank, a regional funding bank that serves Farm Credit associations across the Corn Belt west to Wyoming and down to Arkansas, also said he expected “there will be a lot of interest in putting land into the CRP program” because of the relatively low commodity prices.
But another factor that could encourage enrollment is a change made in the 2018 farm bill to ensure that acreage is more evenly distributed among states. The provision ensured that future enrollments would be based upon historical state enrollment rates.
That was a big win for South Dakota in particular: During the last general signup, South Dakota landowners applied for contracts on 42,352 acres, but only 101 were accepted due to the nationwide cap of 24 million acres. Nationwide, landowners applied for CRP contracts on nearly 1.9 million acres of land during that enrollment period, but only 407,416 acres were approved.
FSA has yet to release the new rule for the program that is expected to detail the state acreage allocations, but they are required to be 60% of a state’s historical enrollment. That will ensure that landowners are only bidding against other landowners in their own states, rather than against each in their own states rather than nationally, said Jim Inglis, director of governmental affairs for Pheasants Forever.
The signup “will be a little bit more fair and spread out throughout the country," he said.
According to FSA's August report, South Dakota had 1.14 million acres enrolled in CRP as of August, the seventh largest amount behind Texas (2.81 million), Kansas (1.94 million) Colorado (1.84 million), Iowa (1.75 million), North Dakota (1.3 million) and Washington (1.19 million).
The CRP rule is still under final review at the Office of Management and Budget.
The caps on payment rates in the 2018 is expected to discourage some landowners from signing up for CRP. The question is how many and where. Under the bill, payment rates cannot exceed 85% of the county rental rates for general-signup acreage and 90% of the rental rates for continuous signup contracts.
The caps helped cover the cost of raising the CRP acreage limit - it rises gradually to 27 million acres by 2023 - but also was aimed at ensuring that high-quality land isn’t taken out of production, something that became an issue in Iowa and a few other states in recent years. In some cases, owners could get paid more for taking their land out of production through CRP than they could for renting it for growing corn and soybeans.
CRP payment rates “do matter and it (the 85% cap) will probably impact interest” in the program this time, said Northey. While CRP rates are often lower than local rents, in cases where the cap does lower potential payments "we’ll have producers who decide that difference is enough that they decide not to participate,” he said.
Another unknown is how many acres USDA will actually accept during the general signup. The expiring acres include some enrolled under the continuous signup, which is limited to stream buffers and other land is that particularly important environmentally. Some 242,736 acres were enrolled under the continuous signup conducted this year.
The farm bill also set aside 2 million acres for grasslands, starting in fiscal 2021, up from the current grasslands allocation of 1 million acres. A signup for the grasslands portion is expected next year.
The bill also created a new initiative known as CLEAR, for “Clean Lakes, Estuaries, and Rivers,” to target land under continuous enrollment for acreage that can reduce sediment and nutrient loading. There also is a pilot program, known as CLEAR 30, to enroll expiring CRP land into 30-year contracts.
For more news, go to Agri-Pulse.com.