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FSA: Corn prices not a major aspect in CRP re-enrollments

By ANN HINCH
Assistant Editor

WASHINGTON – Nearly 89 percent of farmers and producers with land in the Farm Service Agency’s (FSA) Conservation Reserve Program (CRP) whose contracts expire this year have elected to re-enroll.

And of those with contracts ending between 2008 and 2010, more than 83 percent so far have renewed their land for inclusion in CRP.
In Farm World’s seven states, these figures are lower: Just over 66 percent of agricultural landowners are re-enrolling between 2008 and 2010, while three-quarters of those whose contracts are up this year have re-enrolled.

USDA Secretary Mike Johanns referenced speculation by some industry observers that re-enrollment might be down because of the high market prices corn is fetching. But John Johnson, FSA deputy administrator for farm programs, said the numbers are just slightly higher than his agency anticipated.

There is a perception, he noted, that CRP has under its wing vast stretches of highly-arable farmland that could be better used for crops. “It really is a much more fragile set of lands,” he explained. “The more environmentally-sensitive land scores higher (for inclusion), and that is not going to be your best corn-growing land.”

That perception wasn’t always wrong. When the 1985 farm bill established the CRP, it was primarily to cut down on erosion and control the supply of agricultural commodities.

In 1996, Johnson said CRP’s focus was changed from controlling supply to protecting land for itself and as wildlife habitat, and at the time, two million arable acres were taken off the program and replaced with an equal amount of poorer-quality lands. The scoring index came into play in the late 1990s.

“We would like to think this is a reflection of the changes we made back in 1996,” he said of higher-than-expected re-enrollment. “And I think it says something about the American farmer’s conservation ethic.”

“I think it’s a testament that they’re more interested in the long-term conservation gains than in pulling it out for the (corn) market price,” said Bill Chase, chairman of the Production and Stewardship Action Team of the National Corn Growers Association.

Farming in Wolsey, S.D., Chase pointed out many CRP acres in his state belong to absent landowners, and guessed this may be the case elsewhere. That doesn’t mean he objects, especially since between eight and 10 percent of his land is also in CRP.

“It was just a better place for (some land), in the CRP,” he explained. “Some of this land should’ve never been farmed in the first place, through the Seventies.”

Chase believes high corn prices are fleeting and wonders if some farmers are keeping their poorer-quality land in CRP, only to remove it later if and when there is a way found for cellulosic ethanol to be profitable. Woody plants suited to this fuel, such as switchgrass, thrive in soil considered bad for other crops.

Besides, CRP land isn’t entirely fallow. Plenty of South Dakotans charge people to come onto their land to hunt pheasant and other legal game. “There’s more than one way to make a living on a piece of land,” Chase observed.

Of the 36.7 million national acres in CRP, about eight percent are under continuous protection and not on standard 10- and 15-year contracts. Of the other contracted 33 million acres, 15.7 million are set to expire this year, and in 2008-2010, 12.1 million. With the exception of some who were given application extensions, owners who committed to re-enroll had to pay in 2006 a compliance fee of between $45-$500, depending on the size of their spread.

According to USDA, of the owners not re-enrolling 4.6 million acres, 1.4 million are located in major corn-producing states.
Johnson said farmers who enroll their land receive an annual per-acre payment based on their land’s environmental-sensitivity score. A higher score indicates less suitability for growing, such as steep hillsides vulnerable to erosion or an area receiving little precipitation. Eligible wetlands are highly scored, as well.

Governmental payments to the owners of 33 million acres each year total approximately $1.8 billion. Johnson explained a committee in each eligible county across the nation helps determine the value of its farmlands and Midwestern farmland usually scores the lowest because of its rich soil. This may help explain lower re-enrollment in this region.

“We don’t want to have Uncle Sam unfairly competing for land, but on the other hand, we don’t want to pay less than what you could get” leasing the property, Johnson said.

This farm news was published in the March 21, 2007 issue of Farm World, serviing Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.

3/22/2007