Saturday, January 28th, 2023
Saturday, January 28th, 2023

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Study: Loss of CRP could prove costly

By Tim Spielman Associate Editor

Washington – At a time when the nation’s top conservation
program is being threatened by potential federal budget
restructuring and increased grain demand from alternative energy
development, a new study shows the Conservation Reserve Program may
be a real bargain.

In fact, increasing the number of acres enrolled in CRP could
actually save millions of dollars, the study found.

Conservation groups say they hope to use the University of
Tennessee Agricultural Policy Analysis Center’s study when Congress
takes up renewed farm bill discussion early next year. The study,
said Lynn Tjeerdsma, Theodore Roosevelt Conservation Partnership
policy initiatives manager, ‘will be good ammunition showing why
the program shouldn’t be reduced.’

Besides the TRCP, groups like the American Corn Growers
Association and the Association of Fish and Wildlife Agencies
supported the study. According to the University of Tennessee’s
APAC, it’s mostly a matter of supply and demand.

‘While CRP was not primarily designed to be a supply management
program, it clearly has an impact on supply and thus crop prices,’
the report says.

In other words, a loss of CRP and a return to greater crop
production likely would result in a noticeable reduction in the
price farmers receive for what they produce. A program meant to
improve wildlife also promotes higher cash crop prices.

There are 34.7 million acres enrolled in the CRP program. APAC
estimates that if CRP contracts are eliminated as they expire, 37
percent of today’s 34.7 million CRP acres, or 12.6 million acres,
will return to crop production by 2015. Nearly three-fourths of
that land will again produce corn, soybeans, or wheat.

APAC’s model predicts a surge in production – supply – will
reduce corn to 31 cents per bushel below the USDA’s projected
baseline, wheat to 63 cents per bushel below the USDA’s baseline,
and soybeans to 90 cents per bushel below the USDA’s baseline.

‘APAC estimates the three major crops will lose at least $6.9
billion in net market returns in 2015 if CRP acres flow back into
crop production,’ the study concludes.

Furthermore, the APAC estimates federal payments for the eight
major program crops will rise nearly 34 percent, or $3.8 billion,
over USDA’s estimate for 2015 farm program spending. During the
2007-2015 study period, the net effect of eliminating the CRP
program is an additional cost to the government of $32.6 billion,
according to the University of Tennessee group.

On the flip side, the APAC model also indicated that raising CRP
acreage to the allowed 39.2 acres would, by 2015, raise net farm
income by $600 million, and, should the cap be set at 45 million
acres (like it once was), net farm income would increase by $1.7
billion.

‘At the same time, these expansions would result in net savings
to the federal treasury over the 2006-2015 study period of $6.3
billion and $12.7 billion, respectively, in farm program spending,’
the study says.

Tjeerdsma says the TRCP farm bill working group will push for
the 45 million-acre cap.

Larry Mitchell, CEO for the American Corn Growers Association
and a former deputy administrator for the USDA, said the results of
the study came as a surprise.

‘We didn’t expect to see that sort of savings for taxpayers,’ he
said. Mitchell added that the APAC used ‘conservative’ numbers.
Additional savings, he said, could be realized through less
spending on crop disaster programs and crop insurance
subsidies.

‘The CRP is critical for a number of reasons, and the study adds
two more,’ Mitchell said. ‘One, it saves money. Two, it has become
the sole de facto supply management plan available for
agriculture.’ While what’s needed on the supply side of the corn
equation can be argued, according to Mitchell, ‘The challenging
part is putting a 10- to 11-million-bushel corn crop into an 8- to
9-million-bushel market.’

He said the study also considered the potential increase in
demand that might be created by ethanol production.

While discussions have, at least for now, diminished somewhat
regarding CRP conversion for bio-fuel advancement, ‘I don’t think
the danger has decreased,’ Tjeerdsma said.

The upcoming election could lead to a shift in power, which in
turn could have a pivotal effect on the upcoming farm bill, likely
to be discussed in earnest this spring, and approved later in the
summer of ’07.

Also playing a role in the future of CRP, and farming, will be
new technology that allows the tapping of switchgrass and other
perennials as alternative energy sources.

Originally touted as a conservation tool which, by removing
‘marginal’ ag land from production would reduce soil loss on highly
erodible soil, subsequent farm bills expanded CRP to include goals
such as reduced soil sedimentation, increase water quality, and
enhance wildlife habitat. Add to that an economy boon to local
economies.

‘The environmental and wildlife benefits of the CRP have been
well-documented, said Pheasants Forever’s Dave Nomsen, co-chair of
the TRCP’s Agriculture and Wildlife Working Group. ‘And CRP
contributes significantly to the $730 billion annual outdoor
recreation economy. This study points out that a CRP enrollment of
45 million acres would not only dramatically enhance the
environment and wildlife habitat, but a CRP enrollment at this
level also makes sound fiscal sense as well.’

Not all groups see it that way. Last month, Iowa Farm Bureau
Federation delegates voted to oppose CRP entirely when the next
debate begins. As of June, Iowans had enrolled nearly 2 million
acres in the program.

Craig Lang, Iowa Farm Bureau Federation president, said CRP
precludes young farmers and ranchers from getting started in
agriculture, in part because in southern Iowa, grazing land is
enrolled in CRP. ‘CRP is in competition with good agriculture,’ he
said in a radio broadcast.

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