Wednesday, February 8th, 2023
Wednesday, February 8th, 2023

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Johanns departs from CRP ‘early out’ option

By Tim
Spielman
Associate Editor

Washington – It’s been more than a decade since landowners under
contract with the federal government to set aside land as part of
the Conservation Reserve Program were allowed to – without paying
back money already paid to them – opt out of the program.

But recent demand for corn – to replenish world supplies and to
potentially quench the thirst for ethanol production – made early
withdrawal, without the financial consequences, a possibility.

Late last month, Interior Secretary Mike Johanns ended that
speculation, following a report that indicated corn production
would increase significantly, without the need to bring set-aside
land back into crop production.

In a statement dated March 30, Johanns said, ‘Today’s report on
planting intentions suggests that market forces are inspiring
changes that will help to meet the high demand for corn. According
to the report, U.S. farmers intend to plant 15 percent more corn
acres, 90.5 million acres, in 2007. This would be an increase of 12
million acres over 2006 and the largest number since 1944.

‘In light of this information, the U.S. Department of
Agriculture will not offer penalty-free early releases from
Conservation Reserve Program contracts at this time,’ Johanns said.
‘As circumstances exist today, I would not anticipate a change in
this policy in 2007.’

Groups like Ducks Unlimited ‘reacted positively’ to Johanns’
decision ‘to let landowners determine the use of their lands based
on market demands rather than eliminating investments made with
taxpayer funds under the Conservation Reserve Program acres.’

Last month, according to DU, the USDA indicated it ‘would not
charge a penalty for early contract releases to allow the
conversion of CRP acres to corn to meet national demands for
ethanol.’

Typically, if a landowner wanted to terminate a CRP contract, he
or she is required to repay all payments already received from the
government, along with interest accrued from the date of
disbursement, according to Susan Butler, of the Wisconsin Farm
Service Agency. The landowner also must make a one-time payment of
25 percent of the annual rental payment on the CRP acreage.

‘It can be quite costly,’ said Greg Anderson, ag program
specialist for the Farm Service Agency in Minnesota. But, he added,
‘That’s the decision you must make if you’re going into a 10- or
15-year contractual agreement with the U.S. government.’

In the mid-1990s, when the government allowed penalty-free
withdrawal from the program, it had little effect in Minnesota,
Anderson said. The state is now home to about 1.85 million CRP
acres.

Butler said the recent high corn price, coupled with – and the
result of – increased demand, resulted in a tug of war between ag
and conservation interests about CRP acres.

‘There have been a lot of people saying there are plenty of
acres in CRP that could and should go back into production,’ she
said.

DU officials disagreed.

‘Allowing early releases would send the wrong message to the
American public about the conservation value of lands enrolled in
the program,’ Jeff Nelson, director of DU’s Great Plains regional
office, said in a news release.

Johanns’ statement was a result of the National Agricultural
Statistics Service report, ‘the 2007 Prospective Planting’
report.

The decision by the USDA doesn’t mean CRP may not be tapped in
the future if the need for corn increases.

‘While I believe today’s report on planting intentions will help
to ease concern about our corn supply, I will continue to closely
monitor the situation,’ Johanns said. ‘I will not hesitate in the
future to make adjustments to USDA programs if needed to achieve a
balance in the agricultural sector.’

DU said it expected the issue to come up again.

‘ Š as the corn ethanol industry continues its rapid growth, we
expect to face the same questions over the next several years,’
Nelson said.

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