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Conservation Reserve Program:
|Year||Land Leaving CRP
Source: Analysis of the Conservation Reserve Program. Economic Research Service. April, 1994, p. 8.
The most recent large survey of contract holders' plans for enrolled lands after their contracts expire, conducted by the Society of Soil and Water Conservation in late 1993, found that holders intended to return 63 percent of their enrolled acres (about 23 million acres) to crop production and keep 23 percent in grass. Every other use choice attracted less than 5 percent of the responses. Of the land returning to crop production, more than two-thirds would be planted to a crop. Less than one-quarter would be rented or leased. The survey also asked holders how changing commodity prices would alter their current plans. Respondents said that they would return 54 percent of the land to crop production if crop prices were 20 percent lower. But, they would return 74 percent to crop production if crop prices were 20 percent higher.
While these data provide a snapshot of holder intent, changing conditions and individual circumstances and expectations are likely to alter the thinking of many during the several years that contracts expire. Some of these conditions include implementation of trade agreements, and changes in international markets, domestic commodity programs, and policies which encourage continued land retirement (or farm program participation). In general, high prices or expanding markets will attract more interest in cultivating these acres, while shrinking markets or low prices will encourage more producers to keep the land in long-term conserving uses. These decisions are likely to vary from commodity to commodity and region to region, as well as year to year.
CRP was enacted in the 1985 with bipartisan congressional support, and it continues to enjoy strong support today. It was a program that few opposed because it encouraged farmers to retire highly erodible and environmentally sensitive land, a goal endorsed by environmentalists, and to reduce plantings of major commodities, thus firming up prices and pleasing traditional agricultural groups. It also stabilized land prices and helped defuse a major farm credit crisis. And while analyses showed that the program would be a net expense to the Federal treasury, supporters effectively argued that it also would lower Federal commodity program outlays, diffusing concerns about the magnitude of anticipated Federal expenditures.
Anticipating that the initial contracts would expire before action on the 1995 farm bill was completed, discussions of what to do next started during the 103rd Congress. The House Committee on Agriculture's Subcommittee on the Environment held several hearings on the CRP. Subcommittee Chair Tim Johnson of South Dakota formed a bipartisan group with members from both houses to work for extension of the program after 1995.
An initial concern of these congressional supporters was that the Congressional Budget Office had not included extension of the CRP in its baseline budget estimates. If the CRP is not in the baseline, then all new CRP contracts could be funded only by reducing funding in other Federal farm programs. Provisions in the farm bill allow the Secretary to extend contracts after they expire, but CBO had stated that current budget rules do not allow it to include funds for new contracts unless the Department announces that it plans to extend the program. On December 14, USDA announced several initiatives to extend contracts and to target them to more environmentally sensitive areas. CBO's response to this expression of intent should appear in the first baseline, to be issued by February 15, 1995.
Farm groups in many States and many national farm organizations are recommending continuation of CRP with little modification. The Soil and Water Conservation Society, one of many organizations to issue a policy position favoring reauthorization, convened a meeting on status and options in February 1994. At this meeting, Senator Lugar, incoming Chair of the Senate Agriculture Committee, made a specific set of reauthorization recommendations.
The basic policy question is whether the program is to be continued. If it is not continued, then contracts will end over the next several years and some portion of the land currently retired will return to production. A large portion of the environmental and conservation benefits will likely be lost, and Federal farm program costs will likely decline. If Congress decides to continue the program, three questions are likely to be at the core of the debate: what should be the size and characteristics of the reserve? what incentives should be included to keep land out of production after the contracts expire? and can a more certain funding mechanism be established?
Size and Characteristics of the Reserve
Some, especially farm groups, argue that all or most land currently in the reserve remains eligible in a future program. They would like to have a large reserve, and to emphasize traditional agricultural resource values, especially erosion control, or other closely related environmental values, such as water quality. But various commodity groups may identify different mixes of land to maximize the availability of the program to individuals who produce their commodity. Environmentalists, by contrast, will want to concentrate on lands where the environmental benefits are greatest, such as stream buffers or endangered species habitat. Some of these groups, such as wildlife protection advocates, will have more specific goals, in this case for various bird and animal populations.
Mixes of other alternatives could be considered to provide protection more efficiently, or to protect certain environmental values. Many interests have been exploring options for eligible land in terms of both the total acres and the characteristics of eligible acres. Economic Research Service (ERS) staff, researchers at universities, and others continue to identify various options and to map where eligible lands would be concentrated.
Keeping Reserve Lands Out of Production
There will likely be parallel efforts to continue to protect the benefits to agriculture and to the environment after current contracts expire. Several incentives have been enacted to encourage producers to keep these lands out of production, but few believe that these are sufficient. For example, in the 1993 land owner survey mentioned earlier, only 13 percent of the acres would stay in the program if producers were offered half the current annual rental rates. If current rental rates were extended, the survey indicated that 76 percent of the acres would stay in the program. USDA has examined each of 6 policy options under three commodity demand scenarios. The options include:
--Extending or renewing contracts, or holding additional signups;
--Purchasing easements as permitted under the 1990 farm bill;
--Purchasing land currently in the CRP;
--Purchasing the permanent reduction or exchange of acreage base;
--Encouraging conversion to compatible uses before or after the contract expires; and
--Permitting the return of CRP lands to cropping with enrollment into the Water Quality Incentive Program before the CRP contract expires.
Funding the Reserve
The revised program will need a dependable source of funding. More expensive options to the current program, such as extending all contracts or buying long-term easements on a significant portion of these lands will be difficult because of current Federal budget constraints, especially if new contract funding has to come from other Federal farm programs. Current annual appropriations for the CRP are now about $1.8 billion, more than all other agricultural conservation funding combined, and the current program will cost a total of almost $20 billion by 2002. Furthermore, reauthorization does not insure appropriations; Congress has decided to provide no additional funding for further enrollment in each of the last three fiscal years.
The difficulty in securing funding is not only caused by the budget crunch, but also by broader efforts to gradually reduce the Federal role in producer decisionmaking. To ensure that producers keep conservation reserve lands in the condition established under their contracts, either economic incentives and opportunities will have to be strengthened, such as allowing limited commercial use, or penalties for using the land in ways that are detrimental to conservation and the environment will have to be increased. Program supporters will be looking for low-cost approaches, such as allowing certain compatible commercial uses. Enlarged incentives will be difficult to achieve in the current tight budget climate, and environmentalists may see a major role for disincentives to encourage participation as well.
CRP Reauthorization and the Farm Bill Conservation Title
These generalizations barely capture the outlines of what is likely to be a complex and contentious debate over CRP. The outcome of this debate will likely affect development of other conservation and environmental provisions in the farm bill as well. The reserve is likely to offer the most significant source of funding for conservation efforts. If the reserve is not reauthorized with significant funding, then there is likely to be much less incentive for the disparate interests concerned with environmental issues in agriculture to come together to develop new policies or programs within the farm bill on topics such as water quality or endangered species.
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