Corn or conservation? High grain prices could lead to fewer acres entering CRP

COLUMBUS — The current strong grain markets are likely to limit U.S. farmers’ interest in putting ground in the Conservation Reserve Program, even with a signing bonus increase — to $150 an acre from $100.

In a move to get farmers to enroll up to 1 million new acres of land into the federal Conservation Reserve Program, the U.S. Department of Agriculture has announced it would increase a one-time signing bonus for the program to $150 per acre from $100.

The increase will be available only to owners of approved land that features wetlands and benefits duck nesting habitat and certain animal species, including upland birds, the USDA said.

Is it enough?

But the increase may not be enough incentive to get more growers to forgo planting crops that have fetched record prices in recent months, according to Ohio State University ag economist Brent Sohngen.

That’s because the offer comes at a time when high crop and land prices are enticing more farmers to put the land into production.

Currently some 30 million acres are in the program, but 6.5 million acres are set to expire from conservation programs this fall.

Sohngen said with crops fetching higher prices — soybeans increased 9.5 percent last month to $13.13 a bushel — more farmers are likely to consider returning their farmland to crops rather than participating in CRP.

Record prices

With crop prices at historic highs due to increased global food demands and higher commodity prices that have caused land values to rise, more farmers are finding that they can make more profit by renting their land to other farmers for production, said Sohngen.

“You’ll probably be lucky to get 70 to 80 percent of land back into the program this year as more and more farmers are likely to take the risk and farm the land,” he said.

“It’s become a real tradeoff for some — have the guaranteed, stable payment to keep the land in CRP or take a chance to get a higher payment farming it.”

April 6 deadline

In Ohio, some 338,117 acres of farmland are currently enrolled in the conservation program, said Christina Reed, spokeswoman for the Ohio Farm Service Agency. Of those, 26,561 acres are set to expire this year, she said.

The general sign-up program for farmers who want to put land into CRP is from March 12 to April 6.

Also new this year, USDA said that producers whose land meets eligibility criteria for wetlands and certain animal species can enroll in the program at any time.

Land is chosen for CRP using an Environmental Benefits Index that considers wildlife, water, soil, air, enduring benefits and cost, to determine the environmental benefit of the land, according to Reed.

Program impact

One reason land is set aside in the conservation program includes efforts to reduce erosion, which can cause soil runoff that results in chemicals such as nitrogen and phosphorus getting into streams, rivers and lakes, the USDA said.

The federal agency estimates that the program keeps some 600 million pounds of nitrogen and some 100 million pounds of phosphorus from making their way into waterways.

The conservation program also benefits the creation of wildlife habitat by the increase in planting of grasses, trees, wildflowers and other vegetation, said Marne Titchenell, an OSU Extension wildlife specialist.

More than money

Non-financial considerations are also often important for farmers and landowners when deciding to enroll in CRP, said Ohio State ag economist Carl Zulauf.

These considerations include whether to take on the task of finding and negotiating with a farmer on rental terms as well as the environmental benefits achieved by being in the program, he said.

Zulauf said a broader policy question exists. “What is the tradeoff between environmental advantages from CRP versus additional supply of commodities from farming land in CRP?

“Additional supply could benefit consumers, especially the poor, through lower food prices, so the question becomes how many acres should the U.S. withdraw from production to put in CRP?”

This question will likely be an issue in the 2012 farm bill debate, especially if commodity prices remain high, Zulauf said.

And Sohngen said if the U.S. refocused efforts on CRP to get the right land enrolled in the program, “we could do just as good a job of conservation with fewer acres.”