Soaring commodity prices, the likes of which not even the most bullish forecasters could have conjured just a few years ago, and the outlook for continued strong demand for the next several years are creating another quandary for many farmers who have acres enrolled in government conservation programs.
Now in the midst of the biggest agricultural boom since the fencerow-to-fencerow days of the 1970s, many farmers are taking a hard look at the millions of acres they idled in the Conservation Reserve Program, Wetlands Reserve Program, and other government plans enacted a decade later when the boom was but a memory, surpluses were mounting, and there were pressures on Congress and the USDA to get land out of production.
The average $50 per acre annual payment for the marginal land that made up the bulk of acres going into the programs on 10-year and 15-year contracts wasn't that bad when corn was only $2, wheat sub-$3, and soybeans $5 to $6.
It's a different story now. A lot of farmers are saying that with crop prices through the roof and land values pushing upward, there just isn't enough money in conservation payments to keep land idle that could be generating more than $50 per acre.
Last Sept. 30, contracts expired on 5.1 million acres of CRP land.
A bit more than half, covering 2.6 million acres, were renewed but 2.5 million acres left the program, opening them to potential production this year.
At the end of 2007, the USDA said there were 753,000 CRP contracts in force, encompassing 34.6 million acres; the average farm received about $4,100. The next expiration date is Sept. 30 for contracts totaling 1.3 million acres, and in September 2009 contracts on another 3.9 million acres will expire. If crop prices remain sufficiently strong, a good chunk of those acres could be planted.
There had been some speculation, given the pressures for more grains production, that the USDA or Congress would allow some early opt-outs from CRP contracts for the 2008 crop year, but that was shot down in January by then Acting Secretary Chuck Conner.
If that stance continues, many believe the government will have to significantly increase the rents in order to get landowners to re-up when their contracts expire.
Both the Senate and House, in the seemingly eternal wrangling over a new farm bill, included nearly $5 billion additional for conservation programs (whittled to $4 billion in the latest version).
But President Bush, who hasn't exactly been farmer-friendly despite agriculture's overwhelming support for him, has threatened to veto what he terms “massive, bloated” legislation. There has also been talk of scaling back the 39.2 million acre cap on CRP to 32 million acres.
Aside from the soil, water, and atmospheric benefits from conservation programs, wildlife organizations are concerned that a significant exodus of land from CRP will have an adverse impact on wildlife habitat.
“As a nation, we cannot afford to see these programs cut or scaled back,” says Don Young, executive vice president for Ducks Unlimited. “These programs provide tremendous societal and economic benefits to all Americans.”