USDA reports could prompt CRP decision | TSLN.com

USDA reports could prompt CRP decision

Adam Templeton, DTN Staff Reporter

OMAHA (DTN) — The struggle for the acres in the Conservation Reserve Program continues to intensify.

Livestock producers, other end users and some farmers want an “early out,” that is turning CRP acres back over to production without paying the penalty for breaching their contracts. But environmentalists maintain CRP acres are vital to the nation’s wildlife and other natural resources.

Both groups have been pressuring the USDA to pick a side for months.

And with the next Crop Production and Supply and Demand reports due from USDA Friday morning, some experts think an additional announcement about the early release of CRP acres could come soon after.

Brad Lubben, a University of Nebraska-Lincoln extension policy specialist, said the USDA report could be the final word on the CRP debate.

“The likelihood of an early out for CRP is almost a function of the weather forecast, of crop production and supply and demand estimates,” Lubben said. “Everyone’s worried about how much land we can get out (of CRP) — and that decision might happen tomorrow.”

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There are currently 34 million acres enrolled in CRP, and the USDA has been urged to grant early outs to as many as 24 million acres. Between October 2007 and April of this year, only 152,000 acres have been granted early outs, according to Farm Service Agency statistics.

The actual number of acres to be released is still speculative (should acres be released at all), but many experts agree any early release would help lower crop prices.

Terry Francl, an economist for the American Farm Bureau, estimated an additional 10 to 12 million acres could be put into production.

“I think at this juncture, given price levels that we’re dealing with, additional acreage and production in the U.S. would be viewed as a positive by just about all sectors,” Francl said. “Obviously it’s going to have very little impact in the shorter term because it would not have any production impact until the fall of 2009.”

However, the long-term effects could be more pronounced.

For example, Francl estimated converting 3 million acres over to corn production could cause prices to drop by 20 to 30 cents a bushel.

In contrast to views of those like Francl’s, some market analysts don’t think the USDA will release many acres at all.

“I think it’s likely the USDA will respond by doing something, but it will be a very limited response,” said David Kruse, president of Commstock, a brokerage and market analysis firm. “It probably won’t make the end-users clammering for CRP release very happy.”

But regardless of how many acres are released, or what they’re used for, there could be some market impact.

Lubben said many of the acres that could be released were originally wheat acres, and would probably be returned to the same purpose. But extra acres for one crop could help the whole market.

“If you can find me a few more million acres of wheat, then that’s a few million elsewhere that don’t go to wheat,” Lubben said. “That crossover or spillover effect will help corn production.”

Environmentalists are fighting the effort to release CRP acres early. Earlier this week, 15 environmental groups sent a letter to Secretary of Agriculture Ed Schafer urging him to refuse an early release for CRP acres.

“A penalty-free early release of the magnitude you are considering — millions of acres — would deliver a devastating blow to the nation’s soil, water, and wildlife habitat, and significantly increase global warming,” the letter said. “The resulting damages could cost taxpayers substantially.”

The letter went on to credit CRP acres with reducing erosion by hundreds of millions of tons each year, as well reducing pollution in U.S. waterways.

Others point out the land in the CRP is often enrolled because it’s not economically viable to farm those acres in the first place.

“What a lot of people have found, at least the ones we deal with, is a lot of them wouldn’t be able to use that marginal land anyway,” said Kerri Humphrey, a public affairs specialist for the Farm Service Agency. “It’s a tough decision.”

And finally, some feel granting an early out would be like treating the CRP as a bank for farmland, instead of a serious conservation effort.

“The USDA needs to be cognizant of the fact CRP is still a conservation program, not a farm reserve,” Kruse said. “It’s trivializing the integrity of CRP.”

But between flooding and feed prices, some ag producers are arguing the benefits to farmers outweigh the benefits provided by CRP acres.

“We know that CRP has a variety of purposes: environmental, farm income, water and soil quality — all those things,” said Rick Robinson, Environmental Policy Advisor for the Iowa Farm Bureau. “But we’ve got to feed livestock here in Iowa.”

There have been attempts to strike a balance between conservation and ag production.

In May, Secretary of Agriculture Ed Schafer announced farmers would be allowed to hay and graze their CRP lands after the pheasant nesting season ended on August 1.

Justin Dammann, a 28-year-old Iowa farmer with land in Page, Taylor and Montgomery counties, has 100 acres enrolled in the CRP. Like many cow/calf producers, Dammann stands to benefit from the compromise.

An especially wet spring ruined many hay acres and severely restricted the supply available to farmers.

“Our acres aren’t enough to get us out of trouble as far as our hay needs,” Dammann said.

While most farmers have praised the early grazing/haying system, some feel waiting until August may be a poor move.

For starters, the delay could hurt the quality of the forage.

“Now you have long-growing green grass,” said Craig Lang, IFB president. “But if you wait 30 days, that nutrient value is virtually diminished.”

And Schafer’s policy may not even last until its August start date. This week, a U.S. District Judge countered the secretary’s decree by issuing a temporary restraining order to stop haying and grazing CRP acres.

Seattle judge John C. Coughenour has suspended the emergency haying and grazing program until a full hearing on July 17.

“We will lose a larger percentage of livestock producers than birds if we let a Seattle judge substitute his opinion for that of the people,” said Iowa Representative Steve King in a press release about the ruling.

Adam Templeton can be reached at adam.templeton@dtn.com.