What Would the Elimination of the Conservation Reserve Program Do to Federal Spending and Commodity Prices?

On September 7, 2006, the Environmental and Energy Study Institute (EESI) held a Congressional briefing about the economic implications of the possible elimination of the Conservation Reserve Program (CRP). The University of Tennessee’s Agriculture Policy Analysis Center (APAC) released a research study titled, Analysis of the Economic Impacts on the Agricultural Sector of the Elimination of the Conservation Reserve Program, which examined the impact of the non-renewal or non-extension of Conservation Reserve Payments (CRP) contracts, on crop prices, net farm income and government payments.

The Conservation Reserve Program (CRP), as reauthorized by the Farm Security and Rural Investment Act of 2002 (P.L. 107-171), allows for the enrollment of up to 39.2 million acres of farmland. The CRP was established in 1985 as a voluntary program that allowed farmers to retire highly erodible land from production and also ensured a secure income in a time of low commodity pricing. As the program grew, however, farmers were able to retire land to stop further degradation of other environmentally sensitive areas of their land. Some of these environmental aspects include wetland acreage, runoff into waterways, wildlife habitat, etc. Through fiscal year 2005, 34.9 million acres were enrolled into CRP. This amounted to $1.6 billion in annual rental payments to land owners and operators. During their 5-10 year contract, CRP participants practice any number of conservation methods including grass and tree planting and wildlife cover. Many agree that CRP is a successful program, but there is growing concern about the continuation of the program due to the expiration of 26 million acres of CRP contracts from 2007 – 2010 and budgetary pressures. Briefing speakers included:

Daryll Ray, Director of the Agricultural Policy Analysis Center at the University of Tennessee
 

Discussions on the reauthorization of the 2002 Farm Bill have brought to light significant issues with our nation’s agriculture policy. A tight budget, international trade agreements, rural development, conservation efforts and now energy production will determine the direction of the next Farm Bill. Many policy makers, environmentalists and farmers are looking to the growing biofuel industry as part of the solution to some of our deepest agriculture problems. Will biofuel production have any affect on commodity prices if the Conservation Reserve Program were to be eliminated?

This briefing was held in conjunction the with American Corn Growers Association; Pheasants Forever; National Farmers Organization; American Agriculture Movement; Association of Fish and Wildlife Agencies; Theodore Roosevelt Conservation Partnership; and Wildlife Management Institute