The Conservation Reserve Program

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The Conservation Reserve Program

2002 Farm Bill Education ConferenceKansas City, MissouriMay 20-21, 2002

James JohnsonMontana State University

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What is CRP?• CRP is a voluntary long-term cropland

diversion program, although under the current Act contract holders may elect partial economic use.

• CRP relies upon positive economic incentives to entice owners, operators, and landlords to convert cropland and other environmentally-sensitive lands to a conserving use.

• Usually 10-year contracts are developed although some contracts are up to 15 years in duration.

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The Legislature History of CRP

• Established by the Food Security Act of 1985.

• Re-authorized by the Food, Agriculture, Conservation, and Trade Act of 1990.

• Re-authorized by the Federal Agriculture Improvement and Reform Act of 1996.

• Re-authorized by the Farm Security and Rural Investment Act of 2002.

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CRP Goals Under the Food Security Act of 1985 (FSA)

• Primary Goal:– Reduce soil erosion

• Secondary Goals:– Protect the long-term capacity to produce food

and fiber– Reduce sedimentation– Improve water quality– Create fish and wildlife habitat– Curb production of surplus commodities– Provide farm income support

Initially, part of the emphasis was on assisting producers to meet HEL compliance.

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CRP Acreage Targets and Enrollment Under FSA

• Target: 40 to 45 million acres

• Enrollment (in 1990): 33.9 million acres

• Percent of Target: 75 to 85

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CRP Enrollment by Signup Period Under FSA

Enrollment #

Acres(Million)

Average $/acre

1 0.75 42.06

2 2.77 44.05

3 4.70 46.96

4 9.48 51.19

5 4.44 48.03

6 3.38 47.90

7 2.60 49.71

8 2.46 51.04

9 3.33 50.99

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CRP Implementation Rules Under the FSA

• Owners and operators submitted bids on HEL cropland with appropriate cropping history.

• Bids less than or equal to the pool (and then the county-level) maximum acceptable rental rates were accepted. Maximums were known after the completion of bidding.

• Tenant history was protected.

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CRP Goals Under the Food, Agriculture, Conservation, and

Trade Act of 1990 (FACT)

• Primary Goal:– Emphasis on those goals specified in the prior act

that would contribute most to the public good

• Secondary Goals:– Help cropland owners and operators control

erosion on their cropland– Reduce sedimentation and other surface water

quality problems– Address ground water quality problems

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CRP Acreage Targets and Enrollment Under FACT

• Target: 38 million acres

• Enrollment (in 1995): 36.4 million acres

• Percent of Target: 96

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CRP Enrollments by SignupUnder FACT

Enrollment # Acres(Million)

Average $/acre

10 0.48 53.66

11 1.00 59.37

12 1.03 63.17

13 0.61 53.88

There were no signups held in 1994 or 1995.

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CRP Implementation Rules Under FACT

• Owners and operators submitted bids on HEL and other environmentally sensitive cropland with appropriate cropping history.

• Bids at or below the county-level maximum acceptable rental rate were given further consideration. The county maximums were known prior to bidding.

• Bids were evaluated for environmental benefits that were never explicitly known by the bidder but evidently embodied the goals of surface and ground water improvement and preservation of soil productivity.

• Tenant history was protected.

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CRP Goals Under the Federal Agriculture Improvement and

Reform Act of 1996 (FAIR)

• Primary Goal:– Assist owners and operations in cost-effectively

conserving and improving the nation’s natural resources.

• Secondary Goals:– Protect the nation’s soil, water, and wildlife

resources.– Improve and preserve water quality.– Enhance fish and wildlife habitat.– Protect identified national conservation priority

areas.

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CRP Acreage Targets and Enrollment Under FAIR

• Target: 36.4 million acres

• Enrollment (4/30/2002): 33.9 million acres

• Percent of Target: 93

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CRP Enrollments by Signup Under FAIR

Enrollment # Type of Signup

Acres(Million)

Average $/acre

14 Continuous 0.57 75.41

15 General 16.15* 39.22

16 General 5.92 45.21


18 General 4.99 45.65


20 General 2.25 53.06





*Starting with this signup, there was both new and re-enrolled acreage

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The “General” Signup CRP Implementation Rules Under

FAIR

• Owners and operators of HEL and other environmentally sensitive cropland with appropriate cropping history.

• Each tract had its own maximum CRP rental rate (known prior to bidding).

• Bids at or less than the maximum CRP rental rate for a tract were evaluated through an environmental benefits index mostly known to the bidder.

• Tenant history was not tightly protected.

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The “Continuous” Signup CRP Implementation Rules Under

FAIR

• Was available to enroll selected acreages into certain high priority conservation practices.

• Each tract had its own maximum CRP rental rate (known prior to bidding).

• The bids were not subject to an environmental benefit index evaluation.

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The “Continuous” Signup CRP Implementation Rules Under

FAIR• The acreage must have been determined

by NRCS to be eligible and suitable for any of the following practices; riparian buffers, filter strips, grass waterways, shelter belts, field windbreaks, living snow fences, contour grass strips, salt tolerant vegetation, or shallow water areas for wildlife.

• Practice incentive payments (PIP) from 10 to 20 percent above the soil rental rate were offered for some practices.

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The Conservation Reserve Enhancement Program (CREP)

Under FAIR

•CREP is a joint, state-federal land retirement conservation program targeted to address state and nationally significant agriculture-related environmental effects.

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The Conservation Reserve Enhancement Program (CREP)

Under FAIR

•Primary Goals:– Coordinate federal and non-federal

resources to address specific conservation objectives of the state in a cost effective manner.

– Improve water quality, erosion control, and wildlife habitat related to agricultural use in specific geographic areas.

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More on CREP

• CREP differs from CRP in several ways:– CREP is targeted to specific geographic areas.– CREP is joint undertaking among states, the

Federal government and other stake holders addressing particular environmental issues.

– CREP requires states to establish measurable objectives for progress.

– CREP can be adapted to meet local needs (first CREP program involved 100,000 acres within the Chesapeake Bay drainage).

– States are required to provide 20% of the funds for contracting under CREP.

• Starting with CRP no. 17 there are “continuous CREP acre” enrollments reported.

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Location of CRP Enrollment, October 2000

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Specific Implementation Rules and Considerations Under the FAIR Act—A

starting point for the next 6 years

• Producer Eligibility

• Eligible Land

• The maximum CRP rental rate

• Evaluating the CRP rental rate

• Environmental benefits rating

• Crop acre base preservation

• Landlords and Tenants

• Haying and grazing

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CRP Produce Eligibility

• A producer must have owned or operated the land for at least 12 months prior to the close of signup, UNLESS:

– New owner acquired land as result of death of previous owner

– Ownership change occurred due to the foreclosure

– Circumstances of acquisition provides assurance that the new owner did not acquire land for purpose of CRP enrollment

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Land Eligible for CRP Enrollment

• Cropland that is planted or considered planted to an agricultural commodity 2 of the 5 most recent years which is physically or legally capable of being planted in a normal manner to an agricultural commodity, or

– Certain marginal pasture land enrolled in the Water Bank Program

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The Maximum CRP Rental Rate• For a particular tract, the maximum CRP

rental rate is the weighted average of the three predominant soils in the tract plus a $5 per acre allowance for the annual maintenance costs for the conserving use. See the example:

Soil Map Unit

Acres

Soil Rental Rate

Weighted Rate

Maximum Rate

1234

20 80100200

$37$34$30$18

-------$2,760$3,000$3,600

TotalMaintenanceMaximum Rental Rate

400 xxx $9,360 380 = $24.64 5.00 $29.64

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Evaluating the CRP Rental Rate

• Potential bidders can evaluate the bid maximum against the continuation of their current use—crop production

• The net return above operating costs, including base-related benefits, are considered for each year of the CRP contract

• Then, the sum of the present values of the future net returns is amortized to provide an annuity equivalent to compare with the maximum CRP rental rate

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Environmental Benefits Index Rankings for “Periodic” CRP Signups

EBI Component Points***

Minimum Maximum

Wildlife habitat benefits*

0 100

Water Quality benefits 0 100

On-farm benefits of reduced erosion

0 100

Benefits beyond CRP contract

0 50

Air Quality benefits 0 35

Enrollment in conservation preferences

0 25

Cost of bid* (Unknown prior to bid)*** Factors that can be influenced by management decisions

** The cost factor has usually accounted for abut 1/3 of the maximum possible points.

***More details are available in “Consideration When Bidding Cropland Into CRP,” Dept Special Report #24, September 1997, from website http://www.montana.edu/extensionecon/docs/agpolicy.htm

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Crop Acreage Base Preservation

• Example farm: 4,000 acres of cropland, 2,400 acres of aggregate base, bid 1,800 acres into CRP

• Escrow under FSA and FACT Acts: a.

b. Reactivate after CRP contract expiration

escrowinbaseofacresacres 080,1400,2000,4

800,1

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Crop Acreage Base Preservation (continued)

• Forfeiture under FAIR Act:– CRP bid of: 1,800 acres

Aggregate base of: 2,400 acresTotal 4,200 acresCropland - 4,000 acresBase forfeited 200 acresForfeited base is not retrievable.

• Preservation under FAIR Act:– If 1,600 acres or less are enrolled in CRP,

all base is preserved

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Landlord and Tenant Provisions

• Landlords shall:

– When the acreage offered IS NOT ENROLLED in CRP at the time of signup:

»Provide tenants who have an interest in the acreage offered at the time of signup, an opportunity to participate in CRP.

»Not reduce the number of tenants on the farm as the result of anticipation of enrollment in CRP.

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Landlord and Tenant Provisions (continued)

– When the acreage offered IS ENROLLED in CRP at the time of signup, provide tenants, with an interest in the CRP contract acreage, and opportunity to participate in CRP if either of the following apply:

»The tenant is otherwise involved in farming other acreage on the farm at the time of signup

»The tenant has an interest in acreage being offered on the effective date of the new CRP contract.

[Interest in a CRP contract is not considered farming]

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Emergency Grazing and Haying of CRP

• Farm Service Agency state committees can apply for emergency grazing or haying of CRP acreage on a county-by-county basis.

• The Secretary of Agriculture provides approval if the emergency condition warrants the action.

• To graze eligible livestock producers are required to leave 25 percent of each field or contiguous field or graze no more than 75 percent of the Natural Resources Conservation Service documented stocking rate. Haying has a similar requirement.

• Contract holders are assessed 25 percent reduction on their per acre CRP payments for those acres involved in emergency grazing or haying.

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CRP Under the Farm Security and Rural Investment Act of 2002

• A Disclaimer: USDA resources are going to be directed at expanded and new conservation programs: CRP will receive divided attention. Third-party providers of technical assistance will be used in the implementation of CRP Contracts.– Goals– Target Enrollment– Pilot for Wetland and Buffer Acreage

(continuation)– Managed Harvesting and Grazing– One Year Contract Extension– CRP Cropping History

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CRP Goals Under the Farm Security and Rural Investment

Act of 2002

• Goal:

– Through the 2007 calendar year, CRP shall assist owners and operators of land to conserve and improve soil, water, and wildlife resources of such land. [Sec. 1231(a)]

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Maximum Enrollment for CRP Under the Farm Security and Rural Investment Act of 2002

• The Secretary shall maintain up to 39,200,000 acres in the conservation reserve program at any 1 time during the 2002 through 2007 calendar years (including contracts extended). [Sec. 1231 (d)]

• The previous maximum under the FAIR Act was 36,400,000 acres.

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Pilot Program for Enrollment of Wetland and Buffer Acreage in CRP Under the

Farm Security and Rural Investment Act of 2002

• An owner or operator may enroll in CRP:– A wetland including a converted wetland

that was cropped on at least 3 of the immediately preceding 10 crop years, and

– Buffer acreage that» Is contiguous to the wetland (above)» Is used to protect the wetland» Is of such width as determined necessary to

protect the wetland

– The maximum size of the wetland shall be 10 contiguous acres, of which not more than 5 acres shall be eligible for payment[Sec. 1231 (h)(2A and 2D)]

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Pilot Program for Wetland and Buffer Acreage in CRP (continued)

• The owner or operator shall:– Restore the hydrology to the maximum extent

practicable– Establish vegetative cover (which may included

emerging vegetation in water) [Sec. 1231 (h)(3A and 3B)]

• The Secretary may enroll in the conservation reserve under this section not move than a total of 1,000,000 acres nationally or move the 100,000 acres in any one state.

[Sec. 1231 (h)(2C)]

• Enrollment will be available through continuous signups.[Sec. 1231 (h)(4B)]

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Managed Harvesting and Grazing of CRP Under the Farm Security and Rural

Investment Act of 2002

• The Secretary may permit (managed harvesting and grazing), consistent with the conservation of soil, water quality, and wildlife habitat (including habitat during the nesting seasons for birds in the area).

• In the case of managed harvesting or grazing or harvesting or grazing conducted in response to a drought or other emergency, reduce the rental payment (CRP payment) otherwise payable under the contract by an amount commensurate with the economic value of the activity[Sec. 1232 (a)(7)(A)]

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One-year Contract Extension Under the Farm Security and Rural Investment Act

of 2002

• One-year Extension: In the case of a contract described in paragraph (1) the term which expires during calendar year 2002, an owner or operator of land enrolled under the contract may extend the contract 1 additional year. [Sec. 1231 (e)(3)]

• Farm Service Agency data indicate that approximately 1,723,000 acres are under CRP contracts expiring 9/30/2002.

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CRP Cropping History Under the Farm Security and Rural Investment Act of

2002

• Eligible land will include highly erodible cropland that “the Secretary has determined a cropping history or was considered planted for 4 of the 6 years preceding the date of enactment of the Act.” [Sec. 1231(b)(1)(B)]

• Previously the requirement was 3 of the 5 years preceding the close of enrollments.

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Implementation of CRP

• The current fiscal year “continuous” signup is available.

• The next “general” CRP signup can realistically be expected in early calendar year 2003; 1-year extensions are available for expiring contracts.

• The implementation rules that prevailed under FAIR will generally be continued:

– One change will be the cropping history on eligible land (must have been cropped on considered planted in 4 of the 6 years prior to May 13, 2002.)

• There will be early emphasis placed on rules managed harvesting and grazing of CRP lands.

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The Grassland Reserve Program

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The Grassland Reserve Program

• Authorization• Eligible land• Funding and duration• Maximum enrollment• Method of enrollment• Ranking of applications• Permitted activities• Prohibited activities• Restoration agreement• Easement payments• Rental payments• Federal cost share• Delegation of easements

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Authorization of the Grassland Reserve Program

• The total number of acres enrolled under the program shall not exceed 2,000,000 acres of restored or improved grassland, rangeland, or pastureland.

• The Secretary (of Agriculture) shall establish a grassland reserve program to assist owners in restoring and conserving eligible land.

[Sec. 1238 N (a) and (b)(1)]

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Eligible Land

• Land shall be eligible to be enrolled in the program if the Secretary determines that the land is PRIVATE land that is:

– Grassland, land that contains forbs, or shrubland (including improved rangeland and pastureland); or

– Land that:» Is located in an area that has been

historically dominated by grassland, forbs, or shrubland; and

» Has potential to serve as habitat for animal or plant populations of significant ecological value if the land is:

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Eligible Land (continued)

– Retained in the current use; or– Restored to a natural condition; or

• Land that is incidental to the land described above (but necessary to its management).

[Sec. 1238 N (c) (1, 2, and 3)]

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Funding Level and Duration of the Grassland Reserve Program

•A total of $254,000,000 has been provided for the program.

•The program is funded at this level for the 5-year period of fiscal year 2003 through fiscal year 2007.

[Sec. 1241 (a) (5)]

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Maximum Enrollment

•The total number of acres enrolled shall not exceed 2,000,000 acres of restored or improved grassland, rangeland, and pastureland.

[Sec. 1238 N (b) (1)]

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Method of Enrollment

• The Secretary shall enroll in the program from a willing owner not less than 40 contiguous acres of land through the use of:

– A 10-year, 15-year, or 20-year rental agreement– A 30-year rental agreement or permanent 30-

year easement; or in a State with maximum duration for easements, the maximum allowed by law.

• No more than 40% of the enrollments will be under (i) and no more than 60% of the enrollments will be under (ii).

• Parcels with less than 40 acres may be enrolled when such are deemed to assist in the accomplishments of the program’s goals.[Sec. 1238 N (b) (2) (A and B)]

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Ranking of Easement and Rental Agreement Applications

• The Secretary shall establish criteria to evaluate and rank applications for easements and rental agreements under this subchapter.

• The Secretary shall emphasize support for:– Grazing operations– Plant and animal diversity; and– Grassland, land that contains forbs, and

shrubland under the greatest threat of conversion.

[Sec. 1238 O (c) (1 and 2)]

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Terms of Easement and Rental Agreement

• An easement or rental agreement shall (1) permit:

– Common grazing practices, including maintenance and necessary cultural practices, on land in a manner consistent with maintaining the viability of grassland, forb, and shrub species common to the locality;

– Subject to appropriate restrictions during the nesting season for birds in the local area that are in significant decline or conserved in accordance with Federal or State law, as determined by the Natural Resources Conservation Service state conservationist, haying, mowing, or harvesting for seed production; and

– Fire rehabilitation and construction of firebreaks and fences (including placement of posts necessary for fences).

[Sec. 1238 O (b) (1)]

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Terms of Easement or Rental Agreement

• An easement or rental agreement shall (2) prohibit:

– The production of crops (other than hay), fruit trees, vineyards, or any other agricultural commodity that requires breaking of the soil surface; and

– Except as permitted under this subsection or subsection (d), the conduct of any other activity that would disturb the surface of the land covered by the easement or rental agreement [subsection (d) covers the restoration activities].

[Sec. 1238 O (b) (2)]

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Restoration Agreement

• The Secretary shall prescribe the terms of the restoration agreement by which grassland, land that contains forbs, or shrubland that is subject to an easement or rental agreement entered into under the program shall be restored.

• The restoration agreement shall describe the respective duties of the owner and the Secretary (including the Federal share of restoration payments and technical assistance).

[Sec. 1238 O (d) (1 and 2)]

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Easement Payments

• In return for granting an easement by an owner, the Secretary shall make easement payments to the owner in an amount equal to:

– In the case of a permanent easement, the fair market value of the land less the grazing value of the land encumbered by the easement; and

– In the case of a 30-year easement or an easement for a maximum duration allowed state law, 30 percent of the fair market value of the land less the grazing value of the land for the period during which the land is encumbered by the easement.

• Easement payments may be provided in not less than 1 payment nor more than 10 annual payments or equal or unequal amounts.

[Sec. 1238 P (b)(1) (A and B)]

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Rental Payments

• In return for entering into a rental agreement by an owner, the Secretary shall make annual payments to the owner during the term of the rental agreement in a amount not more than 75 percent of the grazing value of the land covered for the contract.[Sec. 1238 P (b)(2)]

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Federal Cost Share of Restoration

• The Secretary shall make payments to an owner under this section of not more than:

– In the case of grassland, land that contains forbs, or shrubland that has never been cultivated, 90 percent of the costs of carrying out measures and practices necessary to restore functions and values of that land, or;

– In the case of restored grassland, land that contains forbs, or shrubland, 75 percent of those costs.

[Sec. 1238 P (c) (1 and 2)]

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Delegation to Private Organizations

• The Secretary may permit a private conservation or land trust organization of a State agency to hold or enforce an easement under this subchapter, in lieu of the Secretary, if:

– The Secretary determines that granting the permission will promote protection of the grassland that contains forbs, and shrubland;

– The owner authorizes the private organization or State agency to hold and enforce the easement; and

– The private organization assumes the costs of administration, enforcement and restoration.

[Sec. 1238 Q (a) (1,2, and 3)]

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Expectations in the Implementation of the Grassland Reserve Program

• The motivation for this program came from livestock industry concerns about the breaking out of range and urban encroachment on grasslands.

• Implementation will initiated in fiscal year 2003.

• With a finite limitation of $254,000,000 for the period of the Act, competition for enrollment will likely be intense.

• For the 40% of funds devoted to 10,15 and 20-year rental agreements, it is expected that signup and enrollment will be conducted in a manner similar to the methods currently in use for the CRP.

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(continued)

• For the 60% of funds to be devoted to 30-year agreements and easements, or permanent easements, it is expected that methods similar to those used for WRP. The Wetlands Reserve Program uses long-term easements and restoration cost-share agreements.

• It is anticipated that the standards for grazing should be no more stringent than for programs such as CRP, the Conservation Security Program, or the Farmland Protection Program.

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(continued)

• There does not appear to be any per person payment limitation expressed in the statute.

• Some of the eligible lands under pressure from urban encroachment may also be eligible under the Farmland Protection Program.

Documents

The Conservation Reserve Program