USDA nixes CRP ‘early-out’ proposal

Conservation Reserve Program (Photo: usgs.gov)

The U.S. Department of Agriculture has backed away from a proposal to release more conservation lands for crop production.

U.S. Secretary of Agriculture Ed Schafer announced Tuesday that the USDA will not move forward with a plan to allow landowners a penalty free “early-out” of Conservation Reserve Program contracts. Schafer said that the proposal was deemed unnecessary after reviewing the current condition of crops and feedstocks around the country.

In a press conference held Tuesday, Schafer said grain prices have dropped in recent weeks, easing pressure on livestock feed markets and lessening the need for any further steps to be taken at this time.

“Despite the damage and disruption caused by the very severe floods that hit the Midwest last month, the indications so far are that the impact on this year’s corn and soybean crops will be less than what was originally feared,” said Schafer. “The markets have been reacting favorably to the good growing weather we have been experiencing in recent weeks and encouraging reports on crop conditions. Cash prices for corn are down 25 percent and for soybeans 14 percent from their record highs just last month.”

The Conservation Reserve Program has been in the news quite frequently this summer, as the USDA has sought to relax the rules of the program in a number of different ways to make available more livestock feed.

But that didn’t sit well with environmental organizations like the National Wildlife Federation, which recently sued the USDA to block a release of CRP acres for haying and grazing under the Critical Feed Use program. That issue was resolved with a U.S. District Court ruling last week.

This week’s announcement involved a different proposal which would have allowed landowners who are currently under CRP contract with USDA to be allowed completely out of their contracts without paying the usual penalty.

In Tuesday’s press conference, Schafer was asked about the relationship of this week’s announcement to last week’s court ruling. He answered by saying that the Critical Feed Use court ruling did not affect the USDA’s decision on the “early-out” proposal.

“As far as the court ruling, we see these as separate issues,” said Schafer. “But the most critical important issue I think is that that was not tied to early out without penalty decision; nor did our attorneys here feel that that decision affected what this decision might be.”

Iowa has approximately 1.8 million acres of land enrolled in the CRP program. When enrolled in the program, landowners sign 10- to 15-year contracts with the USDA and agree to leave the acres out of production. The farmers receive a regular payment from the government, and the program protects environmentally sensitive land and provides wildlife habitat.

The penalties for taking land out of a CRP contract before the agreed-upon time can be steep. A farmer typically must return all payments received during the entire period of the CRP contract in order to be released early from the contract.

Schafer said that even without any action by the USDA, a large amount of CRP land will become available for crop production soon as many current CRP contracts simply expire on their own.

Schafer said that nationwide there are 1.1 million acres in CRP contracts that will naturally expire this September. Landowners will then have the option to renew those contracts. That number jumps to 3.8 million acres in 2009, and then 4.4 million acres in 2010, said Schafer. “So, large blocks of land will be available for other uses, if landowners choose to pursue them.”