Earth Day, Farm Bills, and the Future of Conservation Programs

The day was first celebrated on April 22, 1970.  Today marks the forty-eighth observation of Earth Day.  An opportunity to raise awareness for the need to protect the environment and promote circumstances for environmental conservation.  I thought it appropriate to reflect on how farmers and ranchers have contributed to environmental stewardship and the role of USDA conservation programs.

Investment in agricultural conservation has come a long way since the 1985 Farm Bill first added a Conservation Title. The Farm Bill conservation programs, taken in total, are the largest single source of funding for land conservation. Farm bill programs create significant opportunities for land trusts to protect high-priority farm and ranch lands, grasslands, wetlands, and forests. Today, there is a portfolio of payment programs and other policy instruments designed to encourage better environmental performance and accountability on U.S. farms.

Perhaps one of the more well-known and controversial programs is the CRP. The primary purpose of the Conservation Reserve Program (CRP) is to conserve and improve soil, protect water quality, and provide wildlife habitat by establishing long-term cover on highly erodible land or land in need of conservation buffers that was previously in row crop production. The CRP program offers 10–15 year contracts for the retirement of land from crop production using submitted bids subject to field specific caps. In exchange for cost-share and rental payments, agriculture producers remove environmentally sensitive land from production and plant resource-conserving land cover to protect soil, water, and wildlife habitat.

Congress created CRP in the 1985 Farm Bill due to increased concern over unacceptably high levels of soil erosion. The 1985 Bill authorized USDA to enroll up to 45 million acres, though actual enrollment has never exceeded 37 million acres. Between 1985 and 2008, the enrollment cap was reduced to 36 million acres before being increased to 39 million and then reduced again to 32 million acres. The 2014 Farm Bill gradually lowered the CRP acreage cap from 32 million acres under the 2008 Farm Bill to 24 million acres in 2018.

Source: Farms Service Agency, USDA. (https://www.fsa.usda.gov/programs-and-services/conservation-programs/reports-and-statistics/conservation-reserve-program-statistics/index)

Despite substantial changes in producer preferences and  program design; fluctuations in total acres enrolled; and tremendous technological advancements in agricultural production (many of the arguments used for lower support in the 2014 Farm Bill), payments per acre enrolled have generally declined over time and remained remarkably steady in recent years.  This suggest, that at least in relative terms, the CRP program is operating with greater economic efficiency today than when its was first developed.

I offer 2 alternative methods for inflation adjusting federal CRP outlays.  I first use a more traditional chain-type GDP deflator (2018=100).  I also deflate expenditures by the farm real estate value index (2018=100), since the primary focus of the program and it’s instruments are farmland. Although eligibility is centered on highly erodible land, most CRP land is selected from producer offers using the Environmental Benefits Index (EBI), a benefit–cost index that accounts for a broad range of environmental concerns and the cost of the contract to the government.  Compensation is meant to capture the opportunity cost of foregone production on that specific land  and its ownership and maintenance costs.

In addition to reducing  the acreage cap to achieve cost savings, several other modifications were made as part of the 2014 Farm Bill.  This included three transition options for expiring CRP land. First, within the 2 million-acre reservation for grassland enrollments, expiring CRP acres are prioritized; the land will remain in CRP but the economic use of the land for grazing and haying is greatly expanded. Second, it allowed producers with expiring CRP land to enroll in the Conservation Stewardship Program in the final year of their CRP contract. Third, it provided two years of extra rental payments to owners of expiring CRP land who rent or sell their land to a beginning, socially disadvantaged, or veteran producer who will practice conservation on the land through the Transition Incentives Program.  These program refinements are potentially at odds with the direction of the current Farm Bill discussions.

America’s farmers and ranchers have a proud tradition of conservation stewardship working in concert with the federal government to develop innovative approaches and sustainable practices that benefit the land, water, and wildlife for future generations.  The next farm legislation will have an important impact on whether this stewardship legacy is maintained.   The signals, so far, are not encouraging.

The House Agriculture Committee’s proposed Farm Bill reauthorizes the conservation reserve program increasing acreage from 24 million acres to 29 million acres. It limits CRP rental payments to 80 percent of established local rental rates, with a 15 percent reduction for first re-enrollment and 10 percent thereafter. But working lands conservation is cut by 25 percent over the next 5 years with the Conservation Stewardship Program (CSP) being rolled into the Environmental Quality Incentives Program. Overall, conservation takes a nearly $1 billion cut over 10 years.