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Published April 29, 2013, 09:09 AM

CRP faces challenges

The longstanding Conservation Reserve Program is one of America's most important farm programs. But CRP - in which area farmers soon will have another chance to enroll - is losing acres in the Upper Midwest because of attractive crop prices. Federal budget problems also cloud the program's future.

By: Jonathan Knutson, Agweek

Last fall, for the fourth straight year, Thief River Falls, Minn., farmer Ken Asp chose not to reenroll some of his farmland in the Conservation Reservation Program.

Enrolling the land into CRP made economic sense when he did it, in some cases as long as 20 years ago. But times have changed, and Asp now can do better, financially, farming the land than letting it sit idle in CRP.

“The returns (from farming the land) today project a lot better than they did when I enrolled it,” Asp says.

He’s not alone. Attractive crop prices since 2007 have encouraged agricultural producers nationwide to begin farming millions of acres that had been in CRP.

In the past two years alone, the number of CRP acres nationally has dropped from 31.2 million to 27 million. Of the 4.2-million-acre-decline, North Dakota and Montana accounted for a whopping 1.6 million acres, or 38 percent. Northwest Minnesota and parts of South Dakota also have seen large amounts of land leave the program.

Now, CRP is returning to the front burner. General signup 45, which gives landowners another chance to enroll land in CRP, runs May 20 through June 14.

CRP pays landowners to take environmentally sensitive farmland out of production. The land is given a specially designed vegetative cover that reduces soil erosion, improves soil and air quality, and develops wildlife habitat.

In theory, general signup 45 could draw substantial interest. Roughly 850,000 acres of land enrolled in CRP in North Dakota, Minnesota, South Dakota and Montana will expire Sept. 30, and the signup gives landowners a crack at reenrolling that land in the program. Land not currently enrolled in CRP also could be offered for it.

In practice, attractive grain prices will limit landowners’ interest.

“In my experience, interest in CRP tends to increase when wheat prices go down and decrease when wheat prices go up,” says Bruce Nelson, administrator of the Montana Farm Service Agency.

The FSA, part of the U.S. Department of Agriculture, administers CRP.

Wheat is Montana’s most important crop. In January of this year, wheat fetched an average of $8.40 per bushel in Montana, compared with $3.53 per bushel in January of 2006, according to the National Agricultural Statistics Service, an arm of USDA.

To CRP supporters, who stress the program’s environmental and wildlife habitat benefits, the acreage decline is troublesome, even alarming.

“We’re extremely concerned about the overall loss in CRP,” says Dave Nomsen, vice president of government affairs for Pheasants Forever and Quail Forever.

Critics of CRP welcome the decline in acres. They say the program took too much land out of production, hurting rural communities and businesses that sell agricultural supplies and services.

“We applaud the trend,” says Steve Strege, executive vice president of the North Dakota Grain Dealers Association. CRP should be reserved “for the most environmentally sensitive land.”

Limits to enrollment

Farmers can’t put land into CRP just because they want to. They make formal offers that are ranked on a number of factors, including air quality and wildlife habitat benefits. Only a percentage of offers receiving the highest scores will be accepted.

“It’s a very competitive process,” says Wanda Garry, who manages CRP in Minnesota.

Federal deficit problems also cloud the outlook for CRP.

The next farm bill is widely expected to reduce authorized CRP acreage nationally to 25 million acres. That would be 2 million fewer acres than today and 11.7 million fewer than the record 36.7 million in 2007.

To put those numbers in perspective, consider that CRP was created to take 40 million acres of highly erodible acres out of production. So even at its peak, the program fell short of its original goal.

Aaron Krauter, FSA executive director in North Dakota, notes that interest in CRP rose slowly through many years, with acreage peaking in 2006 and 2007. Then, when crop prices soared, CRP acreage began declining.

Despite its recent slump, CRP, which dates back to the 1950s, remains one of America’s most important farm programs.

Last year, the program paid $92 million to 11,000 CRP contract holders in Montana alone, Nelson says.

Nationwide, CRP will make rental payments of $1.8 billion through 700,552 contracts in the fiscal year ending Sept. 30, FSA says.

Texas leads the nation in CRP acres. Montana ranks fourth, North Dakota fifth, Minnesota eighth and South Dakota 11th.

CRP also helps livestock producers during drought, Nelson says.

Last year in Montana, 110,000 CRP acres were grazed and 145,000 CRP acres were hayed in response to the drought, he says.

Smaller parcels

Farmers haven’t soured on CRP, says Daryl Campbell, CRP program manager in South Dakota.

“They still like it. They may not be offering the large amount of acres they used to. But they still like having some of it (farmland) set aside,” he says.

Campbell and others say that many landowners are removing relatively large parcels of land from CRP, while renewing the contracts of relatively small parcels.

Often, the small parcels have special environmental importance. For instance, small buffer strips along rivers or creeks can make a big difference in water quality.

Landowners also are choosier in selecting how much of a particular field to enroll, officials say.

In the past, landowners may have put an entire field into CRP when only part of the land is highly erodible. Today, landowners might put only the highly erodible portion into CRP.

“Some of the land expiring (from CRP) maybe isn’t as highly erodible as we’re trying to capture with enrollments of today,” says Garry, with FSA in Minnesota.

The growing use of no-till and limited-till farming practices, which reduce soil erosion, reduces the need for CRP, many in agriculture say.

John Weinand, a Hazen, N.D., producer, says his family is farming some rented land that until a few years ago was in CRP.

When the land went into CRP, no-till was uncommon in his area of western North Dakota. Today, no-till is the norm there, he says.

‘Farm bill biologists’

Small CRP parcels can play a big role in reducing soil erosion and improving water quality. But bigger parcels are needed to provide meaningful wildlife habitat, Nomsen says.

So-called “edge species” such as pheasants need parcels of at least 20 acres, preferably 40. Waterfowl needs at least 80 acres, he says.

Pheasants Forever employs what it calls “farm bill biologists” to help landowners design, develop and fund habitat improvements.

That’s especially important when CRP acreage is in decline, Nomsen says.

“There’s a win-win there, a balance. You can have sustainable, dependable crop production, plus wildlife,” he says.

Several wildlife organizations worked this past winter to educate North Dakota landowners about the opportunities and potential benefits of wildlife habitat, Krauter says.

Nomsen says his organization has seen “glimmers of hope” for future CRP enrollment.

Drought’s potential impact

South Dakota, Minnesota and parts of North Dakota and Montana remain in drought, according to the U.S. Drought Monitor, a partnership of drought and academic scientists.

It’s unclear whether that will encourage more landowners to offer their land in general signup 45.

Drought in the Southern Plains has generated more interest there in CRP, Nomsen notes. He also says drought is just one of many factors that determine farmers’ interest in the program.

Farmers’ age and experience affect their decisions about offering land for CRP. Krauter says producers who have seen both wet and dry cycles remain.

“But the interest from younger producers, who haven’t experienced those cycles, isn’t there,” he says.

Campbell, with FSA in South Dakota, doubts that drought will generate more interest in general signup 45.

“As long as (crop) prices are staying high, I don’t see that,” he says. “That’s just my opinion.”

CRP is most attractive to farmers when excess moisture prevents them from planting, not in times of drought, he says.

Interest in general signup 45 also will be affected by the “Highly Erodible Land Initiative,” a special type of CRP USDA announced in February 2012.

The initiative, for which farmers can sign up throughout the year, is designed for only the most environmentally sensitive land. Land accepted into CRP through the initiative typically receives a higher per-acre payment than land accepted into CRP through a general signup.

Landowners interested in general signup 45 should check with their local FSA office to see if their parcel qualifies for the continuous signup.

A note for Montana producers:

There’s been a change in how CRP treats crested wheat grass and smooth brome. The modification should give more flexibility to landowners who offer existing CRP land for reenrollment, Nelson says.

Rental rate adjustments

Strong farm profits in recent years have pushed up land values and rental rates across the Upper Midwest.

Some counties in North Dakota, for example, saw an increase of more than 20 percent in rental rates in the past year, according to a recently released survey.

The National Ag Statistics Service will issue a state-level survey of cropland rental rates for North Dakota and other states on Aug. 2.

FSA state officials say the agency’s national headquarters is evaluating whether the per-acre payments offered to enroll land through general signup 45 should increase, too.

County FSA officials likely will learn in early or mid-May whether their local rates have increased and, if so, how much.

Rates likely will rise in many, though not all, counties in the Upper Midwest, FSA state officials say.

The average per-acre payment for CRP land nationwide is $60.82, according to the FSA website.

The average rate is $75.77 per acre in Minnesota, $66.04 in South Dakota, $41.19 in North Dakota and $31.36 per acre in Montana. The rates are averages and vary sharply from county to county, even in the same state.

Farmers in the Upper Midwest have many concerns this spring, but they shouldn’t overlook general signup 45, state FSA officials say.

“County offices are working hard to get ready,” Nelson says. “I encourage producers to come in and talk.”

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