CRP vs. Cash Rent
Feb 21, 2017
Nellie Neal has a decision to make:
"I am a farm ‘owner.’ I am currently cash renting my land. I can put the acreages in CRP for 100 dollars an acre more than I get on cash rent. My concern is that I have to sign up for 10 years. A lot of things can change in 10 years. Do you have any thoughts I should consider?"
Nellie, thanks for your question, and I urge you to check with your local Farm Service Agency to make sure about important details. This is not an easy decision for landowners and farmers alike.
Farmers line up on both sides of the Conservation Reserve Program, with some wanting more acres enrolled to lower crop surpluses and some arguing it limits opportunity for farmers or presents unfair competition.
That said, a market difference of $100 dollars is a big deal. While it is possible rents could recover to match or exceed the CRP bid, it would take some time to offset that large of a difference, so the economics certainly suggest enrolling.
The greater question, in my opinion, is what is best for the land. I am guessing that this large differential implies your land is marginally suitable for crop production and the conservation benefits are considerable, so good stewardship leans toward enrolling.
The ten-year duration can be seen as confining, but it also locks in a known return. If that rental rate meets your financial needs, keep in mind there aren't many sure things like that in ag these days.
Some owners worry about problems if they should sell or even die during the contract, but it is essentially a cash rent contract that would stay with the acres should ownership change. There are also rules that allow transitioning CRP acres to beginning farmers.
Think of the land and think of your worry load, and make the best decision you can. If you do that, I think you'll be satisfied with the result.