USDA Announces CRP Payments; Acreage Cap Looms

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Payments totaling nearly $1.6 billion under the Conservation Reserve Program (CRP) have been issued, according to USDA, on nearly 24 million acres of ground in the program. Sources, however, signal the 24-million-acre cap on the program for Fiscal 2017 looms as a factor ahead for the program.

Data from USDA at the end of August indicated that the agency enrolled 411,000 acres of ground into the program under the last general signup held, 101,000 acres under the new CRP-Grasslands effort and it showed 836,000 acres had been enrolled during Fiscal 2016 under the continuous signup effort.

However, in announcing the CRP payments, USDA said the level of acres enrolled via the continuous signup for Fiscal 2016 was 1.3 million acres – about double the Fiscal 2015 level.

Given that there were 23.9 million acres in the program as Fiscal 2016 wound down, with new entries that have contract starts of Fiscal 2017 via the general signup and grassland effort, plus 1.67 million acres of contracts maturing, sources did not provide a specific total of how much ground is now in the CRP. But, that level is “pretty close” to the 24 million acre limit that is in place for Fiscal 2017, one source advised.

USDA data show contracts on 2.52 million acres of ground will mature as of September 30, 2017, freeing up space in the program. Of those, 1.98 million acres are from general signups and 540,000 are from continuous signups.

“With interest high from current CRP participants in terms of keeping the ground in the program when their contracts mature, this situation could continue to be interesting even in Fiscal 2018,” one contact observed.

In anticipation of the acreage cap being a potential factor, USDA has already indicated that applications for those seeking to enroll ground in CRP for Fiscal 2017will be allowed to submit those offers. But, those seeking to have contracts start in Fiscal 2017 under the continuous signup will have those offers accepted and they will be placed “in a batch process” to ensure the enrollments do not exceed the statutory cap of 24 million acres.

USDA will make a determination on a monthly basis on how many will be approved for enrollment in Fiscal 2017 “pending availability of acres.” Those who are unable to place ground in the CRP during Fiscal 2017 will be put on “wait list” and offered a Fiscal 2018 (October 1, 2017) effective date.

Or producers can offer ground during Fiscal 2017 and request a contract effective date of October 1, 2017 – Fiscal 2018.

Comments: What was utilized as a budget savings method in the 2014 Farm Bill to limit acres in the program is now becoming a potential important factor for CRP as Fiscal 2017 unfolds. Key will be monitoring the level of acres actually in the program and the pace of offers via the continuous signup efforts, especially with various initiatives available under the continuous signup that have heightened farmer interest, Plus, this all but guarantees there will be no general signup period held during Fiscal 2017. Further, this will up pressure on lawmakers to adjust those acreage caps. And with prices where they are, raising the acreage limit in the CRP may not produce significant budget costs, especially if safety net payments continue to grow.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.