USDA May Shift CRP Contract Starts if Enrollment Cap Hit

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The 24-million-acre cap for the Conservation Reserve Program (CRP) for Fiscal 2017 looms large for the popular program, with USDA setting procedures in place to deal with that limit put in place via the 2014 Farm Bill, procedures that could result in some CRP contracts to be delayed until October 2017.

At the end of August, there were 23.892 million acres in CRP with contracts on 1.65 million acres set to expire September 30. But the level of acreage will not decline the full 1.65 million acres with the start of Fiscal 2017 as there were 411,000 acres accepted via General Signup 49 and another 101,000 acres were approved during the Grasslands signup which all would have October 1 contract start dates. Plus, there are another 317,000 acres of ground from continuous CRP signup that have contracts which start with Fiscal 2017. USDA said that continuous CRP enrollment during Fiscal 2016 was 836,000 acres, the highest continuous signup level on record.

The combination of new entries and contract expirations should translate into around 23 million acres in the CRP to start Fiscal 2017, just 1 million acres below the cap of 24 million in place for both Fiscal 2017 and Fiscal 2018.

USDA put a deadline of September 16 in place for approving CRP contracts as Fiscal 2016 would down to ensure they had “accurate data about CRP in light of the statutory acreage enrollment cap, and to make policy decisions” relative to Fiscal 2017, according to a Farm Service Agency (FSA) notice sent to state and county FSA offices.

As for the continuous signup for Fiscal 2017 (Signup 50), county offices are being instructed to accept all continuous signup offers. However, for any non-Conservation Reserve Enhancement Program (CREP) continuous signup offers, FSA said producers could defer the effective date to October 1, 2017 (Fiscal 2018), or request contracts with an effective date during Fiscal 2017.

However, for those requesting the Fiscal 2017 contract start, FSA said those bids would be accepted on a non-competitive first come, first serve basis and would be placed in a batch process to make sure enrollment levels to not exceed 24 million acres. Those contracts would be approved based on a notification from FSA Washington on a monthly basis “pending availability of acres.”

If there is not room under the enrollment cap, FSA said those offering ground “will be offered an October 1, 2017, effective date” for those contracts.

USDA may find itself under a potentially less onerous situation when Fiscal 2018 arrives as contracts on another 2.52 million acres will mature September 30, 2017, including 1.98 million general signup contracts and 540,000 continuous signup contracts.

Interest in the CRP has ramped up, evidenced by the record level of acres that were enrolled during Fiscal 2016 via the continuous signup effort. Plus, producers submitted offers on 1.857 million acres during general signup 29, of which only 411,000 acres were accepted – 22 percent of those offered. Of the 411,000 acres accepted, 200,189 acres were under a CRP contract that matured September 30, 2016.

USDA Secretary Tom Vilsack is among those calling for the acreage limit on CRP to be increased, evidenced by the fact that CRP enrollments could be limited in Fiscal 2017 at some point if continuous signup interest continues to run high. And some lawmakers like Iowa Republican Senators Chuck Grassley and Joni Ernst are asking questions about the CRP program in the wake of farmers complaining that they are losing the opportunity to rent some acres in cases where entire farms have been enrolled in CRP at rental rates comparable with or even above current prevailing cash rents.

The 23.892 million acres in CRP carry a national-average rental rate of $72.60 per acre for a total of $1.734 billion. Of that, 16.868 million were enrolled via general signups and carry an average rental rate of $51.24 per acre for a total of $864 million. A total of 7.024 million acres have been enrolled via continuous signup and carry an average rental rate of $123.89 per acre for a total of $870 million.

Comments: This is the first time that total rental payments for continuous signup will have exceeded payments being made on ground enrolled via general CRP signups. The average per-acre rental payments under the general signup have actually declined over the past year as USDA data for September 2015 showed an average rental rate of $51.34 per acre, 10 cents higher than the current figure. Likewise, the issue that has caught lawmaker attention is the rental rates being paid out for continuous signup acres which stood at $111.52 per acre in September 2015.

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