USDA Notes Options for Those with Maturing CRP Contracts

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Those with Conservation Reserve Program (CRP) contracts maturing September 30 have been alerted of several options available to them to consider, including re-enrolling acres and potentially pulling those acres out of the program prior to maturing with the 24-million-acre cap on CRP enrollments potentially impacting the options available.

Contracts on 2.55 million acres of CRP ground are scheduled to mature September 30, 2017, with 1.98 million acres enrolled via the general signup process and 540,000 acres under continuous signup efforts.

Seven states will have 100,000 acres or more of CRP contracts maturing September 30, 2017:

As for options, USDA has alerted those with contracts that mature September 30, 2017, of the following options:

Continuous enrollment or CRP Grasslands: All or a portion of maturing CRP contracts may be eligible to be enrolled in either effort. The most-recent CRP Grasslands ranking period already closed December 16 and it is not clear when the next ranking period will be. As for the continuous effort, USDA said those can be made on a first-come, first-serve basis and must be submitted by August 31, 2017. “If demand is as high as anticipated, some offers may not be accepted because of the 24-million-acre cap.” Any enrollments under the continuous signup would have a contract start of October 1, 2017.

Transition Incentives Program (TIP): If the current contract holder is not planning to farm the land upon contract maturity, they can get two additional annual CRP rental payments if they rent or sell the land to a beginning farmer or rancher or a member of an underserved group. Those new renters or landowners have to use “sustainable grazing or farming methods” to bring land back into production. Those seeking to use this option must alert USDA by August 31, 2017. Land under this option could be eligible for an early termination of the contract up to one year before a contract is set to expire. However, the retired or retiring owner or operator may only receive the additional annual rental payments (of up to two years) when the beginning or socially disadvantaged farmer or rancher is not a family member.

USDA has announced that under TIP, they will now allow an “early out” option that will start January 9, 2017. However, this is not a new option under the program as program rules state the CRP contract “may be modified so that the transition activities may be initiated during the last year of the contract without violating the CRP contract. For example, activities to improve the land or to obtain organic certification beginning up to one year before the expiration date of the CRP contract will be allowed under such a modified contract.”

Conservation Easements or Working Lands Programs: Options here include the Agricultural Conservation Easement Program (ACEP) or state and private easement programs. Those planning to bring CRP ground back into production could also use the CRP Grasslands, Conservation Stewardship Program (CSP) or the Environmental Quality Incentives Program (EQIP). “In many cases, a combination of approaches may be taken on the same land,” per USDA, including that a portion of the ground could be put in continuous CRP contract and other areas put in CSP and potentially receive additional ranking points.

Let contract expire: If contract holders opt to let the contract expire, they can plant, graze or hay the ground after September 30, 2017. “Since CRP land typically does not have a recent history of pesticide or herbicide application, the land may be valuable for organic production,” USDA said. However, USDA cautioned that these maturing CRP acres could be subject to conservation and wetland compliance provisions.

Comments: As we’ve previously noted, the focus on CRP is intense at USDA with the acreage level in the program at 23.454 million acres, about 500,000 acres under the 24-million-acre cap on the program. As for the “early out” announcement relative to the TIP option, rules of the program have allowed this option since those rules were finalized in 2010. It’s not clear how many CRP acres have actually come back into production based on this option. The rules governing the program originally indicated there was a $25 million limit on the TIP option, but it is not clear if that still applies. If so, that would signal a limited participation level as the overall current CRP rental payments are around $1.7 billion annually.

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