USDA announced this spring an expanded Conservation Reserve Program (CRP) and upped annual payments to producers in hopes of increasing the acreage amount of environmentally sensitive land removed from production for up to 15 years. The effort is part of USDA’s plans to use CRP to help meet the administration’s climate goals.
USDA said newly enrolled acres would come with higher payments rate and new incentives. However, research this spring by Farmer Mac found while USDA may be able to reach its acreage target for CRP it’s unlikely to make great strides in enrolling corn and soybean acres.
One Kansas State economist is also looking into what the expansion of CRP means for commodity prices.
“Some of the research I’ve done is looking at how much farmers benefit from these different types of programs,” says Nathan Hendricks, professor and agricultural economist with Kansas State University. “One of the key things is when you decrease production in the United States, how much does that increase prices? I find that if you decrease production by just 10% on corn, you increase prices by 5.4%.”
He says as discussions around the upcoming Farm Bill continue, CRP will play a role.
“The main policy mechanism to drive that increase in enrollment will be the cap that is set in the Farm Bill,” he adds. “So what will be a major Farm Bill discussion is what happens to that acreage cap for CRP and do we see that increase or stay the same? There are also questions of where whether producers would benefit more from a program like CRP or from allocating the budget for ARC and PLC to CRP or [allocating] more towards the ARC and PLC type programs?”
USDA recently said it is accepting more than 2.5 million acres in Grassland Conservation Reserve Program signups, which is double last year’s signup total. USDA says the additional acres will come from ag producers and private landowners
As the discussions continue on which programs will be the focus in the next Farm Bill, federal safety nets, like crop insurance, appear safe under the Biden administration according to Jennifer Ifft, a Kansas State agricultural economist.
“Across the past decade, I’ve seen different presidential administrations, both Republican and Democrat, make big cuts to crop insurance premium subsidies, and those don’t go anywhere once it gets to Congress,” says Ifft. “This is a popular program, it’s very highly used, a lot of stakeholders. So, I think if crop insurance ended up being cut, we’d start seeing even bigger changes to our broader farm programs.”
