The Conservation Reserve Program

1
The Conservation Reserve Program
2002 Farm Bill Education Conference Kansas City,
Missouri May 20-21, 2002 James Johnson Montana
State University
2
What is CRP?

• CRP is a voluntary long-term cropland diversion
  program, although under the current Act contract
  holders may elect partial economic use.
• CRP relies upon positive economic incentives to
  entice owners, operators, and landlords to
  convert cropland and other environmentally-sensiti
  ve lands to a conserving use.
• Usually 10-year contracts are developed although
  some contracts are up to 15 years in duration.

3
The Legislature History of CRP

• Established by the Food Security Act of 1985.
• Re-authorized by the Food, Agriculture,
  Conservation, and Trade Act of 1990.
• Re-authorized by the Federal Agriculture
  Improvement and Reform Act of 1996.
• Re-authorized by the Farm Security and Rural
  Investment Act of 2002.

4
CRP Goals Under the Food Security Act of 1985
(FSA)

• Primary Goal
• Reduce soil erosion
• Secondary Goals
• Protect the long-term capacity to produce food
  and fiber
• Reduce sedimentation
• Improve water quality
• Create fish and wildlife habitat
• Curb production of surplus commodities
• Provide farm income support
• Initially, part of the emphasis was on assisting
  producers to meet HEL compliance.

5
CRP Acreage Targets and Enrollment Under FSA

• Target 40 to 45
  million acres
• Enrollment (in 1990) 33.9 million acres
• Percent of Target 75 to 85

6
CRP Enrollment by Signup Period Under FSA
7
CRP Implementation Rules Under the FSA

• Owners and operators submitted bids on HEL
  cropland with appropriate cropping history.
• Bids less than or equal to the pool (and then the
  county-level) maximum acceptable rental rates
  were accepted. Maximums were known after the
  completion of bidding.
• Tenant history was protected.

8
CRP Goals Under the Food, Agriculture,
Conservation, and Trade Act of 1990 (FACT)

• Primary Goal
• Emphasis on those goals specified in the prior
  act that would contribute most to the public good
• Secondary Goals
• Help cropland owners and operators control
  erosion on their cropland
• Reduce sedimentation and other surface water
  quality problems
• Address ground water quality problems

9
CRP Acreage Targets and Enrollment Under FACT

• Target 38 million acres
• Enrollment (in 1995) 36.4 million acres
• Percent of Target 96

10
CRP Enrollments by SignupUnder FACT
There were no signups held in 1994 or 1995.
11
CRP Implementation Rules Under FACT

• Owners and operators submitted bids on HEL and
  other environmentally sensitive cropland with
  appropriate cropping history.
• Bids at or below the county-level maximum
  acceptable rental rate were given further
  consideration. The county maximums were known
  prior to bidding.
• Bids were evaluated for environmental benefits
  that were never explicitly known by the bidder
  but evidently embodied the goals of surface and
  ground water improvement and preservation of soil
  productivity.
• Tenant history was protected.

12
CRP Goals Under the Federal Agriculture
Improvement and Reform Act of 1996 (FAIR)

• Primary Goal
• Assist owners and operations in cost-effectively
  conserving and improving the nations natural
  resources.
• Secondary Goals
• Protect the nations soil, water, and wildlife
  resources.
• Improve and preserve water quality.
• Enhance fish and wildlife habitat.
• Protect identified national conservation priority
  areas.

13
CRP Acreage Targets and Enrollment Under FAIR

• Target 36.4
  million acres
• Enrollment (4/30/2002) 33.9 million acres
• Percent of Target 93

14
CRP Enrollments by Signup Under FAIR
Starting with this signup, there was both new
and re-enrolled acreage
15
The General Signup CRP Implementation Rules
Under FAIR

• Owners and operators of HEL and other
  environmentally sensitive cropland with
  appropriate cropping history.
• Each tract had its own maximum CRP rental rate
  (known prior to bidding).
• Bids at or less than the maximum CRP rental rate
  for a tract were evaluated through an
  environmental benefits index mostly known to the
  bidder.
• Tenant history was not tightly protected.

16
The Continuous Signup CRP Implementation Rules
Under FAIR

• Was available to enroll selected acreages into
  certain high priority conservation practices.
• Each tract had its own maximum CRP rental rate
  (known prior to bidding).
• The bids were not subject to an environmental
  benefit index evaluation.

17
The Continuous Signup CRP Implementation Rules
Under FAIR

• The acreage must have been determined by NRCS to
  be eligible and suitable for any of the following
  practices riparian buffers, filter strips, grass
  waterways, shelter belts, field windbreaks,
  living snow fences, contour grass strips, salt
  tolerant vegetation, or shallow water areas for
  wildlife.
• Practice incentive payments (PIP) from 10 to 20
  percent above the soil rental rate were offered
  for some practices.

18
The Conservation Reserve Enhancement Program
(CREP) Under FAIR

• CREP is a joint, state-federal land retirement
  conservation program targeted to address state
  and nationally significant agriculture-related
  environmental effects.

19
The Conservation Reserve Enhancement Program
(CREP) Under FAIR

• Primary Goals
• Coordinate federal and non-federal resources to
  address specific conservation objectives of the
  state in a cost effective manner.
• Improve water quality, erosion control, and
  wildlife habitat related to agricultural use in
  specific geographic areas.

20
More on CREP

• CREP differs from CRP in several ways
• CREP is targeted to specific geographic areas.
• CREP is joint undertaking among states, the
  Federal government and other stake holders
  addressing particular environmental issues.
• CREP requires states to establish measurable
  objectives for progress.
• CREP can be adapted to meet local needs (first
  CREP program involved 100,000 acres within the
  Chesapeake Bay drainage).
• States are required to provide 20 of the funds
  for contracting under CREP.
• Starting with CRP no. 17 there are continuous
  CREP acre enrollments reported.

21
Location of CRP Enrollment, October 2000
22
Specific Implementation Rules and Considerations
Under the FAIR ActA starting point for the next
6 years

• Producer Eligibility
• Eligible Land
• The maximum CRP rental rate
• Evaluating the CRP rental rate
• Environmental benefits rating
• Crop acre base preservation
• Landlords and Tenants
• Haying and grazing

23
CRP Produce Eligibility

• A producer must have owned or operated the land
  for at least 12 months prior to the close of
  signup, UNLESS
• New owner acquired land as result of death of
  previous owner
• Ownership change occurred due to the foreclosure
• Circumstances of acquisition provides assurance
  that the new owner did not acquire land for
  purpose of CRP enrollment

24
Land Eligible for CRP Enrollment

• Cropland that is planted or considered planted to
  an agricultural commodity 2 of the 5 most recent
  years which is physically or legally capable of
  being planted in a normal manner to an
  agricultural commodity, or
• Certain marginal pasture land enrolled in the
  Water Bank Program

25
The Maximum CRP Rental Rate

• For a particular tract, the maximum CRP rental
  rate is the weighted average of the three
  predominant soils in the tract plus a 5 per acre
  allowance for the annual maintenance costs for
  the conserving use. See the example

26
Evaluating the CRP Rental Rate

• Potential bidders can evaluate the bid maximum
  against the continuation of their current
  usecrop production
• The net return above operating costs, including
  base-related benefits, are considered for each
  year of the CRP contract
• Then, the sum of the present values of the future
  net returns is amortized to provide an annuity
  equivalent to compare with the maximum CRP rental
  rate

27
Environmental Benefits Index Rankings for
Periodic CRP Signups
Factors that can be influenced by management
decisions The cost factor has usually
accounted for abut 1/3 of the maximum possible
points. More details are available in
Consideration When Bidding Cropland Into CRP,
Dept Special Report 24, September 1997, from
website http//www.montana.edu/extensionecon/docs/
agpolicy.htm
28
Crop Acreage Base Preservation

• Example farm 4,000 acres of cropland, 2,400
  acres of aggregate base, bid 1,800 acres into CRP
• Escrow under FSA and FACT Acts
• a.
• b. Reactivate after CRP contract expiration

29
Crop Acreage Base Preservation (continued)

• Forfeiture under FAIR Act
• CRP bid of 1,800 acres
• Aggregate base of 2,400 acres
• Total 4,200 acres
• Cropland - 4,000 acres
• Base forfeited 200 acres
• Forfeited base is not retrievable.
• Preservation under FAIR Act
• If 1,600 acres or less are enrolled in CRP, all
  base is preserved

30
Landlord and Tenant Provisions

• Landlords shall
• When the acreage offered IS NOT ENROLLED in CRP
  at the time of signup
• Provide tenants who have an interest in the
  acreage offered at the time of signup, an
  opportunity to participate in CRP.
• Not reduce the number of tenants on the farm as
  the result of anticipation of enrollment in CRP.

31
Landlord and Tenant Provisions (continued)

• When the acreage offered IS ENROLLED in CRP at
  the time of signup, provide tenants, with an
  interest in the CRP contract acreage, and
  opportunity to participate in CRP if either of
  the following apply
• The tenant is otherwise involved in farming other
  acreage on the farm at the time of signup
• The tenant has an interest in acreage being
  offered on the effective date of the new CRP
  contract.
• Interest in a CRP contract is not considered
  farming

32
Emergency Grazing and Haying of CRP

• Farm Service Agency state committees can apply
  for emergency grazing or haying of CRP acreage on
  a county-by-county basis.
• The Secretary of Agriculture provides approval if
  the emergency condition warrants the action.
• To graze eligible livestock producers are
  required to leave 25 percent of each field or
  contiguous field or graze no more than 75 percent
  of the Natural Resources Conservation Service
  documented stocking rate. Haying has a similar
  requirement.
• Contract holders are assessed 25 percent
  reduction on their per acre CRP payments for
  those acres involved in emergency grazing or
  haying.

33
CRP Under the Farm Security and Rural Investment
Act of 2002

• A Disclaimer USDA resources are going to be
  directed at expanded and new conservation
  programs CRP will receive divided attention.
  Third-party providers of technical assistance
  will be used in the implementation of CRP
  Contracts.
• Goals
• Target Enrollment
• Pilot for Wetland and Buffer Acreage
  (continuation)
• Managed Harvesting and Grazing
• One Year Contract Extension
• CRP Cropping History

34
CRP Goals Under the Farm Security and Rural
Investment Act of 2002

• Goal
• Through the 2007 calendar year, CRP shall assist
  owners and operators of land to conserve and
  improve soil, water, and wildlife resources of
  such land. Sec. 1231(a)

35
Maximum Enrollment for CRP Under the Farm
Security and Rural Investment Act of 2002

• The Secretary shall maintain up to 39,200,000
  acres in the conservation reserve program at any
  1 time during the 2002 through 2007 calendar
  years (including contracts extended). Sec. 1231
  (d)
• The previous maximum under the FAIR Act was
  36,400,000 acres.

36
Pilot Program for Enrollment of Wetland and
Buffer Acreage in CRP Under the Farm Security and
Rural Investment Act of 2002

• An owner or operator may enroll in CRP
• A wetland including a converted wetland that was
  cropped on at least 3 of the immediately
  preceding 10 crop years, and
• Buffer acreage that
• Is contiguous to the wetland (above)
• Is used to protect the wetland
• Is of such width as determined necessary to
  protect the wetland
• The maximum size of the wetland shall be 10
  contiguous acres, of which not more than 5 acres
  shall be eligible for payment
• Sec. 1231 (h)(2A and 2D)

37
Pilot Program for Wetland and Buffer Acreage in
CRP (continued)

• The owner or operator shall
• Restore the hydrology to the maximum extent
  practicable
• Establish vegetative cover (which may included
  emerging vegetation in water)
• Sec. 1231 (h)(3A and 3B)
• The Secretary may enroll in the conservation
  reserve under this section not move than a total
  of 1,000,000 acres nationally or move the 100,000
  acres in any one state.
• Sec. 1231 (h)(2C)
• Enrollment will be available through continuous
  signups.
• Sec. 1231 (h)(4B)

38
Managed Harvesting and Grazing of CRP Under the
Farm Security and Rural Investment Act of 2002

• The Secretary may permit (managed harvesting and
  grazing), consistent with the conservation of
  soil, water quality, and wildlife habitat
  (including habitat during the nesting seasons for
  birds in the area).
• In the case of managed harvesting or grazing or
  harvesting or grazing conducted in response to a
  drought or other emergency, reduce the rental
  payment (CRP payment) otherwise payable under the
  contract by an amount commensurate with the
  economic value of the activity
• Sec. 1232 (a)(7)(A)

39
One-year Contract Extension Under the Farm
Security and Rural Investment Act of 2002

• One-year Extension In the case of a contract
  described in paragraph (1) the term which expires
  during calendar year 2002, an owner or operator
  of land enrolled under the contract may extend
  the contract 1 additional year. Sec. 1231
  (e)(3)
• Farm Service Agency data indicate that
  approximately 1,723,000 acres are under CRP
  contracts expiring 9/30/2002.

40
CRP Cropping History Under the Farm Security and
Rural Investment Act of 2002

• Eligible land will include highly erodible
  cropland that the Secretary has determined a
  cropping history or was considered planted for 4
  of the 6 years preceding the date of enactment of
  the Act. Sec. 1231(b)(1)(B)
• Previously the requirement was 3 of the 5 years
  preceding the close of enrollments.

41
Implementation of CRP

• The current fiscal year continuous signup is
  available.
• The next general CRP signup can realistically
  be expected in early calendar year 2003 1-year
  extensions are available for expiring contracts.
• The implementation rules that prevailed under
  FAIR will generally be continued
• One change will be the cropping history on
  eligible land (must have been cropped on
  considered planted in 4 of the 6 years prior to
  May 13, 2002.)
• There will be early emphasis placed on rules
  managed harvesting and grazing of CRP lands.

42
The Grassland Reserve Program
43
The Grassland Reserve Program

• Authorization
• Eligible land
• Funding and duration
• Maximum enrollment
• Method of enrollment
• Ranking of applications
• Permitted activities
• Prohibited activities
• Restoration agreement
• Easement payments
• Rental payments
• Federal cost share
• Delegation of easements

44
Authorization of the Grassland Reserve Program

• The total number of acres enrolled under the
  program shall not exceed 2,000,000 acres of
  restored or improved grassland, rangeland, or
  pastureland.
• The Secretary (of Agriculture) shall establish a
  grassland reserve program to assist owners in
  restoring and conserving eligible land.
• Sec. 1238 N (a) and (b)(1)

45
Eligible Land

• Land shall be eligible to be enrolled in the
  program if the Secretary determines that the land
  is PRIVATE land that is
• Grassland, land that contains forbs, or shrubland
  (including improved rangeland and pastureland)
  or
• Land that
• Is located in an area that has been historically
  dominated by grassland, forbs, or shrubland and
• Has potential to serve as habitat for animal or
  plant populations of significant ecological value
  if the land is

46
Eligible Land (continued)

• Retained in the current use or
• Restored to a natural condition or
• Land that is incidental to the land described
  above (but necessary to its management).
• Sec. 1238 N (c) (1, 2, and 3)

47
Funding Level and Duration of the Grassland
Reserve Program

• A total of 254,000,000 has been provided for the
  program.
• The program is funded at this level for the
  5-year period of fiscal year 2003 through fiscal
  year 2007.
• Sec. 1241 (a) (5)

48
Maximum Enrollment

• The total number of acres enrolled shall not
  exceed 2,000,000 acres of restored or improved
  grassland, rangeland, and pastureland.
• Sec. 1238 N (b) (1)

49
Method of Enrollment

• The Secretary shall enroll in the program from a
  willing owner not less than 40 contiguous acres
  of land through the use of
• A 10-year, 15-year, or 20-year rental agreement
• A 30-year rental agreement or permanent 30-year
  easement or in a State with maximum duration for
  easements, the maximum allowed by law.
• No more than 40 of the enrollments will be under
  (i) and no more than 60 of the enrollments will
  be under (ii).
• Parcels with less than 40 acres may be enrolled
  when such are deemed to assist in the
  accomplishments of the programs goals.
• Sec. 1238 N (b) (2) (A and B)

50
Ranking of Easement and Rental Agreement
Applications

• The Secretary shall establish criteria to
  evaluate and rank applications for easements and
  rental agreements under this subchapter.
• The Secretary shall emphasize support for
• Grazing operations
• Plant and animal diversity and
• Grassland, land that contains forbs, and
  shrubland under the greatest threat of
  conversion.
• Sec. 1238 O (c) (1 and 2)

51
Terms of Easement and Rental Agreement

• An easement or rental agreement shall (1) permit
• Common grazing practices, including maintenance
  and necessary cultural practices, on land in a
  manner consistent with maintaining the viability
  of grassland, forb, and shrub species common to
  the locality
• Subject to appropriate restrictions during the
  nesting season for birds in the local area that
  are in significant decline or conserved in
  accordance with Federal or State law, as
  determined by the Natural Resources Conservation
  Service state conservationist, haying, mowing, or
  harvesting for seed production and
• Fire rehabilitation and construction of
  firebreaks and fences (including placement of
  posts necessary for fences).
• Sec. 1238 O (b) (1)

52
Terms of Easement or Rental Agreement

• An easement or rental agreement shall (2)
  prohibit
• The production of crops (other than hay), fruit
  trees, vineyards, or any other agricultural
  commodity that requires breaking of the soil
  surface and
• Except as permitted under this subsection or
  subsection (d), the conduct of any other activity
  that would disturb the surface of the land
  covered by the easement or rental agreement
  subsection (d) covers the restoration
  activities.
• Sec. 1238 O (b) (2)

53
Restoration Agreement

• The Secretary shall prescribe the terms of the
  restoration agreement by which grassland, land
  that contains forbs, or shrubland that is subject
  to an easement or rental agreement entered into
  under the program shall be restored.
• The restoration agreement shall describe the
  respective duties of the owner and the Secretary
  (including the Federal share of restoration
  payments and technical assistance).
• Sec. 1238 O (d) (1 and 2)

54
Easement Payments

• In return for granting an easement by an owner,
  the Secretary shall make easement payments to the
  owner in an amount equal to
• In the case of a permanent easement, the fair
  market value of the land less the grazing value
  of the land encumbered by the easement and
• In the case of a 30-year easement or an easement
  for a maximum duration allowed state law, 30
  percent of the fair market value of the land less
  the grazing value of the land for the period
  during which the land is encumbered by the
  easement.
• Easement payments may be provided in not less
  than 1 payment nor more than 10 annual payments
  or equal or unequal amounts.
• Sec. 1238 P (b)(1) (A and B)

55
Rental Payments

• In return for entering into a rental agreement by
  an owner, the Secretary shall make annual
  payments to the owner during the term of the
  rental agreement in a amount not more than 75
  percent of the grazing value of the land covered
  for the contract.
• Sec. 1238 P (b)(2)

56
Federal Cost Share of Restoration

• The Secretary shall make payments to an owner
  under this section of not more than
• In the case of grassland, land that contains
  forbs, or shrubland that has never been
  cultivated, 90 percent of the costs of carrying
  out measures and practices necessary to restore
  functions and values of that land, or
• In the case of restored grassland, land that
  contains forbs, or shrubland, 75 percent of those
  costs.
• Sec. 1238 P (c) (1 and 2)

57
Delegation to Private Organizations

• The Secretary may permit a private conservation
  or land trust organization of a State agency to
  hold or enforce an easement under this
  subchapter, in lieu of the Secretary, if
• The Secretary determines that granting the
  permission will promote protection of the
  grassland that contains forbs, and shrubland
• The owner authorizes the private organization or
  State agency to hold and enforce the easement
  and
• The private organization assumes the costs of
  administration, enforcement and restoration.
• Sec. 1238 Q (a) (1,2, and 3)

58
Expectations in the Implementation of the
Grassland Reserve Program

• The motivation for this program came from
  livestock industry concerns about the breaking
  out of range and urban encroachment on
  grasslands.
• Implementation will initiated in fiscal year
  2003.
• With a finite limitation of 254,000,000 for the
  period of the Act, competition for enrollment
  will likely be intense.
• For the 40 of funds devoted to 10,15 and 20-year
  rental agreements, it is expected that signup and
  enrollment will be conducted in a manner similar
  to the methods currently in use for the CRP.

59
Expectations in the Implementation of the
Grassland Reserve Program (continued)

• For the 60 of funds to be devoted to 30-year
  agreements and easements, or permanent easements,
  it is expected that methods similar to those used
  for WRP. The Wetlands Reserve Program uses
  long-term easements and restoration cost-share
  agreements.
• It is anticipated that the standards for grazing
  should be no more stringent than for programs
  such as CRP, the Conservation Security Program,
  or the Farmland Protection Program.

60
Expectations in the Implementation of the
Grassland Reserve Program (continued)

• There does not appear to be any per person
  payment limitation expressed in the statute.
• Some of the eligible lands under pressure from
  urban encroachment may also be eligible under the
  Farmland Protection Program.