Conservation and the 2002 U.S. Farm Bill

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Conservation and the 2002 U.S. Farm Bill

• Kathy Baylis
• University of California, Berkeley
• October 15, 2002

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Background

• U.S. Farm Bills every 5 years (or so).
• They include conservation policy.
• 2002 U.S. Farm Bill passed in April.
• Lots of at stake.

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Why Do We Care?

• Agriculture affects a lot of resources.
• Ag. conservation funding is a large portion of
  U.S. Environmental .
• Canada considering similar programs.

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Setting for the 2002 U.S. Farm Bill

• Since 1998, U.S. government paying 7 B/year in
  emergency bailouts.
• April 2001, max of 73 B over 10 years extra
  for new farm bill.
• Max became Min, and question became how to spend
  the .

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Setting contd

• Conservation seen as a trade friendly way to
  transfer to farmers.
• Conservation seen as offset to price supports.

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Brief History - the early years

• Begins in 1930s
• Land Retirement
• Ag. Conservation Program 1936 paid to switch
  from soil-depleting crops.
• Technical Assistance
• Soil Conservation Service 1935.
• Regulation/Compliance
• Pesticide regulation 1947.
• Clean Water Act, Endangered Species Act 1972-3.

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U.S. Conservation , 1934-1998 (1996 constant
dollars)
Source USDA-ERS, 2000
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Types of Conservation Programs

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Conservation expenditure
Source USDA 2001
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Land retirement

• What?
• 10-15 year contracts for idling cropland.
• How Much?
• 92 cents of every direct conservation .
• 25 max per county.
• No room left in program.

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Land retirement contd

• Why?
• soil erosion.
• since 1996, based on Environmental Benefits Index
  (e.g. water, habitat).
• supply reduction (subcontext).
• Who?
• Over ½ of payments go to people who are not
  farmers.

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Land Conservation Payments by State, 2001 ( of
U.S.)
7.2
7.0
5.8
11.5
5.9
6.5
6.4
0 - 0.9
9.1
1 - 1.9
2 - 2.9
3 - 3.9
gt 3.9
Source FSA 2001
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Agricultural Revenue by State, 2000 ( of U.S.)
5.6
13.0
0 - 0.9
6.9
1 - 1.9
2 - 2.9
3 - 3.9
Source ERS 2001
gt 3.9
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Direct Government Income Support by State, 2000
( of U.S.)
5.0
6.6
10.0
6.3
8.7
5.3
0 - 0.9
7.0
1 - 1.9
2 - 2.9
3 - 3.9
gt 3.9
Source ERS 2001
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U.S. Senate Agriculture Committee Members, 2001
Members from states in white
Close 2002 senate elections
Source Senate 2001
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Working Land Programs (e.g. EQIP)

• What?
• Cost-share program.
• 5 to 10 year contracts.
• Funding split between livestock and crops.
• State-determined priority areas.
• How much?
• 80,000 contracts, covering 34 million acres.
• backlog of 197,000 applications on 67 million
  acres.
• Current cost 200 m.

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EQIP Allocation by State, 2001 ( of U.S.)
0 - 0.9
12.2
1 - 1.9
2 - 2.9
3 - 3.9
gt 3.9
Source NRCS 2001
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2002 Farm Bill

• Focus on working lands programs.
• EQIP funding increased (200 m to 1,300 m), and
  increases per producer cap.
• Conservation Security Program (green payments).

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2002 U.S. Farm Bill contd

• Land retirement
• CRP cap increased (from 36.4 to 39.2 million
  acres).
• Doubled WRP acreage cap.
• Grasslands Reserve Program (GRP) to retire
  pasture.

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CSP

• Tier 1
• Address 1 resource concern (both new and existing
  practices), 5 year.
• 6 of county rental rate (for specific land use),
  20,000 ceiling
• Tier 2
• 1 resource concern for total operation, 5 to 10
  year.
• 11 of county rental rate, 35,000 ceiling
• Tier 3
• All resource concerns for operation, 5 to 10
  year.
• 20 of county rental rate 50,000

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Two Conservation Amendments (Bohlert-Kind
Reid-Leahy)

• Transfer close to 2 billion/year from commodity
  programs to conservation.
• take funds from large farms.
• ramped up some programs 10 fold in a few years.
• In House (Bohlert-Kind) lost 200 to 226.
• Reid-Leahy also adds water retirement under CRP.
• Lost in Senate although aspects introduced into
  Senate farm bill.

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Meanwhile

• The 2002 U.S. farm bill also increases price
  supports,
• increasing production,
• and increasing the opportunity cost of
  conservation.

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Commodity Title

• Fixed payments on updated acres.
• Introduces countercyclical payments paid on
  past production.
• Loan rates increased and new commodities added.

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U.S. Agricultural Spending
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New Loan Rates
2001/02 ave Mar 2002
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Target Prices Fixed Payments
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Corn price and support
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Soybean price and support
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Issues

• What is the real environmental effect of the farm
  bill?
• Market for Green Payments versus Maximizing
  benefits.
• Other
• Tradable permits Water rights.
• for carbon sequestration pilots and other
  innovation grants.