Focus On Ag

February 27, 2023

USDA ANNOUNCES GENERAL CRP SIGN-UP

The USDA Farm Service Agency (FSA) has announced a sign-up period for the Conservation Reserve Program (CRP) in 2023 that will extend from February 27 through April 7 at local FSA offices. The current CRP sign-up period will be for renewing existing CRP contracts and adding farmland acres into the General CRP program. Landowners can sign-up for the Continuous CRP program throughout the year and the sign-up period for the Grassland CRP program will be announced by USDA at a later date. The CRP program offered on a voluntary basis through USDA. The CRP program can be used as a tool by landowners and the agricultural community to invest in the long-term protection and well-being of their land and natural resources.

The CRP program has a long history of promoting conservation practices and farmland stewardship in the United States. The CRP program was established in December of 1985 as part of the 1985 Farm Bill and has remained part of every Farm Bill since that time. The maximum acreage and primary goals of the CRP program have changed over the years; however, the CRP program has been a centerpiece of the Conservation Title every time a new Farm Bill has been written. There may be some adjustments to the CRP program; however, CRP will likely remain a key component of the Conservation Title when the next Farm Bill is completed later this year or beyond.

There are three different CRP programs that agricultural producers and landowners can enroll in:

• General CRP — The General CRP program has only been altered slightly since the CRP program was initiated in 1985. The goal of the General CRP program is to offer producers and landowners the opportunity to put larger land parcels into a 10-year or 15-year CRP contract, and in return receive an annual rental payment from USDA for the acres of tillable farmland that are enrolled into The CRP acres are usually seeded into approved long-term grasses and trees to control soil erosion, improve water quality, and enhance wildlife habitat. More recently, the General CRP program also includes “climate- smart practices” to help increase carbon sequestration and the removal greenhouse gases. Landowners offer land into the General CRP program through a bidding process that includes an acceptable CRP rental rate for the length of the contract. The General CRP rental rates cannot exceed 85 percent of the average cash rental rate in a given county. USDA evaluates all bids submitted through an “Environmental Benefits Index” (EBI), which takes into account the value of the land parcel for protecting the soil, improving water quality, enhancing wildlife habitat, and reducing greenhouse gases, as well as considering the annual cost based on the desired rental rate. A total of 2.1 million acres in the U.S. were accepted through the General CRP sign-up period in 2022, representing approximately 90 percent of the acres that were offered for bid.

• Continuous CRP — Under Continuous CRP, landowners and producers can enroll in the CRP program at any time during the USDA accepts all land parcels that are offered through Continuous CRP into the CRP program, provided that the land meets the established requirements for the program. Many times, Continuous CRP is used on smaller land parcels that have specific environmental benefits, such as near rivers, streams, or drainage ditches, or to re-establish wetlands. The last Farm Bill set the maximum annual payment rate for Continuous CRP at 90 percent of the average county rental rate; however, there has been legislation passed by Congress since the last Farm Bill that have enhanced some financial opportunities through the program. The Continuous CRP program can be part of special programs such as the Conservation Reserve Enhancement Program (CREP), the State Acres for Wildlife Enhancement (SAFE) program, and the Clean Lakes, Estuaries, and Rivers Initiative (CLEAR30). Many times, these special programs are only offered in specific States. Landowners should check with local FSA or Natural Resource Conservation (NRCS) offices for details. Local Soil and Water Conservation District (SWCD) offices are also a good resource for these special initiatives that involve both USDA and State resources.

• Grassland CRP — The Grassland CRP program is a newer initiative and is a “working-lands” program that is available to landowners, ranchers and The goal of the Grassland CRP initiative is to protect grassland, rangeland, and pastures, while maintaining these areas as working grazing lands. These goals are reached by introducing plant species and management practices that provide biodiversity of plant and animal populations, as well as providing important carbon sequestration benefits. There are currently more than 5 million acres enrolled in the Grassland CRP program, including more than 3.1 million new acres that were accepted into the program in 2022. The Grassland CRP program has become quite popular with landowners and ranchers in the Western and Plains States. Interested parties should check with their local FSA or NRCS office for more details on Grassland CRP.

The initial goal of CRP was to reduce soil erosion on highly erodible cropland and to help curb the over-production of farm commodities. Secondary objectives of CRP included improving water quality, fostering wildlife habitat, and providing income support to farmers. More recently, the CRP program has been identified as a valuable tool through the Federal government as a method to promote “carbon sequestration” on working farmland. Currently, getting farmland enrolled into the CRP program is being challenged by very positive economic returns from crop production and by tight grain supplies worldwide, as well as by higher cash rental rates for farmland.

As of December 31, 2022, there were a total of just under 23 million acres enrolled in the CRP program, which is about 4 million acres below the maximum level of 27 million acres for 2023 that was established in the last Farm Bill. Of the total CRP acres, approximately 8.45 million acres are enrolled under a General CRP contract,

7.16 million acres in Continuous CRP, and 6.3 million acres enrolled in the grassland program, with the balance of the acres in CREP, wetlands and other special CRP initiatives. The 2018 Farm Bill set a maximum of 27 million acres, and USDA would like to reach this goal by the end of the current fiscal year on September 30, 2023. Current CRP contracts will expire on approximately 2 million acres on September 30, 2023.

The total annual Federal budget outlay for the CRP program in the 2022 fiscal year was just over $1.83 billion, including $1.73 billion that was paid in annual rental payments to landowners with acres in enrolled in the CRP program. In addition, USDA allocated $68 million in cost-share payments to landowners for establishing desired practices and plant species on CRP acres and $31 million as special incentive payments through the Continuous CRP program. The overall average rental rate for land in the CRP program in the U.S. in 2022 was $78 per acre. This includes average CRP rental rates of $57 per acre for General CRP, $140 per acre for Continuous CRP, $172 per acre for farmable wetlands, $209 per acre for CREP, and $16 per acre for Grassland CRP.

Summary

The future of the CRP program is likely to garner considerable discussion during the next few months, as the next Farm Bill is being developed and written. The CRP program has a long and successful history of preventing soil erosion, improving water quality, enhancing wildlife habitat, and aiding in carbon sequestration. While it may seem quite logical to utilize expansion of the CRP program to reach further goals related to environmental stewardship and carbon sequestration, there could be some obstacles in accomplishing those goals. Commodity prices for corn and soybeans and farm profit levels in the past two years have been at the highest levels in the past decade, resulting in higher land rental rates in many areas. This makes it difficult to convince farmers and landowners to take farmland out of production to enroll in the CRP program or to re-enroll some expiring CRP acreage, unless there are some added financial incentives.

For more information on the current CRP enrollment, expiring CRP acres, rental rates, etc., landowners and farmers should contact their local USDA Farm Service Agency (FSA) office or refer to the USDA CRP web site at: http://www.fsa.usda.gov/crp

****************************************************************************************** Note — For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President,

MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960)

E-mail — kent.thiesse@minnstarbank.com) Web Site — http://www.minnstarbank.com/