Grainnet, IL
07-25-07
NGFA Urges Senate to Provide CRP Flexibility in Farm Bill
Washington, DC-–The National Grain and Feed Association urged the Senate on
July 20 to provide flexibility in the operation of the Conservation Reserve
Program (CRP) when drafting its version of the 2007 farm bill to enable
producers to bring tillable acreage back into production in response to market
demand.
In a letter submitted to the Senate Agriculture Committee, the NGFA urged the
Senate to adopt a provision included in the House Agriculture Committee-passed
version of the farm bill that would allow producers, with the approval of the
secretary of agriculture, to terminate CRP contracts without penalty if those acres
have been enrolled for five years or more.
Under this provision, nearly 10 million acres of the most environmentally
sensitive land enrolled in the CRP would remain ineligible for early termination;
but producers would have the flexibility to respond to market demand by
removing tillable, environmentally sustainable acres from the land-idling program.
Under current law, a hefty economic barrier discourages producers and
landowners from removing tillable acres from the CRP prior to contract
expiration.
To do so, they first must pay back all CRP rental and cost-share payments
received over the entire life of the contract.
This is in addition to the costs farmers and landowners bear in preparing idled
CRP land for production, as well as forgoing future CRP rental payments on land
removed from the program.
The NGFA also asked the Senate to remove another economic disincentive
under current law, which does not allow CRP acres to be eligible for farm
program payments and benefits if removed prior to contract expiration.
The NGFA, established in 1896, consists of 900 member companies from all
sectors of the grain, feed, processing and exporting business that operate about
6,000 facilities nationwide and handle more than 70 percent of all U.S. grains and
oilseeds.
The NGFA also consists of 35 affiliated state and regional U.S. grain and feed
associations, as well as two international affiliated associations.
In addition, the NGFA has strategic alliances with the North American Export
Grain Association, Grain Elevator and Processing Society, and Pet Food
Institute.
The CRP currently represents – in acreage terms – America’s “fourth largest
crop,” consisting of 36.7 million acres that represent roughly 15 percent of
available farmland.
“Given expected domestic demand growth for grain, it is not sound policy to
simply reauthorize the CRP in its existing form,” wrote NGFA President Kendell
W. Keith.
“Doing so would lock up additional farmland for an entire decade under very rigid
program rules with heavy economic penalties that create insurmountable barriers
for landowners to restore to crop production tillable land that can be farmed in
environmentally sensitive ways.”
Instead, the NGFA urged the Senate to refocus scarce conservation spending on
working lands programs, such as the Environmental Quality Incentives Program
(EQIP), which is focused on enhancing water quality, and the Conservation
Security Program, which provides cost-share payments for implementing sound
conservation practices on working farmland.
“The NGFA recognizes the importance of a strong conservation title as part of
any successful farm bill,” the association wrote.
“But we encourage Congress to redirect conservation resources to focus on
working lands programs coupled with a shift away from land-idling schemes.”
The NGFA noted that the results of an Iowa State University (ISU) study on
biofuels growth completed in May showed that the market will need to attract 94
million to 112 million acres into corn production each year.
Even with projected high levels of corn plantings and strong prices, the study
found there is virtually no leeway for supply disruptions caused by weather, plant
disease, transportation capacity constraints or other factors.
The study was funded in part by the National Grain and Feed Foundation, as well
as seven other national organizations representing the livestock, poultry, meat
and food industry sectors.
The ISU study, conducted by its Center for Agricultural and Rural Development,
also found that the CRP represents the largest source of available U.S. tillable
acres, and could “alleviate some of the financial stress on livestock producers”
(during the early years of rapid ethanol growth), as well as mitigate short-term
supply disruptions caused by drought or other weather anomalies.
Further, it found that biofuels growth could cause a 25 percent decline in U.S.
wheat plantings and cut U.S. wheat exports by more than half. “Given that CRP
land is concentrated heavily in traditional wheat-planting areas, additional land
coming out of CRP could relieve some of the economic stress on the U.S. wheat
sector and keep the United States more competitive in global wheat markets,”
the NGFA said.
In addition to providing flexibility to allow penalty-free early outs from the CRP
and making CRP acres eligible for farm program benefits once they exit the CRP,
the NGFA also urged the Senate to:
• Direct the U.S. Department of Agriculture (USDA) to allow dryland crop
production on any lands enrolled for water-conservation purposes in the
Conservation Reserve Enhancement Program (CREP). Such a provision,
sponsored by Rep. Jerry Moran, R-Kan., was included in the House Agriculture
Committee-passed farm bill. Initiatives under CREP, which is an offshoot of the
CRP, are developed in response to state or local initiatives that identify specific
conservation geographic areas or practices to address such issues as impacts
on water supplies, reduced fish habitats or loss of critical habitat for threatened or
endangered wildlife species. As of June, there were 960,040 CREP acres
enrolled on 36,569 farms nationwide. “While the main goal of CREP is to reduce
water use, enrolled landowners currently are required to cease all agricultural
production (under 10- to 15-year CREP contracts), even if the soil is suitable for
dryland farming,” the NGFA noted.
• Direct that USDA allow early preparation of CRP land that is scheduled to
expire or is nearing eligibility for early contract termination. “As the market
expands opportunities for producers, this would ease the transition into
production and improve the potential for successful cultivation,” the NGFA said.
• Direct that USDA study and report to Congress on the provision under current
law under which no more than 25 percent of a county’s tillable acreage is to be
enrolled in the CRP. The NGFA said it remains concerned that this ceiling has
been exceeded in several counties because USDA initially relied upon inaccurate
data. Further, the NGFA said the cap does not acknowledge that CRP ground
often is concentrated in certain areas of a county and results in a greater-than25-percent loss in agricultural output from the county.
The NGFA noted that several other producer and agricultural organizations are
urging CRP reform as part of the 2007 farm bill.
The National Corn Growers Association, National Association of Wheat Growers,
National Cattlemen’s Beef Association and others have urged the congressional
agriculture committees to place greater focus on enrolling only CRP acres with
the highest environmental benefits, and to allow increased economic use of CRP
land if conditions warrant while still maintaining the conservation value of the land
and reducing conservation rental payments.
“The CRP was never intended to be a permanent land-retirement program,” the
NGFA wrote.
"With modern farming practices (no till, minimum tillage, filter and buffer strips),
more land can be farmed today in an environmentally sustainable way than when
the CRP began.”
The NGFA’s membership encompasses all sectors of the industry, including
country, terminal and export elevators; feed manufacturers; cash grain and feed
merchants; end users of grain and grain products, including processors, flour
millers, and livestock and poultry integrators; commodity futures brokers and
commission merchants; and allied industries. Canadian and Mexican firms also
are NGFA members, and use its Trade Rules and Arbitration System by specific
reference in their contracts.