Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Monday 02/10/14

A Look at Conservation Programs in the New Farm Law

Breaking down conservation programs in the Agricultural Act of 2014

A key theme in debate about conservation programs was to consolidate them and make it easier for producers to sign up for conservation programs. Another key theme was an emphasis on farm production and working lands. Yet, there could be more pressure for conservation dollars in the coming years as farmers and ranchers face more battles with water-quality demands and soil erosion.

Also, conservation compliance provisions in the farm bill could require more producers to seek technical assistance from USDA and thus also compete for program dollars as well.

Collectively, conservation programs are projected to spend $57 billion over 10 years coming mainly in the Big Three: Conservation Reserve Program, Conservation Stewardship Program and Environmental Quality Incentives Program. They make up $52 billion in projected costs.

The combination of sequestration (-$2 billion) and cuts in the farm bill (-$3.97 billion) led to about $6 billion in projected spending declines in conservation compared to the 2008 farm bill.

Income eligibility: As with commodity programs, the new law has a $900,000 cap on adjusted gross income. That cap can be doubled for married couples with farm operations who filed their taxes separately.

Repealed programs: Consolidating conservation programs meant weeding out a broad range of program names and acronyms including the Grassland Reserve Program, Wetlands Reserve Program, Comprehensive Conservation Enhancement Program, Emergency Forestry Conservation Reserve Program, Farmland Protection and Farm Viability Program, Agricultural Water Enhancement Program, Wildlife Habitat Incentive Program, Great Lakes Basin Program, Chesapeake Bay Watershed Program, Cooperative Conservation Partnership Initiative and Environmental Easement Program. All of these programs are slotted into other areas.

Conservation Reserve Program: The bill sets a 2014 acreage cap at 27.5 million acres, which is actually about 2 million acres above current enrollment numbers, according to FSA reports. The CRP acreage cap declines to 26 million acres in 2015; 25 million acres in 2016; and 24 million acres in 2017 and 2018 fiscal years. As part of CRP, USDA will designate 2 million acres as grassland enrollment. The CBO scored out a $3.3 billion savings in CRP over 10 years due to acreage declines in the program. CRP is expected to cost about $20 billion over 10 years.

The managers' language on CRP states that lawmakers make it easier to use CRP acres for hay or grazing in disasters without any reduction of the rental rate. Newly eligible grasslands will be allowed to be used for both as well as harvesting for seed production. The bill also specifies that wind turbines could be installed on CRP land.

Conservation Stewardship Program: Now the largest conservation program in USDA based on acreage, annual enrollment signups will be set at 10 million acres annually, down from 12.8 million per year set in the 2008 farm bill. The new farm bill also sets an average payment rate of $18 per acre for CSP. Priority for enrollment also is given to lands coming out of CRP. The bill also has language allowing farmers to receive supplemental payments for using crop rotations that conserve resources. The program is projected to cost about $16.6 billion over 10 years.

Environmental Quality Incentives Program: The program will now place greater significance on issues such as soil health, water quality and nutrient management. The bill also keeps its allocation of 60% going to livestock producers and 5% targeted for practices benefiting wildlife. The payment limit for the five-year farm bill for EQIP was raised to $450,000. EQIP got a small boost in annual funding and is expected to cost about $15.7 billion over 10 years.

Agricultural Conservation Easement Program: ACEP helps eliminate and consolidate the Wetlands Reserve Program and Grassland Reserve Program and the Farmland Protection Program. It allows landowners to set aside land for natural resources or ensure that land remains in agricultural production. Generally, it will require landowners to create such easements by going through a state or local government entity to sign a contract. The program has specific requirements regarding how a tract of land would qualify, which is comparable to past easement efforts in other programs. Grassland programs could qualify for payments of up to 75% of the land's fair market value. Easement time frames will be based on the total value of the easement.

Regional Conservation Partnership Program: The bill eliminates some conservation priority designations used for funding in the last bill, such as the Chesapeake Bay, Great Lakes and Long Island Sound regions. Those programs are actually moved into the Regional Conservation Partnership Program, which is an effort to consolidate such programs. The RCPP will allow USDA to designate certain conservation priorities and set aside funding from programs such as CRP, CSP and EQIP for those areas.

Voluntary Public Access and Habitat Incentive Program: Rather than using discretionary funds, the program now mandates $40 million a years to give incentives for private landowners to allow public access on their land for hunting, fishing or other recreational activities.

Small Watershed Rehabilitation Program: Sets aside $250 million to refurbish small watershed reservoirs.

(Carried over from crop insurance)

Conservation compliance: The bill requires conservation compliance with highly erodible land and wetland conservation practices to be eligible for premium subsidies when buying crop insurance. A farmer who has not had to comply with conservation compliance for commodity program eligibility will have five years to develop an approved conservation plan. That ineligibility language would only apply after a final determination has been made and only applies to future crop years afterward. "A determination is not final until after the producer has exhausted all administrative appeal rights." This doesn't mean a producer found ineligible cannot buy crop insurance, but they cannot receive the premium subsidy. A farmer also has at least two years of reinsurance to mitigate a wetlands conversion before becoming ineligible. The provision doesn't apply to any wetland conversion prior to enactment of the bill. Also, for producers who convert wetlands of fewer than five acres, the farmer can make a contribution to conservation equal to 150% of the cost of mitigation to remain eligible for the premium subsidy.

Sodbuster: Meant to discourage the breaking of new ground, the farm bill reduces crop-insurance benefits for farmers who plow native sod. Under the provision, insured yield would be 65% of the county transitional yield for the first four years of production. The premium subsidy also would be reduced by 50% as well. This provision only applies to farmers in parts of Iowa, Minnesota, Montana, Nebraska, North Dakota and South Dakota, a region known as the prairie-pothole region.

Missed out: One thing the farm-bill negotiators didn't do was get rid of the provision in December's budget agreement that allows USDA to charge up to $150 for helping farmers write conservation plans. USDA hasn't implemented the provision, but the department still has the opportunity to do so.

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Posted at 3:01PM CST 02/10/14 by Chris Clayton
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