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Groundwater, Crop Prices Affecting Conservation Reserve Program Demand

The application deadline for landowners to enroll in the Conservation Reserve Program passed on Feb. 26 and it was one of the most competitive years in the program’s 30-year history. The program, led by the United States Department of Agriculture (USDA) and the Farm Service Agency (FSA), pays landowners for taking land out of agriculture and leaving it to grow naturally. First introduced to combat soil erosion, the program now offers benefits in all kinds of conservation efforts.

Competition for the program heated up for a few reasons. In Door County, one of them is groundwater.

“I have had more inquiries about CRP in Door County recently,” said Tim Siehr, Door County executive director for the FSA. “Non-farmer landowners are checking out CRP as a rental source in lieu of renting it to the neighbor who is using chemicals and applying manure on fields over shallow soils.”

When land is enrolled in CRP, the farmer or landowner is required to leave it alone, allowing only for periodic mowing during specific times of the year. Typically, there is no manure spreading, pesticide use or weed control while the land is under conservation.

However, in 2008, the USDA waived the restriction of manure spreading on CRP land in some cases due to flooding, citing there are no other places to apply manure safely due to heavy rains.

“As the groundwater concerns grow in Door County, we likely will see more interest in CRP,” said Siehr.

The majority of CRP land is held by landowners who are not farmers and do not have an interest in renting to a farmer. Their land, which otherwise lies dormant, can generate income with the added effort of just filling out an application.

The amount of income is calculated by the potential benefit to conservation, the productivity of the soil, and the local cash rents on farmland.

“A criticism of CRP years ago was the rental rate that FSA paid was higher than local rent paid by farmers,” said Siehr. “As a result, many landowners enrolled in CRP because they receive a higher annual rent than what the neighbor would pay.”

Under the most recent CRP signup, the average rental rate in Door County is $90.28 per acre, ranging from $68 to $138 per acre.

The government will pay more for land that is near environmentally sensitive areas and would otherwise produce a good crop. These CRP payments try to mirror the amount a farmer would pay a landowner to farm the land, but the USDA has had trouble keeping up with the dramatic increase in local land rents, according to Siehr.

On the national level, USDA decreased the number of acres in the program since its inception in 1985, when 45 million acres were enrolled. In 2016, the enrollment cap is at 25 million acres and will continue decreasing in the next two years.

Siehr thinks this decrease is mostly due to a better program, where more concentrated efforts at conservation are producing better results.

“There are many reasons why CRP acres have declined in the county,” said Siehr. “What we have today though is CRP acres that provide higher environmental benefits, on average, than what we had years ago.”

When a landowner applies for the program, the land is assessed for its potential impact on the environment and potential benefit in conservation. Land with higher scores are generally granted the CRP contracts, which binds the property between 10 and 15 years.

With the goal of combating soil erosion, “In Door County, land is relatively flat, resulting in lower competitive scores,” said Siehr. “The only reason most of our CRP offers are accepted is we drain directly into Lake Michigan which puts Door County in a national priority category.”

The entire peninsula north of Sturgeon Bay is considered a national priority conservation area, a designation maintained by The Nature Conservancy.

The prices for agriculture commodities played a big part in the programs past and the recent commodity crash may play a part again. When the program was developed in 1985, it served as a market tool as much as a conservation effort. Farmers were overproducing grains and by paying them to produce less, the government could better control supply.

A 2007 study out of Iowa State University concluded that high crop prices due to the ethanol boom resulted in less land enrolled in CRP because farmers could make more money farming than the government was paying to not farm. The USDA said the opposite may also be true.

“At times when commodity prices are low, enrolling sensitive lands in CRP can be especially attractive to farmers and ranchers, as it softens the economic hardship for landowners at the same time that it provides ecological benefits,” said Agriculture Secretary Tom Vilsack in a December statement.

In the past year, prices on the primary agriculture commodities in Wisconsin including corn, wheat and soybeans, have decreased by an average of 14 percent. This translates into land being less profitable for farmers who are producing. Siehr said that he hasn’t seen a direct correlation to the low commodity prices and an increase in CRP demand, but if prices stay low, that could change.

“I had one farmer tell me that I could offer him $1,000 an acre and he would not take it if it meant not planting it to a crop,” said Siehr. “Certainly he was extreme in his view. However, farmers plant crops and they don’t like to think of leaving land idle if it could be farmed, even if economically it may make more sense to idle through CRP.”

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