Schafer: No early CRP opt-outs
If you were hoping to kick enrolled acres out of CRP and not have to pay the required penalty, a Tuesday announcement may disappoint you.
Secretary of Agriculture Ed Schafer announced Tuesday afternoon that no penalty-free opt-outs for acres currently enrolled in the Conservation Reserve Program (CRP) will be allowed this year.
"We believe the decision that we are announcing today strikes best balance between supporting programs to protect natural resources and meeting the demands for grain production," Schafer said Tuesday.
In his announcement, Schafer cited recent reports that indicate this year's corn and soybean crops have bounced back from a harsh early spring, as well as the recent downturn in the grain trade, as the main reasons for the CRP decision.
"Indications so far are that the impact on this year's corn and soybean crops will be less than what was originally feared," Schafer said of early-season weather, including the major flooding that hit parts of the Midwest earlier this summer. "The markets have reacted to encouraging reports on crop conditions. The strength of America's farmers in meeting demand has reassured the markets that there will be adequate supplies this year."
Schafer said USDA numbers indicate that, despite crop problems in parts of the country, U.S. corn farmers are still expected to raise the second-largest crop in history on around 79 million acres. And, livestock producers -- the ones who have been most affected by high grain prices and tight supplies -- have and will continue to recoup some losses they incurred from record-high prices in recent weeks, the Secretary said. In the corn trade in recent weeks, prices have declined by 25% from highs set earlier this summer, he added.
Even without penalty-free opt-outs, Schafer said this spring's passage of the '08 farm bill will still dictate a smaller CRP. The new law will lower the cap on CRP acres, he said, from 39.2 to 32 million, with between 1 and 5 million acres coming out each September for the next three years (1.1 million this year, 3.8 million in 2009 and 4.4 million in 2010). This will make it possible for many farmers to make use of those acres for crop production after contract expiration.
USDA Farm Service Agency Deputy Administrator John Johnson said Tuesday a higher percentage of the land coming out this fall is in the Great Plains where winter wheat is grown and a smaller amount is in corn- and soybean-growing regions.
Schafer said that farmers can take CRP out early on their own if theyâ€™re willing to return rental payments and pay a penalty. Over the past 19 months, Johnson said, farmers have opted for an early out and penalties son 288,726 acres that were in the CRP, averaging about 15,200 acres a month. The spike was last spring, when farmers took out some 34,000 acres in April and almost 37,000 acres in May.
"Large blocks of land will be available for other uses if landowners choose to pursue them," Schafer said Tuesday. "Participants can still take land out in exchange for repaying payments. Where this option makes economic sense for contract holders, they are clearly choosing to use it."