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Land retirement programs remove land from crop production.
In exchange for retiring land, producers receive rental or
easement payments plus cost sharing and technical assistance
to aid in the establishment of permanent cover. Economic use
of the land is limited.
Land retirement has dominated Federal agricultural conservation
spending since 1985. In fiscal year (FY) 2000, 90 percent
of cash conservation payments made directly to producers were
associated with land retirement, including rental and easement
payments and cost sharing for establishment of permanent cover.
Roughly 50 percent of all USDA conservation spending
since 1985 has been for land retirement. Overall, USDA conservation
spending also includes cost sharing and technical assistance
for non-land retirement activities, public works, and a range
of other administrative, data collection, and research activities.
Nearly all Federally funded land retirement occurs in the
context of two programs—the Conservation Reserve Program
(CRP) and the Wetland
Reserve Program (WRP).
Key Changes
The CRP acreage cap is increased from 36.4 million acres to
39.2 million acres. The Congressional Budget Office (CBO)
estimates increased spending of $1.5 billion over 10 years
over April 2002 baseline spending (i.e., spending anticipated
without the program change).
The WRP acreage cap is more than doubled, increasing by 1.2
million acres—1.075 million acres to 2.275 million. The
Secretary of Agriculture is required (to the greatest extent
practicable) to enroll 250,000 acres per year. CBO estimates
increased spending of $1.5 billion over 10 years.
Summary of Provisions
- The Conservation Reserve Program offers annual
payments and cost sharing to establish long-term, resource-conserving
cover on environmentally sensitive land. To participate,
producers submit bids that specify practices to be used
(e.g., grass, trees, wildlife habitat, filter strips) and
the annual rental payment and cost sharing they are willing
to accept for establishing these practices. Bids are ranked
for selection using the Environmental Benefits Index (EBI),
which incorporates six environmental factors (including
soil erosion, water quality, and wildlife habitat) and contract
cost. Contracts are for 10 to 15 years.
- The Wetlands Reserve Program provides cost sharing
and/or long-term or permanent easements for restoration
of wetlands on agricultural land. Permanent easements account
for 70 percent of enrolled acreage. Wetlands can also be
restored under 30-year easements or under 10-year agreements
that provide only restoration cost sharing. When selecting
among proposed restoration sites, restoration of wetland
wildlife habitat is emphasized. Landowners retain land ownership
and rights to recreational uses, such as hunting and fishing.
Economic Implications
A total of 34.9 million acres are currently enrolled in CRP
and WRP. The 2002 Farm Act expands authority for land retirement
by a total of 4 million acres, an increase of nearly 11 percent
over current authority. At present, an additional 2.6 million
acres of previously available CRP enrollment is unused authority.
Thus, existing authority for additional land retirement is
6.6 million acres, about 19 percent of current enrollment.
In addition to potential environmental benefits, retiring
more land from crop production can help reduce commodity supply
and help support commodity prices. The effect of retiring
additional acres, however, will be modest—6.6 million
acres is roughly 2 percent of harvested cropland. Because
these programs are voluntary and not commodity-specific, enrollment
and subsequent commodity output, price, and environmental
effects will depend on who bids and how bids are selected.
About 60 percent of currently enrolled acreage is in the Great
Plains (ERS-defined Farm Resource Regions of the Prairie Gateway
and Northern Great Plains, with about 30 percent of acreage
in each region). If this pattern is maintained, a majority
of new acres will be enrolled in the Plains, so that commodity
supply and price effects could be more significant for crops
grown in these regions (e.g., wheat).
Between 1.2 and 1.7 million acres of the new authority will
be devoted to wetland restoration. The WRP enrollment cap
will increase by 1.2 million acres. In the CRP, 500,000 acres
of the 2.8-million-acre increase in the acreage cap could
be used to enroll farmed wetlands and associated buffer acreage.
Wetlands provide significant environmental benefits. Because
land restored to wetland tends to be less productive than
other cropland, the potential commodity supply and price effects
of enrolling this land are likely to be quite small.
For More Information...
For Program Agency Information...
- Farm
Service Agency—Administers the Conservation Reserve
Program (CRP), the Conservation Reserve Enhancement Program
(CREP) and other conservation programs.
- Natural
Resources Conservation Service—Administers the
Environmental Quality Improvement Program (EQIP), Wetland
Reserve Program (WRP), Wildlife Habitat Improvement Program
(WHIP), Farmland Protection Program (FPP), and other conservation
programs.
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