ERS Charts of Note

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Farms and acres covered by direct payments, crop insurance, and conservation programs

Tuesday, March 20, 2012

In recent years, direct payments (DPs) have been a key source of environmental compliance (EC) incentives. Under EC, farmers must apply approved soil conservation systems to highly erodible cropland and refrain from draining wetland to maintain eligibility for most USDA agricultural programs. Federally subsidized crop insurance is the only large USDA program that is not currently subject to EC. Direct payments may be reduced or eliminated in the next farm bill (due in 2012) to help reduce the Federal budget deficit. An end to DPs would sharply reduce compliance incentives for many farms. Some farmers (but not all) would continue to be subject to EC because of other payments, primarily conservation and disaster assistance. One way to fill the incentive gap for other farmers would be to extend EC requirements to crop insurance. The extent to which crop insurance could replace compliance incentives now supplied by DPs will depend, in part, on the extent to which farmers who receive DPs also buy crop insurance. Roughly 141,000 farmers (7 percent), operating on 33 million acres of cropland (8 percent), received DPs in 2010 but did not purchase crop insurance or receive conservation payments. For these farms, extending compliance requirements to cover crop insurance would not replace DP incentives. In 2010, 181,000 farms (9 percent), operating on 141 million acres of cropland (36 percent), received DPs and also purchased crop insurance, but did not receive conservation payments. For these farms, making crop insurance subject to compliance sanction could help compensate for compliance incentives lost if direct payments end. Farmers who do not receive DPs or other payments subject to compliance but do purchase crop insurance may be subject to compliance requirements for the first time. In 2010, an estimated 53,000 farms (2.4 percent) with 17 million crop acres (4.3 percent) received neither conservation payments nor DPs but did purchase crop insurance. Some of these farms may already be subject to compliance requirements because of disaster payments. Of course, farms facing compliance requirements based on crop insurance coverage would be affected only if they continued to purchase crop insurance. This chart is found in the ERS report, The Future of Environmental Compliance Incentives in U.S. Agriculture, EIB-94, March 2012.

Environmental compliance across federal farm programs

Tuesday, March 13, 2012

Environmental compliance requires farm program participants to conserve soil on highly erodible cropland and refrain from draining wetlands or risk losing all or part of most farm program payments. Since 2008, "direct payments" have accounted for a large share of payments subject to withholding. Federally subsidized crop insurance is not currently subject to environmental compliance but has been in the past. If direct payments are reduced or eliminated in future farm legislation but crop insurance is again subject to withholding, environmental compliance incentives would change. In many areas where crop production is risky, such as the Northern Plains, crop insurance could provide a conservation incentive that is equal to or even larger than direct payments. In other areas, such as the Mississippi Delta, compliance incentives could decline. This map appears in the March 2012 issue of Amber Waves magazine.

USDA conservation spending on working agricultural lands bucks long-term trend

Tuesday, August 23, 2011

USDA provides technical and financial assistance to help farmers implement conservation practices on working agricultural lands or on lands temporarily retired from production. As measured in constant (2009) dollars, Federal conservation assistance has fluctuated widely during the past 60 years. Rapid increases in spending have typically been associated with large-scale land retirement in the Soil Bank (1956-1972) and Conservation Reserve (1986-present) Programs. Since 2002, however, and after several decades with stable levels of spending, there has been a big increase in conservation assistance through programs that help farmers defray conservation costs on working agricultural lands. This chart may be found in the September 2011 issue of Amber Waves magazine.

The grassland-cropland margin

Monday, July 25, 2011

Land that moves between grassland and cultivated cropland is, by definition, at the margin between these uses. Nationally, the most active grassland-cultivated cropland margin between 1997 and 2007 was for hay. More than 26 million acres moved between cultivated crops and hay, resulting in a net shift of 4.8 million acres from cultivated crops to hay. More than 15 million acres moved between cultivated cropland and pasture, resulting in an overall shift of 5.5 million acres from cultivated crops to pasture. In contrast, the margin between cropland and rangeland involved less than 3.1 million acres. Roughly 1.3 million acres of range were converted to cultivated cropland, while 1.8 million acres went the other way for a net conversion from cultivated crops to range of about 500,000 acres. The CRP appeared to serve as a transitional land use between cultivated crop and forage production. Total CRP enrollment was roughly 32 million acres in both 1997 and 2007. During this period, however, 11.1 million acres of cultivated cropland were enrolled in the CRP for the first time while only 6.1 million acres were returned to cultivated crops. This chart is from the ERS report, Grassland to Cropland Conversion in the Northern Plains: The Role of Crop Insurance, Commodity, and Disaster Programs, ERR-120, June 2011.

History of the Conservation Reserve Program

Wednesday, April 20, 2011

USDA's Conservation Reserve Program (CRP) was established in 1985 and by 1986 began enrolling highly erodible cropland using contracts that retired land from crop production for 10-15 years. Enrollment grew quickly, reaching 33 million acres by 1990. After the initial contracts were awarded, program goals were expanded to include water quality and wildlife habitat improvements in addition to reduced soil erosion. To capture these multiple objectives, an Environmental Benefits Index (EBI) was adopted in the 1990s to rank competing offers for CRP's periodic "general signups," but didn't begin to have a measurable impact on enrollment until 1998. At about the same time, a "continuous CRP signup" began enrolling parcels of land with high environmental benefits outside of the EBI ranking process. Enrollment in continuous programs has steadily increased, as has their role in expanding CRP benefits. Between 1990 and 2008, CRP enrollment fluctuated around 33 million acres. As of February 2010, the program enrolled 31.2 million acres. This includes about 4.5 million acres of continuous signup acres. This chart appeared in the ERS publication, The Influence of Rising Commodity Prices on the Conservation Reserve Program, ERR-110, February 2011.

More farms find methane digesters profitable at higher carbon prices

Monday, March 21, 2011

Methane digester systems capture methane from lagoon or pit manure storage facilities and use it as a fuel to generate electricity or heat. In addition to providing a renewable source of energy, digesters can reduce greenhouse gas emissions and provide other environmental benefits. Methane digesters have not been widely adopted in the United States mainly because the costs of constructing and maintaining these systems have exceeded the value of the benefits provided to the operator. But policies to reduce greenhouse gas emissions could make such biogas recovery facilities profitable for many livestock producers. Without a carbon market (when the price is zero), no hog and few dairy operations find it profitable to adopt a digester. As the carbon price increases, more operations adopt digesters, lowering emissions. At a carbon price of $13, greenhouse gas emissions could be reduced by 9.8 and 12.4 million tons (carbon dioxide equivalent) for the dairy and hog sectors, respectively. This amounts to reductions of 61-62 percent of manure-generated methane in these sectors. A doubling of the carbon price to $26 could cause manure-based methane emissions from dairy and hogs together to be reduced by 78 percent. This chart was originally published in Carbon Prices and the Adoption of Methane Digesters on Dairy and Hog Farms, EB-16, February 2011.

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