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Compliance incentives under the 2014 Farm Act would be lower without link to crop insurance premium subsidy

Wednesday, November 1, 2017

To be eligible for most U.S. farm program benefits, participating farmers must apply soil conservation systems on cropland that is particularly vulnerable to soil erosion. The 2014 Farm Act re-linked crop insurance premium subsidies to this provision, known as Highly Erodible Land Compliance (HELC), for the first time since 1996. These premium subsidies account for a significant share of Compliance incentives—typically between 30 and 40 percent, depending on crop prices. The 2014 Act also included major changes in other Compliance-linked programs, including the elimination of Direct Payments, a large program under the 2008 Farm Act. On individual farms, Compliance-linked benefits could be higher or lower than they would have been under a continuation of the 2008 Act. Under the 2014 Act (blue bars), ERS researchers estimated that less than 10 million acres are on farms that would have experienced a 50-percent or larger decline in Compliance incentives between the two Farm Acts given crop prices similar to 2010 levels. If premium subsidies were not subject to Compliance (green bars), more than 40 million acres of cropland in HEL fields would be on farms where Compliance incentives would decline by 50 percent or more. This chart appears in the July 2017 Amber Waves feature, "Conservation Compliance in the Crop Insurance Era."

Conservation Compliance links crop insurance premium subsidies to soil conservation

Friday, September 15, 2017

Most U.S. agricultural programs that provide payments to farmers require participating farmers to apply soil conservation systems on cropland that is particularly vulnerable to soil erosion. ERS research shows that this provision, Highly Erodible Land Compliance (HELC), is effective in reducing soil erosion when the farm program benefits that could be lost due to noncompliance exceed the cost of meeting conservation requirements. Under the 2014 Farm Act, some programs previously linked to HELC were eliminated, while new ones were created. In addition, crop insurance premium subsidies were re-linked to HELC for first time since 1996. Twenty-five million acres of highly erodible cropland are estimated to be in farms with relatively strong Compliance incentives (rightmost bars) under the Act. Without premium subsidies, farms with this level of HELC incentive would include only 14 million acres of highly erodible cropland. By comparison, farms with relatively weak Compliance incentives (the second and third sets of bars) include an estimated 27 million acres of highly erodible cropland. Without premium subsidies, farms with this level of HELC incentive would include an estimated 45 million acres of highly erodible cropland. A version of this chart appears in the ERS report, Conservation Compliance: How Farmer Incentives Are Changing in the Crop Insurance Era, released July 2017.

Almond producers accounted for 80 percent—over $280 million—of pollination service fees in 2016

Monday, August 7, 2017

Farmers growing crops that depend on pollination can rely on wild pollinators in the area or pay beekeepers to provide honeybees or other managed bees, such as the blue orchard bee. In 2016, U.S. farmers paid $354 million for pollination services. Producers of almonds alone accounted for 80 percent of that amount—over $280 million. By comparison, producers of apples and blueberries paid about $10 million each. Pollination services helped support the production of these crops—which, in 2016, had a total production value of about $5.2 billion for almonds, $3.5 billion for apples, and $720 million for blueberries. Between 2007 and 2016, the production value of almonds grew by 85 percent in real terms, while the production value of both apples and blueberries grew by about 15 percent. Over the same period, the number of honey-producing colonies grew by 14 percent. This chart uses data found in the ERS report Land Use, Land Cover, and Pollinator Health: A Review and Trend Analysis, released June 2017.

Conservation Compliance has significantly reduced water erosion on fields designated as highly erodible

Friday, July 28, 2017

Conservation Compliance ties eligibility for most Federal farm program benefits to soil and wetland conservation requirements. Under Highly Erodible Land Conservation (HELC), for example, farmers who grow crops in fields designated as highly erodible land (HEL) must apply an approved conservation system—one or more practices that work together to reduce soil erosion. ERS researchers used a statistical model to compare water (rainfall) erosion on cropland in HEL fields to similar cropland not in HEL fields. Between 1982 and 1997, soil erosion reductions were significantly larger in HEL fields (39 percent, or 6.6 tons per acre) than in those not designated as HEL fields (24 percent, or 3.9 tons per acre). The difference—about 2.7 tons per acre—is statistically different from zero, suggesting that HELC did make a significant difference in soil erosion reduction. During 1997-2012, after the initial implementation of HELC was complete, ERS analysis finds that these soil conservation gains were maintained. This chart appears in the July 2017 Amber Waves feature, "Conservation Compliance in the Crop Insurance Era."

The Conservation Reserve Program (CRP) is regionally concentrated

Tuesday, March 28, 2017

As of the end of 2016, the Conservation Reserve Program (CRP) covered about 23.5 million acres of environmentally sensitive land in the United States. With a $1.8 billion annual budget, CRP is currently USDA’s largest conservation program in terms of spending. Farmers who enroll in CRP receive annual rental and other incentive payments for taking eligible land out of production for 10 years or more. Program acreage tends to be concentrated on marginally productive cropland that is susceptible to erosion by wind or rainfall. A large share of CRP land is located in the Plains (from Texas to Montana), where rainfall is limited and much of the land is subject to potentially severe wind erosion. Smaller concentrations of CRP land are found in eastern Washington, southern Iowa, northern Missouri, and the Mississippi Delta. This chart appears in the ERS data product Ag and Food Statistics: Charting the Essentials, updated March 2017.

Double-cropped acreage varies by region

Thursday, September 1, 2016

Over the last decade, growing demand for agricultural commodities?for both food and fuel?has increased the incentives for farm operators to raise production. Double cropping, the harvest of two crops from the same field in a given year, has drawn interest as a method to intensify production without expanding acreage. In the U.S., the prevalence of double cropping varies by region. The variation across regions reflects farmers? response to local conditions such as weather, climate (particularly growing season length), policy differences, and market incentives. The Southeast, Midwest, and Southern Plains regions lead the country in total double-cropped acreage. About one-third of the total double-cropped acreage over 1999-2012 was in the Southeast (2.7 million acres on average), and slightly more than one-fifth was in the Midwest (1.8 million acres on average). However, relative to each region?s total cropland acreage, the Northeast, Southeast, and Southwest all have larger shares of cropland used in double cropping than other regions. The Northeast had the largest share of double-cropped acreage (nearly 10 percent, on average) of the region?s total cropland, and the Northern Plains had the smallest (less than 0.5 percent on average). This chart is found in the ERS report, Multi-Cropping Practices: Recent Trends in Double-Cropping, EIB-125, May 2014.

Relatively few farms receive both conservation and commodity payments

Thursday, September 1, 2016

Existing conservation and farm commodity programs serve multiple purposes. Commodity-based income programs are intended to support farm families historically involved in the production of targeted ?program? crops. Conservation payments, on the other hand, are designed to promote environmentally beneficial changes in farmland use or production practices. Conservation payments are available to a much wider range of producers, with nearly all crop and livestock producers eligible for at least one conservation program. In 2011, roughly 31 percent of all U.S. farms received commodity payments, conservation payments, or both. Only 6 percent of farms, however, received both commodity and conservation payments. Fifty-five percent of conservation payments went to farms that did not receive commodity payments, while 63 percent of commodity payments went to farms that did not receive conservation payments. Since 2004, the proportion of farms receiving both conservation and commodity payments has remained fairly constant. This chart updates one found in the March 2012 Amber Waves finding, Green Payments: Can Conservation and Commodity Programs Be Combined?

Some conservation practices are more widely adopted than others

Thursday, September 1, 2016

The environmental effects of agricultural production, e.g., soil erosion and the loss of sediment, nutrients, and pesticides to water, can be mitigated using conservation practices. Some practices are more widely adopted than other practices; no conservation practice has been universally adopted by U.S. farmers. Variation in conservation practice adoption is due, at least in part, to variation in soil, climate, topography, crop/livestock mix, producer management skills, and financial risk aversion. These factors affect the onfarm cost and benefit of practice adoption. Presumably, farmers will adopt conservation practices only when the benefits exceed cost. Government programs can increase adoption rates by helping defray costs. The potential environmental gain also varies?ecosystem service benefits (such as improved water quality and enhanced wildlife habitat) depend both on the practice and on the location and physical characteristics of the land. This chart is based on data from ARMS Farm Financial and Crop Production Practices.

Changes in U.S. double-cropped acreage roughly mirror commodity prices

Thursday, September 1, 2016

Double-cropped acreage has varied from year to year. Because decisions about double cropping are made annually, fluctuations are likely as farmers respond to changing market and weather conditions. For example, higher commodity prices give farmers more incentive to intensify production and could offset revenue shortfalls from lower potential yields when double cropping. From 2004 to 2012, total double-cropped acreage roughly paralleled soybean, winter wheat, and corn prices. When commodity prices at the time of planting decisions were increasing or relatively high, total double-cropped acreage also increased. Total double-cropped acreage peaked at 10.9 million acres in 2008, when prices for soybeans, winter wheat, and corn also peaked. In 2005 and 2010, nearly every region witnessed declines in double-cropped acreage amid commodity price declines. This chart is found in the ERS report, Multi-Cropping Practices: Recent Trends in Double-Cropping, EIB-125, May 2014.

Most U.S. corn acres at risk of nitrogen losses to the environment

Thursday, September 1, 2016

Corn is the most widely planted crop in the U.S. and the largest user of nitrogen fertilizer. By using this fertilizer, farmers can produce high crop yields profitably; however nitrogen is also a source of environmental degradation when it leaves the field through runoff or leaching or as a gas. When the best nitrogen management practices aren?t applied, the risk that excess nitrogen can move from cornfields to water resources or the atmosphere is increased. Nitrogen management practices that minimize environmental losses of nitrogen include applying only the amount of nitrogen needed for crop growth (agronomic rate), not applying nitrogen in the fall for a crop planted in the spring, and injecting or incorporating fertilizer into the soil rather than leaving it on top of the soil. In 2010, about 66 percent of all U.S. corn acres did not meet all three criteria. Nitrogen from the Corn Belt, Northern Plains, and Lake States (regions that together account for nearly 90 percent of U.S. corn acres) contribute to both the hypoxic (low oxygen) zone in the Gulf of Mexico and to algae blooms in the Great Lakes. This chart is based on data found in the ERS report, Nitrogen Management on U.S. Corn Acres, 2001-10, EB-20, November 2012.

Land in shale areas more likely to leave Conservation Reserve Program

Thursday, September 1, 2016

Hydraulic fracturing for natural gas and oil trapped in shale formations has diverse impacts on agriculture. Farmers in shale regions have the potential to receive lease or royalty payments, but may face competition with energy companies for labor, water, and transportation infrastructure, and may also have an increased risk of soil or water contamination. In addition, shale energy development may affect farmers? participation in certain USDA programs, such as the Conservation Reserve Program (CRP). CRP covered about 27 million acres of environmentally sensitive land at the end of 2013, with enrollees receiving annual rental and other incentive payments for taking eligible land out of production for 10 years or more. About 28 percent of CRP land is located in counties that overlay shale formations (?shale counties?). From 2007 to 2012, the CRP exit rate (including early exits and non-reenrollments) was greater, on average, in shale counties than in non-shale counties. Early exits and decisions not to re-enroll could be due to a number of factors, including the placement of oil or natural gas wells, pipelines, and access roads through CRP land. For acres that exit the CRP, landowners must pay an early-exit penalty, which is the sum of all CRP payments received since enrollment plus interest. This chart is found in the ERS report, Trends in U.S. Agriculture?s Consumption and Production of Energy: Renewable Power, Shale Energy, and Cellulosic Biomass, released on August 11, 2016.

Many factors, including conservation payments, influence the adoption of conservation practices

Thursday, September 1, 2016

The Federal Government spent more than $6 billion in fiscal 2013 on conservation payments to encourage the adoption of practices addressing environmental and resource conservation goals, but such payments lead to additional improvement in environmental quality only if those receiving them adopted conservation practices that they would not have adopted without the payment. Some farmers have adopted specific conservation practices without receiving payments because doing so reduces production costs or preserves the long-term productivity of their farmland (e.g., conservation tillage). Many other farmers have not adopted conservation practices, presumably because the cost of doing so exceeds expected onfarm benefits, the value of which can vary based on many factors?soil, climate, topography, crop/livestock mix, producer management skills, and risk aversion. Since the value of onfarm benefits can vary widely across practices and farms, identifying which farmers will adopt a conservation practice only if they receive a payment is not straightforward, but research indicates that the likelihood a payment will result in additional environmental benefits increases as the implementation cost of the conservation practice increases and its impact on farm profitability declines. This chart is found in the ERS report, Additionality in U.S. Agricultural Conservation and Regulatory Offset Programs, ERR-170, July 2014.

While total acreage in the Conservation Reserve Program (CRP) continues to decline, land in "continuous signup" steadily increases

Thursday, June 25, 2015

The Agricultural Act of 2014 gradually reduces the cap on land enrolled in the Conservation Reserve Program (CRP) from 32 million acres to 24 million acres by 2017. CRP acreage declined 34 percent since 2007, falling from 36.8 million acres to 24.2 million by April 2015. Environmental benefits may not be diminishing as quickly as the drop in enrolled acreage might suggest. While initially enrolling mainly whole fields or farms (through periodically announced general signups), CRP increasingly uses “continuous signup” (which has stricter eligibility requirements than general signup) to enroll high-priority parcels that often provide greater per-acre environmental benefits. Conservation practices on these acres include riparian buffers, filter strips, grassed waterways, and wetland restoration. Riparian buffers, for example, are vegetated areas that help shade and partially protect a stream from the impact of adjacent land uses by intercepting nutrients and other materials, and provide habitat and wildlife corridors. Enrollment under continuous signup increased by about 50 percent, from 3.8 million acres in 2007 to 5.7 million acres in 2014. A version of this chart is found on the ERS web page, Agricultural Act of 2014: Highlights and Implications (Conservation).

Maintaining and restoring wetlands could remove nitrogen cost effectively over much of the Upper Mississippi and Ohio River watersheds

Monday, June 1, 2015

Every year, agriculture contributes an estimated 60-80 percent of delivered nitrogen and 49-60 percent of delivered phosphorous in the Gulf of Mexico. Nitrogen in waters can cause rapid and dense growth of algae and aquatic plants, leading to degradation in water quality as found in the hypoxic zone of the Gulf of Mexico, where excess nutrients have depleted oxygen needed to support marine life. Nitrogen removal is one of the many benefits of wetlands. An ERS analysis found that on an annual basis, the amount of nitrogen removed per dollar spent to restore and preserve a new wetland ranged from 0.15 to 34 pounds within the area of study (the Upper Mississippi/Ohio River watershed), or a range of $0.03 to $7.00 per pound of nitrogen removed. Restoring and protecting wetlands in the very productive corn-producing areas of Illinois, Indiana, and Ohio tends to be more cost effective than elsewhere in the study area. The study suggests that if nitrogen reduction was the only environmental goal, these corn-producing areas would be a good place to restore wetlands. Hydrologic conditions in the Upper Mississippi and Ohio River watersheds are unique, so the cost effectiveness of wetlands elsewhere is uncertain. This map is found in the ERS report, Targeting Investments To Cost Effectively Restore and Protect Wetland Ecosystems: Some Economic Insights, ERR-183, February 2015.

Incentive payments often boost adoption of conservation practices

Wednesday, April 22, 2015

Under the Agricultural Act of 2014, Congress provided an estimated $28 billion in mandatory 2014-18 funding for USDA conservation program payments that encourage farmers to adopt conservation practices. If farmers would have adopted the practice even without financial incentive, however, the practices are not “additional,” and the payments provide income for farmers without improving environmental quality. Some farmers have adopted specific conservation practices without receiving payments because doing so reduces production costs or preserves the long-term productivity of their farmland (e.g., conservation tillage). Many other farmers have not adopted conservation practices, presumably because the cost of doing so exceeds expected onfarm benefits, the value of which can vary based on many factors, including soil, climate, topography, crop/livestock mix, producer management skills, and risk aversion. Since the value of onfarm benefits can vary widely across practices and farms, identifying which farmers will adopt a conservation practice only if they receive a payment is not straightforward. Additionality tends to be high for practices that are expensive to install, have limited onfarm benefits, or onfarm benefits that accrue only in the distant future (e.g., soil conservation structures, buffer practices, and written nutrient management plans). Practices that can be profitable in the short term are more likely to be adopted without payment assistance and tend to be less additional (e.g., conservation tillage). Research indicates that the likelihood a payment will result in additional environmental benefit increases as the implementation cost of the conservation practice increases (such as soil conservation structures) and its impact on farm profitability declines. This chart is based on data from the ERS report, Additionality in U.S. Agricultural Conservation and Regulatory Offset Programs, ERR-170, July 2014.

Costs of restoring and preserving wetlands vary across the United States

Friday, April 10, 2015

USDA’s costs of restoring and preserving new wetlands across the contiguous United States range from about $170 to $6,100 per acre, with some of the lowest costs in western North Dakota and eastern Montana and the highest in major corn-producing areas and western Washington and Oregon. To analyze conservation program expenditures, ERS researchers generated county-level estimates of wetland costs for each of the major wetland regions as designated by USDA’s Natural Resources Conservation Service (outlined in black in the map), using primarily NRCS Wetland Reserve Program contract data. Variations in costs are driven by differences in land values and the complexity of restoring hydrology and wetland ecosystems. Information about how the costs of restoring and preserving wetlands vary spatially (together with the relative benefits) can inform wetland targeting policies within States/regions and across the U.S. This map is found in the ERS report, Targeting Investments to Cost Effectively Restore and Protect Wetland Ecosystems: Some Economic Insights, ERR-183, February 2015.

Improving water-use efficiency remains a challenge for U.S. irrigated agriculture

Monday, May 6, 2013

U.S. agriculture accounts for 80-90 percent of the Nation’s consumptive water use (water lost to the environment by evaporation, crop transpiration, or incorporation into products). The 17 Western States account for nearly three-quarters of U.S. irrigated agriculture. While substantial technological innovation has already occurred in irrigation systems, significant room for improvement in farm irrigation efficiency still exists. Between 1994 and 2008, the combined share of Western irrigated acres using improved gravity-flow and low-pressure sprinkler systems has increased but the rate at which traditional irrigation systems have been replaced with more efficient, improved systems has slowed over the past decade. This chart comes from the Amber Waves September 2012 finding, Improving Water-Use Efficiency Remains a Challenge for U.S. Irrigated Agriculture.

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.

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