Debbie says: This is a press release from American Corn Growers
Association. This is in responce to the Farm Bureau recently voting to
support eliminating sign ups for CRP. You can look at the last line of
the article to see who supported this report.
Elimination of Conservation Reserve Program Would Increase Farm Program
Costs by $33 Billion
WASHINGTON, Sept.7, 2006 - "While it seems logical to assume that
eliminating a government program would save money, such is not the case
with the Conservation Reserve Program (CRP)," said Dr. Daniel De La
Torre Ugarte, Associate Director of The University of Tennessee's
Agriculture Policy Analysis Center (APAC) and Associate Professor.
According to De La Torre Ugarte, "The full elimination of the CRP
program would save the government over $12 billion in CRP payments
across the period, 2007-2015. However, increased production and lower
prices caused by former CRP acreage returning to production causes an
increase in government payments of $45 billion over the same nine year
period. The net additional cost to the government of eliminating the CRP
is $33 billion."
These conclusions come from a new APAC research study titled, "Analysis
of the Economic Impacts on the Agricultural Sector of the Elimination of
the Conservation Reserve Program." This study examines the impact of the
non-renewal or non-extension of Conservation Reserve Payments (CRP)
contracts, as they expire, on crop prices, net farm income and
government payments. The study, co-authored by De La Torre Ugarte and
Chad Hellwinckel, also estimates that in 2015, corn prices would be 31
cents per bushel below USDA's current projected baseline price of $2.60.
"With additional CRP acres coming into production, wheat prices would be
63 cents per bushel below current expectations and soybean prices would
suffer from a 90-cent per bushel drop" said De La Torre Ugarte. "These
lower prices are the trigger that brings about the $33 billion increase
in farm program spending," De La Torre Ugarte continued.
According to De La Torre Ugarte, "As of April 1, 2006, 34.7 million
acres of farmland had been converted from crop production to soil, water
and wildlife conservation uses under the Conservation Reserve Program.
In addition to protecting highly erodible watersheds, protecting and
providing new habitat, and reducing pollution, the CRP has reduced
supplies of crops that would have been produced on that land if it had
not been placed in the CRP. APAC simulations indicate that significant
reductions in CRP acreage will have major impacts on crop production
crop prices, net market income for producers, and government payments."
The APAC study estimates that if CRP contracts are eliminated as they
expire, 37 percent of today's 34.7 million CRP acres, or 12.6 million
acres, will return to crop production by 2015. Seventy-one percent of
returning acres, or 9 million, will grow corn, soybeans and wheat.
Professor Daryll E. Ray, Blasingame Chair of Excellence in Agricultural
Policy and APAC Director said "The study estimates the three major crops
will lose at least $6 billion in net market returns in 2015 if CRP acres
flow back into crop production."
On the other hand, the APAC model predicts that increasing the CRP
program will have significant positive effects on net farm income and
reduce government farm payments. The analysis reveals that increasing
the CRP to 39.2 million acres (statutory limit) by 2015 raises net farm
income by $600 million, and if the CRP were increased to 45 million
acres by 2015, net farm income would be increased by $1.7 billion. Gross
revenue and net farm income for the CRP expansion scenarios include
significantly more market revenue and fewer government payments.
"These CRP expansions would result in net savings to the federal
treasury over the 2006-2015 study period of $6.3 billion and $12.7
billion, respectively, in farm program spending," said De La Torre
Ugarte at a formal presentation of APAC's findings at the National Press
Club in Washington, D.C.
The study time frame for the elimination of the CRP was 2006-2015. The
authors believe that while recent extensions and renewals would change
the time frame, the general magnitude of the results and the nature of
the conclusions would remain the same if the CRP were to be eliminated
at some future date.
The CRP was established in 1985 as a voluntary program that allowed
farmers to retire highly erodible land from production and also ensure a
secure income during times of low commodity pricing. As the program grew
farmers were able to retire land to reduce degradation of other
environmentally sensitive areas of their land. Some of these
environmental aspects include wetland acreage, runoff into waterways,
and wildlife habitat.
Currently the USDA pays $1.6 billion in annual CRP rental payments to
land owners and operators. During their 5-10 year contracts, CRP
participants practice a number of conservation methods including grass
and tree planting and wildlife cover. The continuation of the CRP
program is at risk due to budgetary pressures.
Joining De La Torre Ugarte and Ray were organizations supporting and/or
contributing to the study, including the American Corn Growers
Association, Pheasants Forever, the National Farmers Organization, the
American Agriculture Movement, the Environmental and Energy Study
Institute, the Association of Fish and Wildlife Agencies, the Theodore
Roosevelt Conservation Partnership, and the Wildlife Management Institute.
(30)
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