Agricultural Sector Briefing by cpd16778

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									                           Agricultural Sector Briefing
            Implementation Committee for the Chesapeake Bay Program

                                      April 19, 2007

The significance of agriculture to the economic, environmental, and social well being of
the Chesapeake Bay and its human population has been critical throughout history, and
will remain so into the foreseeable future. The restoration of the Chesapeake Bay is
explicitly tied to the vitality and sustainability of agriculture within and around its
watershed boundary. The efforts of the Chesapeake Bay Program and its partners to
restore the Bay to its former health will only be achieved through a comprehensive
understanding of agricultural production and a collaborative relationship with the
agrarian community.

I. Description of Agriculture in the Chesapeake Bay Watershed

The agricultural heritage of the Chesapeake Bay region is rich and multifaceted. Farms
provide food and fiber, as well as significant open space and aesthetic and environmental
benefits to us all. Agricultural lands account for 22 percent of the watershed, making
them one of the largest land uses in the area, second only to forests (58%). Within the
Bay watershed, there are more than 87,000 farm operations and 6.5 million acres of
cropland.

Farms in the Chesapeake Bay watershed are very diverse. They vary greatly in size,
ranging from small to large operations, and they produce a large variety of farm products.
Today, more than 50 named commodities are produced in this region. The area’s primary
crops include pasture, hay, corn, wheat, soybeans, vegetables, and fruits. The eastern part
of the region is also home to a rapidly expanding nursery and greenhouse industry.

In addition to crop production, animal operations make up a significant portion of the
Bay’s agricultural industry. Livestock products account for over 60 percent of the
region’s annual farm product sales. In the watershed, there are six major types of animal
operations: dairy cows, beef cattle, pigs, egg production, broilers, and turkeys. At any one
time, there are over 185 million livestock animals present in the area. The three major
animal production regions in the watershed, based on livestock concentration, are the
Lower Susquehanna River in Pennsylvania, the Shenandoah Valley in Virginia and West
Virginia, and the Delmarva Peninsula in Delaware, Maryland and Virginia.

The Bay states rank high nationally in poultry, dairy and nursery products. The Delmarva
Peninsula is considered to be one of the country’s top poultry producing regions and,
according to the 2002 Census of Agriculture, three Bay counties are among the top
twenty poultry producing counties in the nation (for either poultry/eggs, broilers, or
layers): Sussex County, DE, Lancaster County, PA, and Wicomico County, MD. In
addition, at least one Bay county is among the top twenty counties for production of the
following farm commodities: turkeys; cattle and calves; milk and other cow dairy
products; hogs and pigs; horses and ponies; corn for silage; snap beans; apples; short



                                             1
rotation woody crops; and nursery, greenhouse, floriculture, and sod. Agricultural
operations in the Chesapeake Bay region are very productive. Although the Bay states
account for only 3.2 percent of all U.S. farm acreage, they produce 5.7 percent of the
U.S. farm cash receipts.

Agriculture contributes significantly to the regional economy, accounting for
approximately 13 percent of the region’s Gross Domestic Product. In 2002, the sale of
agricultural products in the Bay states totaled nearly $8 billion. It is interesting to note,
however, that a large portion of these sales come from just a few of the region’s farms. In
2002, 8% of the farms in the Bay states accounted for 75% of the region’s total
agricultural sales.



                             Agricultural Lands in the Watershed

                                 Non-Tidal Water
                                      1%
                          Non-Agricultural
                            Grasslands                  Agriculture
                               10%                         22%
                    Urban/Suburban
                         9%




                                              Forest
                                               58%




II. Importance of Agriculture to the Restoration of the Chesapeake Bay

According to the Chesapeake Bay Watershed Model, accounts for nearly a quarter of the
watershed land area, but at the same time farmland is the single largest source of nutrients
and sediments to the Bay. Based on 2004 model simulations, it is estimated that farmland
contributes approximately 41 percent of the nitrogen, 47 percent of the phosphorus and
63 percent of the sediment loads to the Bay annually. Reducing these loads is an
important component for restoring the Chesapeake Bay. Despite the figures, the ultimate
protection and restoration of the Bay is synonymous with the viability of agriculture
within the watershed. In addition to producing food and fiber, agriculture provides other
significant economic, environmental and social benefits such as maintaining open space,
preserving rural traditions and aesthetics, and imparting local products and services.



                                                   2
The Chesapeake Bay Tributary Strategies developed by the watershed states are relying
on significant agricultural nutrient and sediment reductions to achieve their restoration
objectives due to several primary reasons. The land area occupied by agricultural
production throughout the watershed is second only to forestry. Agricultural production
methods can often create sources of nutrients and sediment pollution to the environment,
even with conservation measures in place. Although the amount per acre may seem
minimal, the total effect across the basin is significant.

Another reason why agriculture is critical to achieving reductions is due to the cost
effectiveness of agricultural conservation practices compared to other sectors such as
wastewater treatment system upgrades or urban storm water control system retrofits. A
2004 report from the Chesapeake Bay Commission identified five agricultural practices
out of the top six conservation measures that delivered the largest nutrient and sediment
load reductions for the least cost.


                                               Agricultural Nutrient and Sediment Loads
                                                        to the Chesapeake Bay
                                           Nitrogen                                                                              Phosphorus
                                            Septic
                                             5%



             Municipal & Industrial                                          Agriculture = 41%                        Municipal & Industrial
                                                                                                                                                 chemical fertilizer   Agriculture = 46%
                                                     chemical fertilizer                                                                              18%
                 Wastewater                                                                                               Wastewater
                     20%                                   16%                                                                22%




                                                               manure
                                                                19%
           Urban/Suburban Runoff -
              chemical fertilizer                                                                                                                             manure
                    11%                                                                                          Urban/Suburban Runoff                         27%
                                                                                                                  & In-stream Sediment
                                                                                                                           30%
                                                                  Agricultural Atmospheric
          Atmospheric Deposition -
                                                                  Deposition - livestock &
            natural (lightning +
                                                                   fertilized soil emissions
                forest soils)
                                                                              6%
                    1%             Atmospheric Deposition -
                                                                                          Sediment
                                                                                                                                               Natural - wildlife, forest,
                                     mobile + utilities +                                                                                                 etc.
                                         industries                                                                                                       3%
                                            22%

                                                                           Urban/Suburban Runoff
                                                                            & In-stream Sediment
                                                                                                                         Agriculture = 62%
                                                                                     18%




                                                                           Natural - forest, etc.
                                                                                                        Agriculture
                                                                                  20%
                                                                                                           62%




Agricultural Progress

The agricultural sector of the Bay watershed has achieved substantial reductions for
nitrogen, phosphorus and sediment between 1985 and 2005, according to progress reports
provided to the Chesapeake Bay Watershed Model from federal agencies, state
jurisdictions, and other non-governmental partners. Basin-wide, agricultural lands have
reduced nitrogen losses by approximately 43.5 million pounds per year, phosphorous
losses by 3.2 million pounds per year and sediment losses by 1.1 million tons per year.
Compared to the benchmark 1985 nutrient and sediment load levels, these reductions
accomplished over the past two decades equate to a 45 percent nitrogen achievement, a


                                                                                                    3
49 percent phosphorus achievement and a 43 percent sediment achievement of the
Chesapeake 2000 Agreement cap load allocations for agriculture.

III. Tributary Strategy Commitments for Agriculture

The Chesapeake Bay Tributary Strategies developed by each of the jurisdictions propose
to implement nearly thirty different agricultural practices to address the nutrient and
sediment goals of the Chesapeake 2000 Agreement. For Maryland, Pennsylvania and
Virginia, these new Tributary Strategies were an improved version of former strategies
developed over the past two decades, and for all the watershed states, agricultural nutrient
and sediment reduction practices were relied upon to achieve a significant portion of the
total nutrient and sediment goals.

The Chesapeake Bay Commission’s (CBC) report entitled Cost-Effective Strategies for
the Bay (www.chesbay.state.va.us/Publications/cost%20effective.pdf) published in
December of 2004, found that five out of the six smart investments for short term
achievements in nutrient and sediment reductions for the Bay were agricultural practices
(the fifth practice was wastewater treatment plant upgrades). The most effective
agricultural practices identified were traditional and enhanced nutrient management,
conservation tillage, and cover crops for cropland production; and diet and feed
adjustments for animal production.

The Tributary Strategies for cropland build off of the state voluntary and regulatory
erosion and sediment control and nutrient management programs. In the Tributary
Strategies, the jurisdictions have proposed to implement practices such as nutrient
management and conservation tillage on nearly all of the available cropland. Most of the
Strategies emphasize cover crops, proposing to implement this practice on anywhere
from thirty to ninety percent of the available cropland acreage. In addition to traditional
practices such as farm conservation plans and nutrient management plans, the Strategies
promote new innovative systems which rely on increased levels of management,
including enhanced nutrient management and precision agriculture.

Similar to cropland, the Tributary Strategies for animal agriculture are based on the
federal Concentrated Animal Feeding Operation (CAFO) regulations, as well as
voluntary and regulatory state nutrient management programs. Standard control practices
such as waste management and nutrient management plans are being supplemented with
new management systems including dairy precision feeding and ammonia emission
controls.

The graphs below illustrate the reported implementation of agricultural practices across
the Bay basin as of 2005 as compared to the levels of implementation forecasted by the
combined Tributary Strategies for all jurisdictions. In all cases, the current level of
reported practice implementation falls short of planned levels, and in a number of cases,
no implementation has been reported to date.




                                             4
                                                     Agricultural Commitments
                                                            Cost-Effective BMPs
                                    2005                                             Tributary Strategies
             6
                   Goal: almost
                   100% cropland
             5



             4

                                                                     Goal: 70-90%
(millions)




                                         Goal: almost
             3                                                       of cropland in
                                         100% cropland
                                                                     MD, PA, VA

             2



             1



             0
                   Nutrient Management   Conservation-Tillage &    Cover & Commodity      N Feed Management      P Feed Management
                          (acres)          Continuous No-Till      Cover Crops (acres)    (million lb. reduction (million lb. reduction
                                                (acres)                                  TN applications x10-1) TP applications x10-1)




                                                     Agricultural Commitments

                                         2005                                         Tributary Strategies
             1.4



             1.2



             1.0



             0.8
(millions)




             0.6



             0.4



             0.2



             0.0
                    Off-Stream   Off-Stream Forest Buffers           Land      Grass Buffers Tree Planting Poultry Litter    Wetland
                    Watering w/ Watering w/o   (acres)            Retirement      (acres)       (acres)     Transport       Restoration
                     Fencing      Fencing                           (acres)                                (million tons      (acres)
                      (acres)      (acres)                                                                    x10-6)




                                                                        5
                                                        Agricultural Commitments
                                                                Innovative BMPs
                                            2005                               Tributary Strategies
                     0.9


                     0.8


                     0.7


                     0.6
        (millions)




                     0.5


                     0.4


                     0.3


                     0.2


                     0.1


                     0.0
                             Ammonia Emission           Horse Pasture      Carbon Sequestration   Precision Rotational
                            Reductions (million lb.   Management (acres)         (acres)            Grazing (acres)
                           reduction TN deposition
                                   x10-1)




Agricultural Implementation Programs

The following programs are representative of the regulatory, financial and technical
resources available to encourage agricultural producers to implement conservation
practices to reduce nutrient and sediment losses for cropland and animal operations in the
watershed:

US-EPA Chesapeake Bay Implementation Grant Program:

A federal grant program targeted for the restoration of the Chesapeake Bay through the
signatory jurisdictional partners of Maryland, Pennsylvania, Virginia and the District of
Columbia. Funds are primarily utilized for technical and financial assistance to
administer and implement agricultural nutrient and sediment reduction programs and
practices within the Bay watershed. The 2010 Implementation Plan encourages the
jurisdictions to target specific practices for accelerated implementation. Program
information can be obtained at
(www.epa.gov/region3/chesapeake/grants/progress.htm#imp)

US-EPA Concentrated Animal Feeding Operation (CAFO) Regulations:

The federal Clean Water Act’s (CWA) Concentrated Animal Feeding Operation
regulations are designed to protect and improve water quality through the regulation of
agricultural operations where animals are kept and raised in confined situations. Under
the CWA, CAFOs are defined as point source dischargers, and must comply with the
basic requirements to protect water quality through National Pollutant Discharge


                                                                      6
Elimination System (NPDES) permits. NPDES permits describe discharge limits,
management practices, and record keeping for CAFO operations. The expansion of the
number of CAFO permitted operations will cause increased oversight by federal and state
regulatory agencies on a greater number of agricultural operations. In order to obtain
permit compliance, operators may be required to implement additional conservation
practices than are normally required by state regulations. See (www.epa.gov/guide/cafo/)
for regulation information.

USDA-NRCS Environmental Quality Incentives Program (EQIP):

A voluntary conservation program for farmers and ranchers to promote agricultural
production and environmental quality as compatible national goals. The program
provides financial and technical assistance to eligible producers to install or implement
structural and management practices on eligible agricultural land. The 2007 Farm Bill
proposes to combine multiple incentive programs under the EQIP program, potentially
increasing the available program funds and increasing flexibility to target key watersheds
or practices. See (www.nrcs.usda.gov/programs/eqip/) for additional information

USDA-NRCS Conservation Security Program (CSP):

A voluntary financial and technical assistance program available in all 50 states to
promote the conservation and improvement of soil, water, air, energy, plant and animal
life, and other conservation purposes on private working lands. Working lands include
cropland, grassland, prairie land, improved pasture, and range land, as well as forested
land that is an incidental part of an agricultural operation. The 2007 Farm Bill is
proposing the elimination of the targeted watershed method that has been utilized in the
past, as well as substantially increasing the available acreage. See
(www.nrcs.usda.gov/programs/csp/) for more information.

USDA-NRCS Conservation Innovation Grants Program (CIG):

A voluntary program intended to stimulate the development and adoption of innovative
conservation approaches and technologies while leveraging federal investment in
environmental enhancement and protection, in conjunction with agricultural production.
CIG enables NRCS to work with other public and privates entities to accelerate
technology transfer and adoption of promising technologies and approaches to address
some of the Nation’s most pressing natural resource concerns. Grants are available in a
national competition under the categories of Natural Resource Concerns, Chesapeake
Bay Watershed, and Technology; while individual states may elect to offer similar
options locally. USDA-NRCS Offices in Maryland, Pennsylvania, and Virginia have
elected to offer State CIG programs to increase targeting of EQIP funds. Increased
collaboration with EPA and other Bay Program Partners will insure improved targeting of
key projects affecting the Bay watershed. See (www.nrcs.usda.gov/programs/cig/) for
details.




                                            7
USDA-NRCS Agricultural Management Assistance Program (AMA):

A program that provides financial assistance to agricultural producers to voluntarily
address conservation issues such as water management, water quality, and erosion control
by incorporating conservation into their farming operations. Producers may construct or
improve water management or irrigation structures, plant trees for windbreaks or to
improve water quality; and mitigate risk through production diversification or resource
conservation practices, including soil erosion control, integrated pest management, or
transition to organic farming. Currently the 2007 Farm Bill is proposing to combine the
AMA with EQIP to more effectively target specific areas or practices. See
(www.nrcs.usda.gov/programs/AMA/) for detailed information.

USDA-FSA Conservation Reserve Program (CRP):

A program that provides financial and technical assistance to eligible farmers and
ranchers to address soil, water and related natural resource concerns on their lands in an
environmentally beneficial manner. It encourages farmers to convert highly erodible
cropland or other environmentally sensitive acreage to vegetative cover, such as tame or
native grasses, wildlife plantings, trees, filter-strips, or riparian buffers. Farmers receive
an annual rental payment for the term of the multi-year contract and cost share on
practice establishment. The CRP program has been a significant program in the
development of riparian buffers throughout the watershed. State and NGO partners are
collaborating with USDA-FSA to extend the original landowner contracts by offering
long-term easements in Maryland, Pennsylvania, and Virginia. See
(www.nrcs.usda.gov/programs/crp/) for more information.

National Fish & Wildlife Foundation (NFWF) Chesapeake Bay Small Watershed Grants
Program:

The program provides grants to organizations and local governments working on a local
level to protect and improve watersheds in the Bay basin, while building citizen-based
resource stewardship. The purpose of the program is to support protection and restoration
actions that contribute to restoring healthy waters, habitat and living resources of the Bay
ecosystem based on the commitments of the Chesapeake 2000 Agreement and the state
Tributary Strategies. These grants have been designed to encourage the development and
sharing of innovative ideas among organizations involved in watershed restoration,
conservation, and planning activities. Increased collaboration with traditional program
partners and other grant programs, notably USDA’s Conservation Innovation Grant
(CIG) Program, could improve targeting of funded projects and the dissemination of
project results for greater implementation. See
(www.nfwf.org/programs/chesapeake/index.cfm) for grant information.

NFWF Chesapeake Bay Targeted Watersheds Grant Program:

This program supports innovative projects designed to foster nutrient reduction in the
Bay watershed. The goal of the program is to expand the collective knowledge on the



                                               8
most innovative, sustainable and cost-effective strategies- including market-based
approaches- for reducing excess nutrient loads within specific tributaries to the Bay. To
achieve this goal, the program awards grants of up to $1 million on a competitive basis to
projects that target and reflect the diverse conditions and sources of nutrients that exist
through out the watershed. Increased collaboration with traditional program partners and
other grant programs, notably USDA’s Conservation Innovation Grant (CIG) Program,
could improve targeting of funded projects and the dissemination of project results for
greater implementation. See (www.nfwf.org/programs/targetedwatershed/) for additional
information.

Nutrient Trading:

Nutrient trading is a voluntary, market driven program which allows one source (point or
nonpoint sources) to meet pollutant reduction goals by acquiring nutrient reduction
credits from another source in their watershed. Credits are generated when a source
reduces nutrient loadings to a greater extent than required by local and federal
regulations, or by the associated Chesapeake Bay Tributary Strategy. Nutrient trading is
currently being implemented by Pennsylvania and Virginia, and is proposed in the states
of Delaware, Maryland and West Virginia. The credits generated for trades are
considered offsets; however, significant reductions may be required of the nonpoint
sources in order for them to qualify for trading. This may increase the adoption of
conservation practices by participating agricultural operations under a market driven
system. For Pennsylvania see (www.depweb.state.pa.us), keyword Nutrient Trading, and
for Virginia see (www.deq.virginia.gov/info/nutrient.html).

State Nutrient Management Programs (NMP):

In addition to the federal CAFO regulations identified above, all of the Chesapeake Bay
jurisdictions, excluding Washington D.C., implement varying forms of nutrient
management planning and implementation regulations and/or incentive programs. The
programs typically limit the application of animal manures on cropland based on soil
phosphorus levels and annual plant uptake. In the past, nutrient management plans were
based upon nitrogen limits which were less restrictive for manure application rates and at
times lead to excessive levels of soil phosphorus. The development of certified NMP
plans and the implementation of supporting agricultural practices such as animal waste
storage facilities, conservation plans, and manure transport have a positive effect on
reducing nutrient and sediment loading to the Bay.

State Agricultural Incentive Programs:

Each of the watershed state utilizes state public funds to provide financial incentives and
technical assistance to the agricultural sector for the implementation of nutrient and
sediment controlling practices. Financial assistance is provided in multiple forms, and
may or may not be used in combination with federal incentive programs and/or private
sources. State or local matching funds are required for the EPA Chesapeake Bay
Implementation Grant Program and other federal programs such as the USDA-FSA



                                             9
Conservation Reserve Program (CRP). In some cases, the level of state and local funding
may exceed that at the federal level for agricultural assistance.

Manure Strategy

Animal manure and poultry litter are contributing about half of the agricultural nutrient
load that is entering the Chesapeake Bay, according to Phase 4.3 of the Chesapeake Bay
Watershed Model. As animal operations become more concentrated and the acreage of
cropland available for manure application is lost to development, the challenge of manure
management will only intensify. Finding ways to deal with excess nutrients in manure is
critical for ensuring the long-term viability of the agricultural industry and the restoration
of the Chesapeake Bay.

In November 2005, the Chesapeake Executive Council, the headwater states, and the U.S.
Department of Agriculture endorsed the Strategy for Managing Surplus Nutrients from
Agricultural Animal Manure and Poultry Litter in the Chesapeake Bay Watershed
(Manure Strategy). The purpose of this strategy was to augment the existing successful
nutrient management programs implemented by the Bay watershed states by focusing
attention on the areas where experts believe that additional nutrient load reductions could
be efficiently and effectively achieved. Four opportunities for better managing manure
nutrients in the Chesapeake Bay watershed were identified in this strategy: (1) Reduce
surplus animal manure and poultry litter nutrients by adjusting animal diets; (2) Foster
alternative uses for animal manure and litter products that can be used for energy,
fertilizers, soil amendments or compost on a variety of lands; (3) Develop a
comprehensive inventory of manure and litter nutrient surpluses in the watershed; and (4)
Coordinate manure management programs throughout the watershed to address the
regional imbalances of manure and poultry litter surpluses. The top three initiatives that
are currently underway to implement this strategy are the dairy feed and forage
management initiative, the manure product procurement initiative, and the manure
technology initiative.

The dairy feed and forage management initiative is seeking to meet the Manure Strategy
commitment of achieving a 20% reduction in phosphorus and nitrogen levels in manure
in one-third of the Chesapeake Bay watershed dairy animals by 2010, and in one-half of
the Chesapeake Bay watershed dairy animals by 2015. The Chesapeake Bay Program
formed a Dairy Feed Management Technical Assistance, Education and Outreach Group
to spearhead the implementation of this commitment. This group is comprised of dairy
nutritionists and key experts from NRCS, state agricultural agencies, cooperative
extension, Chesapeake Bay Foundation, and Environmental Defense. They are working
on developing a methodology for how to best track nutrient reductions from the
implementation of dairy feed and forage management programs and they are exploring
the concept of creating a voluntary feed management certification program in the Bay
watershed to help build the technical assistance expertise necessary for widespread
implementation of this type of program. In addition, NRCS, through its Conservation
Innovation Grant program, recently provided funding for dairy feed management projects
in the Chesapeake Bay watershed. Funding was provided to dairy farms in Maryland,



                                             10
Virginia, Pennsylvania, and New York. NRCS is also working with each of the
Chesapeake Bay states to adopt the National NRCS Feed Management (592) Standard
and modify it, as appropriate, for each state. Once the standards are adopted, NRCS will
be able to offer the producers financial assistance for feed management through programs
such as the Environmental Quality Incentives Program, the Agricultural Management
Assistance Program, and the Conservation Security Program.

The manure product procurement initiative is intended to help build a market for manure-
based products in the Chesapeake Bay watershed. The Manure Strategy commitment for
this initiative is that by 2010, 20% of the total fertilizer, soil amendments, and compost
used on state and federal lands will be comprised of poultry litter or animal manure
nutrients derived from sources generated within the Chesapeake Bay watershed states.
Currently, representatives from the watershed states and the federal government are
developing inventories of the number of acres owned by government agencies in their
jurisdiction, the percentage of these acres that are receiving fertilizer or manure, and the
amount of fertilizer and manure that is being applied. Many of the jurisdictions are also
working to identify the individual contacts that are in charge of ground management at
specific government sites. For example, in March 2007, EPA met with representatives
from Fort Meade to discuss how Fort Meade could use organic fertilizer, soil
amendments, and compost on their land. Challenges that the jurisdictions have
encountered so far include difficultly identifying the contacts at specific sites and a lack
of information on where to obtain readily available commercial products comprised of
watershed-generated manure. New York and West Virginia have also raised the point that
procuring manure products for use on government lands in their portion of the watershed
may not be necessary due to a lack of excess manure in those areas.

The third Manure Strategy initiative that is currently underway is the manure technology
initiative. Even with feed management and other nutrient management programs in place,
there are likely to be regions within the Chesapeake Bay watershed that still suffer from
manure or poultry litter nutrient surpluses. After feed management, developing
alternative uses for manure and litter nutrients may be the best long-term sustainable
solution for dealing with excess manure and litter nutrient surpluses. Because of this, one
of the goals in the Manure Strategy is to identify and promote a range of economically
viable and environmentally sustainable alternatives to applying raw manure and litter
nutrients to agricultural lands. The Chesapeake Bay Program formed a Regional Manure
and Litter Use Technology Task Force to help address this issue. The task force held its
first meeting in May 2006. At this meeting, they developed a targeted list of potential
technologies for turning manure and poultry litter surplus nutrients into marketable
products. Energy production was identified as one potential use for excess manure and
litter. Currently, Chesapeake Bay Program staff is developing a report to help determine
the feasibility of using poultry litter for energy in the Chesapeake Bay watershed in order
to improve water quality.




                                            11
IV. Priorities for Agricultural Nutrient and Sediment Reductions

The Chesapeake Bay Tributary Strategies were developed by each of the jurisdictions
within the Bay basin (New York State’s is pending) to address the nutrient and sediment
goals of the Chesapeake 2000 Agreement. Of the nearly thirty unique agricultural
practices proposed by the combined strategies, the majority are planned to be
implemented on an extremely high percentage of available acres or livestock and poultry
operations, some even at 100 percent in selected states.

Due to the high implementation levels of practices in the Tributary Strategies to reach the
intended nutrient and sediment goals, most jurisdictions and EPA have since developed
implementation plans to strategically target limited financial and technical resources for
the greatest potential gains. Some of these plans have focused on a subset of agricultural
practices, whereas others have focused on particular sectors within the agricultural
community such as livestock or poultry producers.

Strategic Implementation Plan

The Chesapeake Bay Program Office (CBPO) has developed a 2010 Strategic
Implementation Plan (SIP) based on the recommendations of the EPA and USDA Office
of Inspector General report published in November of 2006 entitled Saving the
Chesapeake Bay Watershed Required Better Coordination of Environmental and
Agricultural Resources. The SIP includes a discussion on agricultural production within
the basin, and the methods that each of the program partners is employing to address the
implementation of nutrient and sediment reduction practices to reach their target goals.

In collaboration with the current Chesapeake Bay Tributary Strategies developed by each
of the jurisdictions, the 2010 Implementation Plan for the basin relies heavily on further
reductions by agriculture as well. Agricultural land uses in the plan are forecasted to
further reduce nitrogen losses by approximately 12.8 million pounds, phosphorus by 0.8
million pounds, and sediment by 0.4 million tons per year. Of the total nutrient reductions
proposed, agricultural reductions would account for 51.7 percent of the total nitrogen
decrease and 77.4 percent of the total phosphorus decrease. The reductions are expected
to primarily come from a combination of cropland conservation practices and animal
production management systems.

The graphs below illustrate the reported levels of implementation for related groups of
practices by the year 2005, the potential levels under the 2010 Implementation Plan, and
the Tributary Strategy goal levels (cap load allocation).




                                            12
                                 2005                           2010 Implementation Plan                                         Tributary Strategies
                  8




                  7                       6.8




                  6




                  5                                                       4.9
                                                               4.6
                                 4.4
  illion acres)




                  4
                         3.6                          3.5
(m




                  3
                                                                                                    2.5
                                                                                                                                    2.3

                                                                                   1.9      1.8                                                                 1.8
                  2


                                                                                                                                                         1.2
                  1
                                                                                                                           0.5                 0.6

                                                                                                                 0.1
                  0
                      Conservation Plans/SCWQP      Traditional & Enhanced        Conservation-Tillage &       Cover & Commodity Cover        Pasture Grazing BMPs
                                                     Nutrient Management            Continuous No-Till           Crops (Early- & Late
                                                                                                                       Planting)




                                   2005                          2010 Implementation Plan                                        Tributary Strategies
                  0.50



                  0.45



                  0.40



                  0.35



                  0.30
  illion acres)




                  0.25
(m




                  0.20



                  0.15



                  0.10



                  0.05



                  0.00
                         Horse Pasture   Forest Buffers      Carbon           Land       Grass Buffers    Tree Planting   Poultry Litter    Wetland       Animal Waste
                         Management                       Sequestration    Retirement                                       Transport      Restoration    Management
                                                                                                                          (million tons)                    Systems




                                                                                         13
                                                                 2005                         2010 Implementation Plan                                      Tributary Strategies
                                                   20

                                                                         18.4
                                                   18



                                                   16
 (million lb reduction of cropland applications)




                                                   14
                                                                                             13.2
                                                                                                      12.5

                                                   12



                                                   10                                9.5



                                                    8                                                                              7.7



                                                    6



                                                    4

                                                                                                                                                               2.1                        2.0
                                                    2


                                                         0.0     0.0                                              0.0        0.2              0.0     0.0                 0.0     0.0
                                                    0
                                                        Dairy Precision Feeding   Poultry Phytase (million lbs    Ammonia Emissions          Dairy Precision Feeding   Swine Phytase (million lbs
                                                            (million lbs TN)                  TP)              Reductions (million lbs TN)       (million lbs TP)                TP)




In addition to developing a watershed-wide SIP, the OIG report also recommended that
each of the jurisdictions develop a state specific 2010 implementation plan to support
their existing Tributary Strategies. EPA included these implementation plans as a special
condition in the 2007 Chesapeake Bay Program grant guidance for jurisdictions that have
not already submitted such plans to EPA.

State Approaches for Focusing Efforts

Pennsylvania:

Pennsylvania has developed a focus in four main areas of the Chesapeake Bay Program.
The agricultural incentive programs now focus on non-structural, or in other terms
management practices, that are typically lower cost per landowner than structural
component practices. This change in program direction from past practices enables the
state to provide declining technical assistance resources to increased numbers of
cooperators on an annual basis, since the work is less dependant on time consuming
engineering designs. It also allows limited incentive program funds to be utilized on a
greater number of projects, potentially realizing larger nutrient and sediment reductions
than a fewer number of more expensive engineered animal waste facilities. Non-
structural practices are typically more flexible to change than structural practices,
allowing the practice to adapt over time with changes in the agricultural operation.

Examples of priority practices include nutrient management planning, conservation
tillage and no-till, cover crops, enhanced nutrient management or precision agriculture,
and riparian buffers through livestock exclusion. In partnership with the USDA Farm
Services Agency (FSA) under the Conservation Reserve Enhancement Program (CREP),
the Commonwealth is targeting its practice incentive funds towards the establishment of
riparian buffers versus upland habitat areas. The development of standards for new


                                                                                                                        14
practices identified in the Pennsylvania Tributary Strategies for implementation is also a
key focus.

On the financial side of Pennsylvania’s programs, additional state funds have been
allocated to the Bay efforts through the Growing Greener Program (GG2), and the
Governor’s FY 2007-08 proposed budget to over-match the EPA Chesapeake Bay
Implementation Grant. The Resource Enhancement and Protection (REAP) proposed
legislation is currently being debated in the state legislature, which could provide up to
$450 million in tax credits for operations implementing agricultural conservation
practices.

The commonwealth is focusing its agricultural outreach through the Agriculture,
Communities and the Rural Environment (ACRE) Initiative to assist landowners in
attaining compliance with existing commonwealth erosion/sedimentation and nutrient
management requirements. The initiative is intended to assist participating county
conservation districts with improving outreach to agricultural landowners to improve
compliance levels with state erosion and sediment control (E&S) and nutrient
management requirements. Twenty-six conservation districts are currently participating
in the program state-wide.

Rather than creating a specific agricultural sector focus, Pennsylvania is now balancing
its resources between agronomic and animal production. Neither is the state focusing on
specific watersheds across the basins, but a higher funding priority is given to
agriculturally impaired sub-watersheds under competitive grant programs such as the
GG2 and ACRE Initiative.

Maryland:

Nutrient reduction goals set for agriculture are extremely ambitious and will require
implementation of the entire suite of BMPs at levels projected. The state department of
agriculture promotes an entire suite of BMPs rather than focusing cost share and
technical assistance to a short list of BMPs. They do not target specific BMPs because
they believe it will compromise the state’s ability to achieve agricultural goals, reduce
program flexibility to address site conditions and limit farmer options. MDA, NRCS,
and FSA cannot deny assistance to anyone interested in implementing eligible practices.

Maryland Agricultural Water Quality Cost Share (MACS) program was established by
State law in 1984 to help farmers control nutrient runoff and protect water quality and
natural resources on their farms. MACS provides farmers with grants to cover up to
87.5% of the cost to install BMPs on their farms to control soil erosion, manage nutrients,
and safeguard water quality. A maximum funding level of up to $35,000 per project and
$75,000 per farm applies. Farmers receiving MACS funds for animal waste treatment
and containment projects may receive up to $100,000 per project with a maximum of
$150,000 per farm when combined with other BMPs. In many instances, MACS and U.S.
Department of Agriculture (USDA) funds may be combined.




                                             15
The varied funding sources utilized by MACS do target certain practice to some degree.
For example, the Cover Crop Program, Manure Transport Program and Nutrient
Management Cost Share assistance all have defined funding streams which govern
available annual support to these management options.

The Cover Crop Program provides cost share assistance to farmers to implement this
BMP. Cover crops absorb unused crop nutrients remaining in the soil following the fall
harvest and act as a ground cover to keep the soil from eroding during the winter months.
Maryland continues to refine the program, providing tiered incentives in 2006 to
encourage early planting, which maximizes nutrient uptake. A Commodity Cover Crop
Program was offered in 2006 for farmers who would like to harvest their cover crop.
Cost-share support is administered through MACS. MDA had a record breaking sign-up
for Maryland’s cover crop program. In state fiscal year 2007, approximately 1,500
farmers, which included 500 farmers entering the program for the first time, applied to
enroll 450,000 acres. Everyone who applied for the program was able to participate on a
pro-rated basis. Funding limitations resulted in approval of 290,000 acres. Although
funding for the program doubled from last year, $4 million to $8 million, requests totaled
$17 million. The Chesapeake Bay Restoration Fund, one of the most important
environmental initiatives of the past 30 years, provides approximately $5 million
annually to fund this program. The growth in the program is remarkable and
demonstrates that given a consistent program with predictable funding, farmers are more
than willing to implement conservation practices.

State funding was tripled this year for the Manure Transport Program which helps
farmers transport excess manure and is especially timely as farmers’ transition to
phosphorus based nutrient management plans.

MDA continues to look for opportunities, such as grant funds for staff dedicated to
address a variety of issues including ammonia emission reduction, alternative manure
management systems for dairy industry, innovative practices for management of
agricultural drainage, animal dietary management to reduce nutrient outputs,
Management Intensive Grazing Systems for dairy production designed to improve
pastures and forage resources to support the majority of a herd’s nutritional needs, and
management of small horse operations of less than eight horses as a demonstration.
Currently MDA manages 33 grants totaling $5.2 million for technical assistance and
research.

Virginia:

Virginia has developed a practice focus by selecting five agricultural conservation
practices from its Tributary Strategy to receive a priority in funding. The practices
include the following:

   •   Nutrient Management plan preparation and implementation
   •   Conservation tillage
   •   Cover Crops


                                             16
   •   Livestock exclusion from streams
   •   Riparian buffers (including those established under the Conservation Reserve
               Enhancement Program (CREP)

Appling increased levels of financial assistance has also been a focus of Virginia’s
programs. Significant financial resources have been available in recent years compared to
levels 10 years ago and prior years. In the current biennium, $9.5 million has been made
available for nonpoint source abatement in the Chesapeake Bay watershed area of
Virginia.

Outreach efforts in the commonwealth have focused on expanding the poultry litter
transport program to encourage more broker participation, and to encourage litter to be
applied on fields which can better utilize the nutrients with less loss to the environment.
The program is intended to work in harmony with a current USDA-NRCS EQIP Poultry
Litter Transport program available in the state.

The agricultural sector focus for Virginia has been with the livestock and poultry
production arena. Increased emphasis has been placed on renewing the commitment of
the poultry industry to reduce phosphorus in feed by using phytase additives. This has
expanded recently into a project to reduce phosphorus levels in dairy manure by reducing
phosphorus concentrations in the feed ration. The development and implementation of
Nutrient Management Plans by certified planners in Virginia remain a requirement for
permitted confined animal feeding operations (200 animal units for poultry, 300 animal
units for all other species), since land where these nutrient sources are applied contribute
a higher nitrogen and phosphorus load per acre than where only commercial fertilizer is
used.

Virginia does not implement a specific watershed focus on its programs, the closest being
the poultry litter transport program targeted to sub-watersheds (counties) where excess
poultry litter exists. Generally, the “priority practices” are being implemented across the
Bay basin.

Delaware:

Delaware focuses practice efforts on reducing phosphorous levels in poultry feeds with
phytase additives; poultry litter transport, developing alternative uses of manure and
nutrient management planning. The state does not provide for a watershed focus due to
the limited land area residing within the Bay watershed. Instead, all watersheds have been
assessed and a TMDL plan developed to guide the implementation of conservation
practices. The plan does focus on nutrient management, both livestock manure and
chemical fertilizer applications within the agricultural sector. The poultry industry is a
major source of manure due to its prevalence in the state.




                                             17
West Virginia:

West Virginia includes nutrient management planning, cover crops, conservation tillage
and poultry litter transport as focused practices for nutrient and sediment reductions. Due
to the limited land area included within the Bay watershed, the state does not employ a
watershed focus in its plan. The agricultural sector focus is balanced between agronomic
and animal production.

New York:

New York will focus on nutrient management planning, riparian buffers and pasture
management as primary practices under a voluntary, incentive based approach. The state
will address the Bay watershed in its entirety without separate distinctions; however, they
do not intend to implement programs or regulations significantly different from the
remainder of the state. The agricultural sector focus will be on animal production systems
and the improved utilization of animal manures to reduce losses to the environment.

EPA/USDA Approach for Focusing Efforts

On the November 20, 2006 the Environmental Protection Agency and the U.S.
Department of Agriculture Offices of Inspector General (OIG) released an evaluation
report entitled Saving the Chesapeake Bay Watershed Requires Better Coordination of
Environmental and Agricultural Resources. In this report, the Offices of Inspector
General recommended seven actions for EPA and USDA to take to better coordinate
environmental and agricultural resources
(http://www.epa.gov/oig/reports/2007/20061120-2007-P-00004_glance.pdf). EPA and
USDA are addressing all of these recommendations. The following are a few highlights.

Memorandum of Understanding between EPA and USDA and Agency Work Plans:

The OIG recommended that EPA propose executing a Memorandum of Understanding
with the USDA to assist the Bay partners in meeting their nutrient reduction goals. EPA
and USDA drafted a Memorandum of Understanding in December 2006, which will be
endorsed in April 2007 by the EPA Assistant Administrator of the Office of Water and
the USDA Under-Secretary for Natural Resources and the Environment. EPA and
USDA are developing agency-specific plans of work for addressing the action items in
the Memorandum of Understanding. To start, EPA and NRCS have drafted a work plan
that is currently under review by both agencies. One initiative in this work plan is for
EPA, in cooperation with the Chesapeake Bay Program, to identify priority watersheds
and conservation practices for focused nutrient reductions and to share these priorities
with NRCS at its State Technical Committee meetings. NRCS will explore opportunities
to direct resources to support these priority watersheds and practices. Next, USDA and
EPA will develop plans of work with the Agricultural Research Service, Cooperative
State Research, Education, and Extension Service, and the U.S. Forest Service.




                                            18
Tributary Strategy Implementation Plans:

The OIG recommended including the development of implementation plans as a special
condition in Chesapeake Bay Program grant agreements for States that have not
submitted an implementation plan. The EPA included this requirement in the EPA
CBPO 2007 grant guidance. EPA requires that any signatory jurisdiction or headwater
state that does not have an approved Tributary Strategy implementation plan work
directly with its Project Officer to assure that any missing elements of Tributary Strategy
implementation plans are incorporated into its Work Plan.

Agricultural Nutrient and Sediment Reduction Workgroup’s Strategic Focus

The Chesapeake Bay Program’s Agricultural Nutrient and Sediment Reduction
Workgroup coordinate and evaluate agricultural nutrient and sediment reduction
measures throughout the program’s participating jurisdictions. In January 2007, the
workgroup adopted a new set of responsibilities
(http://www.chesapeakebay.net/anrwg.htm). These responsibilities include: encouraging
communication between groups, identifying innovative practices, identifying research
gaps, technically reviewing the watershed model, reviewing BMP definitions and
efficiencies, and determining how to meet agricultural nutrient management needs in the
future.

As part of their new scope, the workgroup has also committed to developing a strategic
approach for evaluating and overcoming implementation barriers. In order to do this, they
will devote a majority of their time to one specific responsibility: providing
recommendations and promoting the implementation of priority agricultural systems,
approaches, and conservation practices that would significantly contribute to improving
the water quality in the Chesapeake Bay. The first step in this process will be to identify a
relatively short list of practices for the workgroup to focus on in the upcoming months.

V. Resources for Implementing Agricultural Conservation Practices

The cost of full implementation of the agricultural practices called for in the states’
Tributary Strategies is estimated to be $700M per year. On average, farmers typically
pay for 25% of practice costs, with the remainder of the costs divided equally between
state and federal funds. Consequently, the expected federal funding need for agricultural
conservation in the watershed is $262.5M per year, a four-fold increase from FY2004
federal funding levels.

Federal Funding

2007 Farm Bill:

Total Farm Bill expenditures are not expected to increase with the 2007 reauthorization.
However, changes in conservation program allocation formulas that are more favorable to
the Bay region look promising. Additionally, there is considerable discussion on how the



                                             19
Farm Bill as a whole can transition to programs that are more acceptable to the World
Trade Organization, and conservation programs are widely accepted as trade-compliant.

Besides funding, the delivery of technical assistance is often cited as a limiting factor to
conservation practice implementation. Following the significant expansion of
conservation programs in the 2002 Farm Bill, NRCS staff took on greater responsibilities
for program delivery, leaving much of their traditional technical assistance role in the
hands of local conservation districts or private Technical Service providers.
During discussions of the 2007 Farm Bill, the roles of NRCS and its partners continues to
be a source of debate.

NRCS Resources:

The 2002 Farm Bill contained unprecedented increases in funding for agricultural
conservation programs. NRCS staff numbers increased concomitantly as the agency
ramped up to carry out new and enhanced financial assistance programs. Funds for the
increased staff came from technical assistance funding provided by the mandatory Farm
Bill programs. At the same time, NRCS’ discretionary Conservation Technical
Assistance (CTA) program, and the agency’s base program that provides funding for staff
salaries and fixed costs (buildings, vehicles, equipment), saw significant decreases that
continue to this day. In essence, there has been a trend toward more of NRCS’ salary
funds coming from mandatory programs rather than the discretionary CTA program.

The Chesapeake Bay earmark for dedicated Natural Resources Conservation Service’s
(NRCS) technical staffing within the six-state region has been eliminated for FY 2007
and its future is uncertain. Each year between FY 2002 and 2006, the six Chesapeake
Bay watershed states received an earmark in the CTA program. The earmark provided
$6 million in CTA funds, parsed out proportionally to the six states. The removal of the
Chesapeake Bay earmark in NRCS’ FY 2007 appropriation has strained the salary
budgets of the Bay watershed states. Reducing administrative overhead and increasing
cooperative projects with other organizations, including state agricultural agencies and
local conservation districts, will be an important focus for the future.

The future of the Chesapeake Bay component of Conservation Innovation Grants (CIG)
is also uncertain. For the past three years, up to $5 million has been available for projects
in the Bay watershed. CIG was authorized under EQIP in the 2002 Farm Bill, so the
program’s future, and with it the future of the Bay component, is uncertain. The
Administration’s Farm Bill proposal recommends reauthorizing CIG and increasing its
annual funding to $100 million.

Technical Assistance Demands

The majority of government conservation initiatives rely upon competent technical staff
to effectively develop programs, to support landowners and producers with plans and
contracts, and to implement practices or systems with technical and financial assistance.
The general trend over the past twenty years has been to increase funding for financial



                                             20
assistance to landowners while maintaining or decreasing technical field staff. Even
where program staff numbers were maintained, the increasing administrative program
demands upon them have typically reduced their field presence. As a result, the backlog
of technical assistance requests waiting for service has gradually risen in many counties
and states. Requests for basic conservation assistance such as contour and strip-cropping,
grass waterways, planned crop rotations, and soil quality management; all part of farm
conservation planning; will in some cases wait for years before assistance can be
obtained.

Actions have been taken in specific areas to address the backlog for technical assistance,
but as agricultural production changes with the influx of new regulations, technology, and
market influences, the objective may be increasingly harder to obtain. Some programs,
notably most state nutrient management programs, rely on certified private consultants to
expand their ability to offer technical assistance to producers. This practice of controlled
out-sourcing to qualified consultants has allowed the state agencies to maintain staffing
levels while enlarging their programs.

As the Chesapeake Bay Program partners continue to search for new and innovative
conservation methods to achieve their nutrient and sediment objectives from agriculture,
it is probable that greater reliance will be placed on improved management systems such
as dairy precision feeding and precision agriculture. To effectively implement these
management practices will require increased levels of technical assistance to landowners
and producers on an annual basis. The options can include diverting incentive budgets to
increase technical staffing levels, placing greater reliance on contracted technical service
providers, and developing cooperative relationships with the agri-business and service
sectors. Without future decisive actions, existing backlogs of requested assistance will
likely grow as the program partners expand their programs to restore the Bay.

Funding Options

There are multiple ways in which the Bay Program partners can increase the adoption of
conservation practices and systems by the agricultural community. One “traditional”
method is to increase financial support to agencies and programs providing financial and
technical assistance to agricultural landowners and operators. There is little question that
additional financial support could gain increased implementation across the watershed,
however, this action alone will most likely prove insufficient to achieve the levels called
for by the Chesapeake Bay Tributary Strategies.

If additional funds were available, agricultural conservation program administrators could
elect to increase the cost-share payments from the typical rates of 50 to 80 percent, to a
rate of 100 percent or greater. There is little question those programs within the Bay
which have implemented cost-share rates at 100 percent or greater above the costs of
implementing the practice did create an increased adoption by the agricultural
community. This in effect allowed the landowner to implement the practice and receive a
profit besides. Even with the higher incentives, these programs have typically not met
their expected implementation goals, or that of the jurisdiction’s Tributary Strategy.



                                             21
Another negative effect of increasing cost-share rates for a program is that it can play
havoc with other similar incentive programs in neighboring watersheds or jurisdictions. If
program coordination is absent between partners, a successful program in one area may
be compromised by the actions of another. The result can lead to dissatisfaction amongst
the agricultural community split by watersheds or political boundaries, as well as by
affected program partners.

Increasing incentive payments to at or above implementation costs is one way to garner
additional implementation, and it could be adopted by nearly all of the conservation
programs operating with the basin, but should they? Another option could be to design
incentive programs to better fit into the crop or animal production system, balancing
financial resources with expected nutrient and sediment reductions. One example is the
development of commodity cover crop programs which allow landowners to harvest the
cover crop the following year and apply reduced rates of nutrients to the cover during the
growing cycle. These programs can provide a minimal incentive payment while
achieving increased levels of adoption over cereal cover crop programs that typically
require the crop to be terminated.

A second possible option is to create market-driven incentive programs to increase
practice adoption, which is again based on agricultural production systems. If the industry
that is buying the agricultural products implements standards from its contracted
producers and pays a premium price, the landowners may more readily adopt the
practices voluntarily without a direct government incentive program payment. “Corporate
responsibility” could offer a new opportunity for the Bay Program partners to cooperate
with the agricultural and food industry to effect change. The Perdue Clean Bays
Environment Management Initiative, the milk urea testing program with the milk
cooperatives in Maryland, and the Scotts Miracle-Gro/Lebanon Seaboard Corporation
agreement are all examples of this type of system change.

A third potential option is to assist landowners and the agricultural industry with "fine-
tuning" their existing production systems so that they maximize yields while reducing
input costs. Providing technical assistance so that producers meet or exceed their
production goals while utilizing the minimum amount of nutrient inputs required, can
balance the needs of the agricultural producer with the environmental needs of the Bay.
An example includes the implementation of enhanced nutrient management or precision
agriculture practices to increase yields while reducing nutrient input costs to the
producer. These management systems can also reduce the potential loss of nutrients and
sediment to the watershed, creating a win-win situation that works in harmony with
agricultural production and the agricultural community.

VI. Challenges of Reducing Nutrients and Sediments from the Agricultural Sector

Consistent with the most recent Chesapeake Bay Tributary Strategies developed by each
of the watershed states, the 2010 Implementation Plan for the basin relies heavily on
further reductions by agriculture. Even though agricultural acreage is declining,
agricultural land uses in the plan are forecasted to further reduce nitrogen losses by


                                            22
approximately 12.8 million pounds, phosphorus by 0.8 million pounds, and sediment by
0.4 million tons per year. Of the total nutrient reductions proposed, agricultural
reductions would account for 51.7 percent of the total nitrogen decrease and 77.4 percent
of the total phosphorus decrease. The reductions are expected to primarily come from a
combination of cropland conservation practices and animal production management
systems. Due to the significant level of reductions expected from agriculture, it is
necessary to include the majority of agricultural operations in the strategies and the 2010
Implementation Plan.

Multiple Approaches

The Chesapeake Bay Program partnership has developed multiple approaches for
achieving agricultural pollution reductions, as diverse as the jurisdictions are themselves.
Even with such diversity, there are similarities as well. In most cases, the partners are
advocating approaches from a comprehensive list of close to 30 conservation practices;
those practices defined in the latest Chesapeake Bay Tributary Strategies. Utilizing this
list as a beginning point, many partners have elected to strategically focus on
implementing key conservation practices that are considered most cost effective and
result in the most significant nutrient and/or sediment reductions. Examples of these
practices include nutrient management planning, conservation tillage and no-till, cover
crops, riparian forest buffers, manure transport, dairy and poultry feed management, and
alternative uses of manure.

Voluntary Implementation

With the exception of a limited number of permitted agricultural operations regulated
under the EPA Concentrated Animal Feeding Operation (CAFO) regulations, the
majority of farms operate under a diversity of state regulations and/or local government
ordnances/zoning restrictions. The enforcement of state regulations are by designated
state regulatory agencies, who may in turn delegate these responsibilities to local
government entities, such as county conservation districts. The diversity of laws and
regulations, in tandrum with a mixture of enforcement entities, can at times result in
inconsistent compliance and enforcement actions. These actions are typically limited to
operations causing severe and measurable environmental impacts, and/or public
complaints. As a result, the agricultural community other than permitted operations can
be uncertain of their legal responsibilities.

The implementation of conservation practices is typically voluntary on behalf of the
landowner and operator outside what is required to meet varying levels of federal, state,
and local restrictions. The ability of federal, state and other program partners to influence
an operator’s decision making is primarily limited to offering incentive programs and
providing technical assistance. Federal assistance programs are implemented through
agency employees or contracted certified Technical Service Providers (TSPs), whereas
state programs may be implemented by state employees or through self-governing local
government organizations such as county conservation districts, or through independent
non-governmental organizations (NGOs). Despite the complexity of service providers,



                                             23
each with their own motivations and perspectives, the agricultural community routinely
views these distinct entities as one organization.

Economic market forces and the agri-business sector may have a greater influence on
producer decision making for the short and long terms. The value of agricultural
commodities and the ability of the operator to produce and market his products have a
direct impact upon the operation’s economic viability. If economic returns are minimal,
there may not be an incentive to implement conservation measures based on long term
investment and sustainability, or an improvement to the environment. It is also far more
likely for an operator to receive financial and technical advice from a private agri-
business consultant with whom they may interact with on a regular basis, than from a
federal, state, or local conservationist.

The primary challenge to achieve substantial nutrient and sediment reductions by
obtaining voluntary implementation of unprecedented levels of conservation practices,
has never before been witnessed in any watershed. By streamlining at times rigid
financial and technical assistance programs, instituting improved communications and
cooperation between programs and agencies, exerting positive influences on market
forces, and involving greater participation by the private agri-business sector, the goals
may yet be achieved.

Agricultural BMP Tracking

The Bay Program states are responsible for tracking, compiling, and reporting
agricultural BMP implementation so that their records best reflect what has occurred over
a year or is on-the-ground at the end of an annual period. It is each jurisdictions
prerogative to choose how to track and assimilate BMP implementation data as the states,
are in the best position to meet the objective.

It is the states’ prerogative to choose how to track and assimilate BMP implementation
data to meet the objective of reported BMP implementation that best reflects what has
occurred over a year or is on-the-ground at the end of an annual period. Tracking
mechanisms are unique to jurisdictions. Generally, agricultural BMP implementation can
be tracked through funds expended, i.e., cost-share. It is each state’s responsibility to
work with agencies that manage the agricultural BMP data to address issues of double-
counting where implementation funds were derived from several sources such as federal,
state, county, local, and/or landowners. In many cases, jurisdictions choose to use their
cost-share databases rather than NRCS data for a more comprehensive assessment of
implementation and to improve accuracy by reducing the potential of double-counting
BMPs.

NRCS is currently working with the state agricultural agencies to ensure that all
conservation practices implemented in the watershed by NRCS are captured in data
submitted to the Chesapeake Bay Program Office. Some states do not use NRCS data for
fear of double counting and NRCS data are often difficult to access given confidentiality
issues.



                                             24
To further improve the accuracy and completeness of BMP tracking, the National
Environmental Information Exchange Network (NEIEN) Grant Program has been in
development for more than two years. The nonpoint source BMP data exchange using
EPA’s NEIEN will provide inputs for the Watershed Model and various Information
Technology tools developed for regional use.

The scheme will eventually replace the existing system where BMPs are accounted for
through disparate funding sources and implementation under many organizations. Use of
the network meets both Bay Program office and jurisdictional needs such as 1) rapid
access to high-quality, timely environmental information to support management activity;
2) consistent and comparable data across jurisdictions to inform management activity;
and 3) a removal of the burden on the states to submit uniquely formatted data to the
Chesapeake Bay Program office and EPA.

Quantifying the Effectiveness of Agricultural BMPs

The definitions and proposed nutrient/sediment reduction effectiveness of most
agricultural BMPs used in the Chesapeake Bay Watershed Model is currently undergoing
a formal review through a two-year project headed by the University of Maryland and the
Mid-Atlantic Regional Water Program (MARWP). The project involves developing and
refining BMP definitions and recommending methods of quantifying BMP
implementation. The assessment includes scientific literature searches, data analyses,
expert interviews and surveys, and selected demonstrations and field tours. States are
permitted to propose new BMPs and efficiencies for review by the Chesapeake Bay
Program, in accordance with the Nutrient Subcommittee's BMP protocol.

Agricultural Inputs and the Watershed Model Simulation

The CBP has devoted more time on improving Watershed Model agricultural inputs and
the agricultural simulation than any other land type or sector. This is primarily due the
disproportionate degree of fundamental nutrient inputs to agricultural lands (i.e., manure,
chemical fertilizers, and atmospheric deposition of nitrogen) and the relative complexity
of nutrient transport and transformations in agriculture among all source sectors.
Although most of the nutrient inputs to all lands are attenuated through uptake by
vegetation, soil storage, and (in the case of nitrogen) denitrification, agricultural lands
yield the greatest nutrient and sediment loads to the Chesapeake Bay and are planned to
be managed to achieve the greatest reductions among all source sectors.

The Phase 5.0 of the Watershed Model currently undergoing calibration is much
improved from the earlier version used for environmental management. Overall upgrades
include finer spatial resolution with over 2,000 hydrologic segments and more than 1,000
individual reaches; more land use types; time-varying land use areas; better atmospheric
deposition inputs; and time-varying BMPs through the simulation period. An automated
calibration ensures even treatment across jurisdictions; is repeatable; and makes
calibration feasible. The calibration strategy is fully documented and enables uncertainty



                                            25
analysis. The latest version of the model has a longer simulation period (or two decades
of meteorology and watershed condition and management data) and generally operates on
a 1-hour time-step.

In addition to these significant improvements, developments specific to the Watershed
Model’s agricultural inputs, simulation, and methods of quantifying the benefits of BMP
implementation also include the following:

   •   Sixteen land use types (of the total 26 land use categories) that vary by tillage,
       crop type, fertilizer type, fertilizer rate, and the presence of livestock
   •   More animal classes
   •   A continuous soil nutrient budget simulation through a yield-based algorithm
   •   Time-varying land applications based on crop, fertilizer type, and climatic zone
   •   A nitrogen and phosphorus link in manure applications
   •   Nitrogen and phosphorus nutrient management
   •   A crop uptake calibration that’s sensitive to rainfall (mimicking actual annual
       trends)
   •   Capabilities for seasonally-variable BMP efficiencies reacting to hydrologic
       variation

Although an upgrade to the Watershed Model’s input data and simulation are extensive, it
should not be expected that model outputs, such as loads, are relevant at the scale of
farming operations. Even if computing capabilities and development resources were
available, data for most environmental conditions and model parameters are not available
at this fine scale across the domain of the Chesapeake Bay watershed and through the
longest simulation time period. The minimum resolution for directing management
would, more likely, be at a scale of clusters of counties – with accuracy of the outputs
increasing with increasing area.

VII. Future of Agriculture in the Chesapeake Bay

The future of agriculture within the Chesapeake Bay watershed is as uncertain as the fate
of the bay it surrounds. The close proximity of major population centers, the bisecting of
the basin by national commerce routes and the increasing influence of economic and
social forces for development, continue to exact its toll on an agrarian way of life.
Change has been relatively constant for the agricultural community since the beginning
of conservation efforts to restore the Bay in the 1980’s, however, new economic factors
such as expanding corn ethanol production, rising grain commodity prices and a
replacement of traditional corn based animal feed stocks with dried distillers grains
(DDG), may effect a more rapid change in agriculture than witnessed over the past two
decades.

Agricultural Biofuels

The increasing national demand to replace imported foreign petroleum with agriculturally
based biofuels, especially corn ethanol, could herald significant changes to agriculture


                                            26
and conservation programs in the Bay watershed. Rising demand has increased corn
commodity prices from above $2.00 a bushel to over $4.00 a bushel, encouraging
producers to convert additional acreage from other row crops, hay, pasture and idle lands
into corn acreage. The March of 2007 Prospective Plantings report from the USDA
National Agricultural Statistics Service (NASS) predicts an increase of 15 percent in the
number of acres planted to corn nationally, and a decrease of 11 percent in the acres of
soybeans. If true, corn acreage would increase from approximately 78.4 million acres in
2006 to over 90.5 million acres in 2007, the highest level since 1944.
See (www.usda.gov/nass/PUBS/TODAYRPT/pspl0307.pdf ) for more detailed
information.




Within the Chesapeake Bay basin, current estimates conservatively place the increased
corn acreage over the next several years at one million acres. Holding other potential
market influences constant, the conversion rate to corn production will vary across the
basin over the next two years. According to the recent figures from USDA-NASS, the
coastal plain areas should experience relatively small conversions in 2007 due to the
limited acreage in hay, pasture, and idle lands. The majority of available cropland is
presently in either corn or small grain/soybean production. It is difficult for producers to
convert small grain fields (to be doubled cropped with soybeans) to corn due to the
economic investment in the existing small grain stand. Instead, producers are more likely
to convert these fields into corn in 2008, while maintaining continuous corn rotations in
other production fields. Full-season soybean fields will stand a greater chance than
double-cropped soybeans for being converted to corn production in the present year.

In the piedmont, as well as the ridge and valley areas, a significant conversion to corn
production is forecasted to begin in 2007, according to recent USDA-NASS reports. This
increased conversion rate may be due to the greater availability of hay, pasture, and idle
lands to convert into corn production, all of which may be rotated into corn in a shorter
period time with less loss of economic investment than small grains. The majority of
conversion will likely occur on hay and idle lands, with a limited amount of pasture being



                                             27
converted. This trend may continue in 2008, but will probably be at a lower rate
compared to the present year, as well as the coastal plains in 2008.

Idle lands being converted to corn production consist primarily of low fertility cropland
idled due to low productivity, farmland owned by absentee owners for investment and/or
future development, and retired lands under federal and state conservation programs.
Higher corn commodity prices can provide improved opportunities for economic gains on
low productivity soils, as well as one-year rental agreements on farmland destined for
eventual development. Landowners may also be provided an economic incentive to buy-
out governmental contracts and reclaim cropland previously retired by conservation
programs, such as the Conservation Reserve Program (CRP) and the Conservation
Reserve Enhancement Program (CREP), both under the USDA-Farm Services Agency
(FSA).

As another effect of higher commodity prices, a fifteen percent increase in nitrogen
application rates on corn is expected by leading national agricultural economists.
Although commercial fertilizer prices have increased by over 20 percent from 2006, the
increase of corn prices by double has pushed up the economic threshold of profitability.
This could increase nitrogen losses from corn production dramatically nationally and
within the Bay basin. The World Resources Institute (WRI) projects nitrogen loading
from agriculture could rise over five percent nationally with the additional corn
production. This could equate to a conservative estimate of 16 million pounds of
additional nitrogen lost to the environment within the basin alone if an additional one
million acres of corn are raised.




                       Grain Production vs. Nitrogen Efficiency


Dried distillers grains (DDG) are a byproduct of corn ethanol production, which are
typically feed to livestock. Due to the distilling process for converting carbohydrates to
sugars, DDGs are higher in content than corn in other elements such as proteins, fats, and
phosphorus. The altered composition of the feed does not allow it to be utilized


                                            28
effectively by mono-gastric such as poultry and swine. Limited amounts can be fed to
multi-gastric animals such as dairy and beef cattle (20-30 percent respectively) as a
partial supplement to corn as an energy source, and soybean meal as a protein source.
Higher levels of phosphorus are excreted in the manure, which flies in the face of recent
initiatives to reduce soil phosphorus levels through improved feed management practices.

As a greater amount of the nation’s corn harvest is utilized by the ethanol industry, DDGs
will become more readily available for cattle feeds, providing a more profitable
alternative to more expensive grains. Increased feedlot beef cattle production may
become a commercial necessity to consume the DDGs, while at the same time, poultry
and swine production may begin to decline due to higher corn grain feed costs.

                                                                                Distillers Grains
                 30                                                                                                                                              160




                 20                                                                                                                                              130
  Million Tons




                                                                                                                                                                       $ per Ton
                 10                                                                                                                                              100




                  0                                                                                                                                              70
                      6

                               7

                                        8

                                                 9

                                                          0

                                                                   1

                                                                            2

                                                                                     3

                                                                                              4

                                                                                                       5

                                                                                                                6

                                                                                                                         7

                                                                                                                                  8

                                                                                                                                           9

                                                                                                                                                    0

                                                                                                                                                             1
                  /9

                           /9

                                    /9

                                             /9

                                                      /0

                                                               /0

                                                                        /0

                                                                                 /0

                                                                                          /0

                                                                                                   /0

                                                                                                            /0

                                                                                                                     /0

                                                                                                                              /0

                                                                                                                                       /0

                                                                                                                                                /1

                                                                                                                                                         /1
                 95

                          96

                                   97

                                            98

                                                     99

                                                              00

                                                                       01

                                                                                02

                                                                                         03

                                                                                                  04

                                                                                                           05

                                                                                                                    06

                                                                                                                             07

                                                                                                                                      08

                                                                                                                                               09

                                                                                                                                                        10

                                                                                M a r k e tin g Y e a r

                                                              P r o d u c tio n ( D r y E q u iv a le n t)                    P r ic e




Other examples of potential agricultural biofuels include bio-diesel from soybean oils and
cellulose-based ethanol from crop residues, forestry slash and bi-products, and cool or
warm season grasses. An increase in soybean production might have only minimally
positive effects on water quality over corn due to the reduced crop residue and the loss of
residual nitrogen. Some forms of cellulose-based ethanol may pose increased water
quality risks as well, including the removal of crop residues and forestry cover which
would increase nutrient and soil loading to the Bay. Bi-products (i.e. sawdust, wood
chips), cool season grasses (i.e. orchardgrass, timothy) or warm season grasses (i.e.
switchgrass, big bluestem) may offer the best alternatives for maintaining or increasing
nutrient and sediment reductions in agriculture. Unfortunately, the technologies to
commercially produce large volumes of cellulose-based ethanol are currently not
available. Significant government assistance will be required before cellulosic ethanol is
commercially profitable. For more information on the future of biofuels, see Volume 17,
Number 2 of the Alliance for the Chesapeake Bay Journal (www.bayjournal.com).


                                                                                              29
                                       Estimated Biofuel Feed-Stock Production




           Source: U. of Tennessee, “25% Renewable Energy for the U.S. by 2025”, Report,
           November 2006

           Agricultural Land Conversion

           According to model projections based on federal Census data, agricultural lands within
           the Chesapeake watershed have steadily been converted to other land uses, primarily into
           developed land uses. Between 1985 and 2000, approximately 10 percent of agricultural
           lands were converted out of production. This trend continued from 2000 to 2005 at nearly
           3 percent, and is forecasted at the same rate for the 2010 Implementation Plan. With the
           estimated loss of over 52,700 acres of farmland per year, the increasing reliance on
           agriculture to assume additional nutrient and sediment load responsibilities seems at odds
           to meeting the Tributary Strategy goals.


                   Chesapeake Bay Watershed Estimated Land Uses: 1985-2010
               ACRES       ACRES         ACRES       ACRES     ACRES         ACRES      ACRES     ACRES        ACRES      ACRES
               s01ref      No-BMPs       Change      Percent   No-BMPs       Change     Percent   No-BMPs      Change     Percent
                1985         2000       1985-2000    Change      2005       2000-2005   Change      2010      2005-2010   Change
Row Crop       4,851,854   4,358,543     -493,311    -10.2%    4,234,568     -123,975   -2.8%     4,110,595    -123,973   -2.9%
   Hay         2,165,865   2,202,873       37,008     1.7%     2,266,684       63,811    2.9%     2,330,495      63,811    2.8%
 Pasture       3,599,763   2,954,301     -645,462    -17.9%    2,750,654     -203,647   -6.9%     2,547,007    -203,647   -7.4%
 Manure            9,317      8,529          -788    -8.5%          8,515         -14   -0.2%        8,537           22    0.3%
Agriculture   10,626,800   9,524,245    -1,102,555   -10.4%    9,260,420     -263,825   -2.8%     8,996,635    -263,785   -2.8%




                                                               30
                                  110          10% of ag lands converted to
                                               other uses (over 15 years)
   % of ag land in CB watershed                                               3% of ag lands converted to
                                  100                                         other uses (over 5 years)

                                  90

                                  80

                                  70

                                  60

                                  50
                                        1985                        2000                            2005


Improved market economics for grain commodity prices may provide only a minimal
effect on slowing the conversion of farmland to developed land uses. The increased cost
of corn grains and forages for animal feeds, low milk prices, high land values and a
strong development real estate market will potentially overcome any gains from a
favorable commodity market.

Corporate Responsibility

The development of a global agricultural products market, and the subsequent rise in the
influence of national and international corporations in the market place, may provide new
opportunities for obtaining additional reductions of nutrients and sediments. Recent
public food security concerns stemming from agricultural production practices (i.e. green
onions and spinach recalls in 2006), has had long-term financial repercussions on select
areas of the industry. The expansion of markets for organic, animal welfare or
sustainability produced certified products is an increasing trend in the industry. Termed
“corporate responsibility”, large corporations are increasingly sensitive to the public
perception of agricultural production methods. The opportunity now exists as never
before for the Chesapeake Bay Program (CBP) partners to engage with corporate
America in defining how agricultural products are produced; backed up with third party
verification and economic consequences for the producer. Several examples of corporate
responsibility have been realized within the Bay watershed already.

The recent agreement between Perdue Farms, Incorporated and EPA under the Perdue
Cleans Bays Environment Management Initiative is one example. Perdue Farms will offer
education, training and joint environmental assessments with federal and state inspectors
to its contracted producers for enhancing compliance with environmental regulations, as
well as receive federal assistance in creating new markets for poultry litter. See
(www.epa.gov/region03/pdf/Perdue_MOA.pdf) for specific information.




                                                               31
A second example of corporate responsibility is the agreement signed between the CBP
and the Lebanon Seaboard Corporation and the Scotts Miracle-Gro ® Company to reduce
or eliminate phosphorus in do-it-yourself turf-grass fertilizer products distributed within
the basin. See
(www.chesapeakebay.net/info/pressreleases/ec2006/Lawn%20Care%20MOU%20ver1%
20color.pdf) for additional information.

Conclusions

The importance of agriculture to the health of the Chesapeake Bay can not be overstated,
as has been amply demonstrated by this report. The impact economically and
environmentally of over 87,000 privately owned and operated farms, in combination with
a large, complex, and at times integrated support system of diversified agri-businesses
and corporations, is one that can not be ignored. The continued aging of the farm
population, the increasing level of business administration and financial capital required
of operators, and the growing pressures of rising land prices, absentee landowners and
encroaching development, all contribute to an ever rapidly changing agricultural sector.

Although it may appear from this report that the Chesapeake Bay Program’s knowledge
of agriculture and its future is extensive, the opposite is the reality. Traditional sources of
agricultural statistics remain available for the most part, such as the national Agricultural
Census data and agricultural reporting by USDA-NASS, however, these sources may not
capture the full picture of agriculture within the basin. Former sources of information
may no longer be available to the program, such as the crop residue surveys from the
National Conservation Technology Center (NCTC). The rapid change in agricultural
markets may have made past reports on agricultural conservation methods obsolete, such
as the Chesapeake Bay Commission’s report entitled the Cost-Effective Strategies for the
Bay published in 2004. Other critical information may not have ever been collected, such
as the ratio of operator owned versus rented farmland, which can dictate the ability and
interest of a producer to implement long-term conservation practices. The resulting data
gaps may prevent the program and its partners from adequately forecasting and
addressing the needs of agricultural production with water quality goals.

It is important for the Chesapeake Bay Program and its partners to investigate new
opportunities to obtain sound agricultural data on an annual basis. Traditional sources
should continue to be utilized with improved electronic and GIS based reporting tools,
but in combination with new sources such as program partner sponsored crop residue
surveys, commodity market forecasting reports, and agricultural trend reporting from
agri-business. The results of an improved network of data collection could be collected
into an annual or biannual “Chesapeake Bay Agricultural Report” for use by the
Chesapeake Bay Program and its partners for an important decision making tool.

In order for a “Chesapeake Bay Agricultural Report” to become a reality, the program
and its partners will need to prioritize this effort as a long-term commitment. The
dedication of financial and technical resources to leverage existing resources, the




                                              32
development and implementation of program sponsored or validated data collection tools,
and the cooperation of the private agricultural industry will likely be required.

Any new commitment for the program and its partners can be viewed as burdensome at
best, but the alternative of not anticipating the changes in agriculture and how it will
affect meeting our nutrient reduction goals could hurt the Bay restoration. An agricultural
sector that has experienced slow to moderate change in the past two decades may now be
poised for a period of instability as the new market influences forever change the face of
agriculture within the basin.




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