August 24, 2005
The Honorable James Little U.S. Department of Agriculture 1400 Independence Ave., SW Washington, D.C. 20250 Dear Administrator Little: We understand that the President is planning to make an announcement regarding the Conservation Reserve Program (CRP) during the White House Conference on Cooperative Conservation to be held in St. Louis, MO on August 28-31. The primary issue is how to handle the large number of expiring acres in 2007 and 2008. Given the President’s message on competitiveness and opportunity, particularly in light of a very close vote on the Central American Free Trade Agreement (CAFTA) and the significant renewable fuels standard outlined by the recently signed energy legislation, a proposal that continues to idle large tracts of farmable land is in direct conflict with that message. Assessing USDA recommendations for the CRP: 1. Offering of Automatic Re-enrollments for 20 percent of Land with Highest EBI score. 2. Offer 2 to 5 year extensions for 80 percent of remaining expiring acres. 3. Adjusting rental rates for re-enrollments, but not extensions. Expiring land, regardless of its EBI, should be competitively re-bid. Given the different and changing ownership structure for land, only a bidding process can ensure some reasonable degree of pricing and program efficiency. In a period of limited government resources and the Administration’s emphasis on program performance and efficiency to ensure taxpayer dollars are being spent wisely does a non-competitive re-enrollment and extension process for a multibillion dollar program make sense? Only a competitive bidding process will give USDA the ability to find the best mix of CRP acres for the environment and the economy, thereby maximizing the usefulness of a taxpayer funded program. Simply adjusting rental rates on the basis of market rental rates for farmland is a poor and inefficient substitute for a competitive process. By letting contracts expire, USDA could focus the program to provide better environmental targeting of idled land and limit the negative economic consequences of keeping large tracts of land out of production. If USDA does not permit the bulk of CRP contracts to expire and require re-bidding against other lands, it will only serve to further the perception that the government is involved in a permanent land-idling scheme with economically damaging impacts very similar to the discounted resource-idling policies that have been discontinued in previous farm legislation. Short term extensions of 1 to 3 years based on the highest EBI scores should be sufficient to “spread out” the effect of mass contract expirations. By automatically re-enrolling 20 percent and offering such long-term extensions as 5 years, large tracts of land are locked away in an era of
increased foreign competition, an explosion of ethanol facilities encouraged by state and federal tax incentives and on the eve of a farm bill rewrite. We continue to encourage an approach that reflects the Administration’s commitment to free enterprise and support for U.S. agricultural economic growth. 4. Bringing the 70 counties that exceed the 25 percent county cap down to 22 percent with 3 percent available for CREP and continuous. In addition to counties that have been exempted we remain concerned about counties that are not classified as such, but still appear to be well above the 25 percent cap. We believe that the formula for determining what constitutes 25 percent of the agricultural land base of a county needs to be revised. It appears that because outdated data on cropland is being used to determine the per-county cap acreage, the total acreage being removed from production far exceeds 25% of a modern-day “normal cultivated acreage” (in the absence of a CRP program) for a given county. Two anecdotal examples of this are Harmon County, OK which has 51,000 acres in the CRP, but only harvests 84,000 acres of cropland and Ellis County, OK which has 63,000 acres in the CRP with current plantings of crops of 97,000 acres. Both of these examples suggest the 25% cap, as being administered by USDA, has not successfully limited the potential economic damage to rural areas. This issue has been repeatedly raised for the last twelve months and as yet, we have seen no substantive response from anyone within USDA. In addition, as noted previously, because so many counties already have reached the 25% limit as now being administered, USDA is being prevented from enrolling valuable filter strips in such counties that could contribute meaningfully to water-quality objectives. This is another important reason not to rush to judgment on reenrollments of existing CRP acreage. 5. Compliance and spot-checks. We are pleased that USDA intends to ensure 100 percent compliance before anything is reenrolled or extended. 6. Expiring contracts not re-enrolled or extended. We understand USDA estimates that 6 million of the acres due to expire will not be re-enrolled or extended due to landowner preference. USDA must allow anyone bringing expired land back into to production to be able to add these acres to their base when considering farm program payments. These acres must maintain eligibility for government programs otherwise they will be severally disadvantaged to those already in production and will provide a disincentive to bring any of those expiring acres back into production. This point is critical to the outcome of the USDA review process of the CRP.
Given the rapidly growing bio-fuel sector, and yield-robbing production threats like soybean rust and head blight in wheat that defy accurate impact assessment at this stage, traditional U.S. agricultural sectors like livestock, poultry, grain processing and exporting face considerable
uncertainty regarding long-term supplies of whole grain feed stocks. Because of this consideration, and the fact that technological advancements now permit more effective soil conservation practices on land that remains in active farming, we think that Congress should have as much flexibility as possible to determine the future direction of the CRP program, as well as the context of the CRP within overall conservation programs. Excessive early reenrollments and automatic extensions by USDA could restrict the options available to Congress in the next farm bill to fully evaluate and consider a more optimal mix of conservation programs. The Farm Bill Listening Sessions conducted by USDA have already witnessed significant complaints about the negative impact of the CRP on young farmers and local communities further highlighting the ill-conceived notion of automatic re-enrollments and long-term extensions. We encourage you to adopt conservation policies that promote long-term U.S. agricultural competitiveness and opportunities for growth rather than idled productive farmland. Sincerely, American Bakers Association Biscuit and Cracker Manufacturers’ Association Independent Bakers Association National Chicken Council National Grain and Feed Association National Grain Trade Council National Oilseed Processors Association North American Export Grain Association North American Millers’ Association The Fertilizer Institute
Contact Information: Kendell Keith, President National Grain and Feed Association 1250 Eye Street NW, Suite 1003 Washington, D.C. 20005 (202) 289-0873 kkeith@ngfa.org