Record-high or near-record crop prices do not bode well for the near future of the Conservation Reserve Program (CRP) and the wildlife that depends on the habitat that CRP provides, according to the Wildlife Management Institute. Driven by the recent and significant increase in ethanol production, plus substantially increased foreign demand, corn prices are now hovering at record levels despite record production last year.
 

The 2007 corn harvest was 13.1 billion bushels, surpassing the previous record of 11.8 billion bushels set in 2004, according to the U.S. Department of Agriculture (USDA). More acres were planted to corn last year than in any year since the 1940s. High corn prices in 2007 caused producers to shift acreage to corn from other commodities, such as soybeans and wheat, triggering similar substantial increases in the prices for these crops.

Even with record production last year, USDA projects that corn supplies will dwindle to just a five-week supply by late summer 2008. The high demand for crops apparently is going to result in a substantial decline in the number of acres enrolled in CRP. Kevin Kading of the North Dakota Game and Fish Department reported that just fewer than 420,000 acres of CRP were lost between August 31 and November 30, 2007, in North Dakota alone. This represents a CRP enrollment loss of more than 12 percent in the state lost in a three-month period. Corresponding declines in grassland-dependent wildlife are inevitable.

Along with major negative impacts to wildlife, increased soil erosion and reduced water quality and carbon sequestration are expected as a result of a loss of CRP acres. Because CRP targets lands prone to erosion, sediment losses from lands withdrawn from CRP and put back into crop production tend to be higher than losses from croplands not eligible for CRP because of their low erosion potential.

CRP subsidy rate payments to landowners often are not competitive with the prices for crops grown on the same ground. A spike in crop prices aggravates the situation because subsidy rates are based on a formula that does not account for such rapid price escalations. CRP rates are always a little behind and below crop cash rental rates when crop prices increase.

The Center for Agriculture and Rural Development at Iowa State University estimated that, if corn prices were at $3.00 per bushel, half of CRP acres would likely be put back into production. Using current March corn futures that are hovering in the $4.50 per bushel range, their projections would be for a 65-percent reduction in CRP lands. A good analysis of the impact high corn prices has on CRP can be found in the Iowa Ag Review (vol. 13. no. 2) at www.card.iastate.edu/iowa_ag_review. (pmr)

Editor's Note

For clarification, the loss of 420,000 acres of Conservation Reserve Program (CRP) land in North Dakota last year occurred because U.S. Department of Agriculture (USDA) did not offer the opportunity for producers to re-enroll in the program, not because high crop prices motivated producers to leave the program. Whether those acres would have been re-enrolled otherwise is speculative, but high crop prices undoubtedly were a factor driving USDA's decision. Also, reference was made to CRP subsidy payments; in fact, they are rental payments.??
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