The U.S. Department of Agriculture's (USDA) Economic Research Service recently released a report projecting impacts of higher crop prices on enrollment of lands in the Conservation Reserve Program (CRP). The report, "The Influence of Rising Commodity Prices on the Conservation Reserve Program," concludes that, if the unusually high crop prices in place in 2008 become the norm, CRP rental payments will be required to roughly double to maintain the acreage and environmental benefits currently provided by the program, according to the Wildlife Management Institute.

Corn prices jumped from $3.03 per bushel in 2006 to $4.20 per bushel in 2007 and increased even further to $5.40 per bushel in the summer of 2008. Corn prices have been hovering around $7.00 per bushel in recent days.

Without a significant increase in CRP rental rates, which could be a pretty tough sell on Capitol Hill given the prevailing attitude there to address budget deficits, CRP could lose substantial acreage, be less effective in terms of environmental benefits or both. The 2008 Farm Bill established a 32-million acre cap for CRP?4.6 million acres less than the program's peak in 2007. As the lure of higher commodity prices influences farmers to put land into crop production instead of CRP, USDA may have to decide whether to accept less environmentally sensitive lands into the program to maintain acreage near the cap level or accept fewer acres and target the program where the most environmental benefits will occur.

The report also notes that one possible resolution to this dilemma would be to allow CRP participants to sell carbon offsets on lands enrolled in the program if and when a market develops for carbon sequestration.

Access the full report. (pmr)