When USDA stops paying rent, idled land usually goes back into crops

A Reagan-era creation, the CRP is the largest U.S. land retirement program, paying landowners an annual rent if they idle environmentally fragile cropland for 10 to 15 years. But when the contracts expire, most of the land goes back into crop production, says a USDA report that examines the budgetary and land stewardship implications of land leaving the reserve.

The USDA paid $1.8 billion in rent to owners of the 22 million acres enrolled in the reserve in fiscal 2019. The 2018 farm law raised the ceiling on enrollments to 27 million acres and a "general" sign-up, allowing owners to offer large tracts for enrollment, runs until February 28. Contracts expire on 5.4 million acres on September 30, so there could be a large turnover in the reserve as well as an overall increase in the size of the CRP.

Read More: Ethanol industry's founding fathers look for buyers - again

"Overall, most land, 64%, associated with (CRP) contracts expiring over 2013-2016 was not reenrolled and exited the program," said six Economic Research Service analysts in the USDA report. The remainder of the land stayed in the reserve through reenrollment.

"The effects this lack of reenrollment have on ecosystems depend on the ultimate use to which the expired…land is put," they said. Four fifths of the land that left the reserve "has returned to some sort of crop production," most commonly soybeans, corn, and wheat, but also including perennial forages, in some cases.

The shift to annual crops was highest in the Midwest and neighboring states, which could have implications for water quality, said the report. By coincidence, Iowa had one of the highest reenrollment rates, 52%, of any state and was among six states with the highest rates of returning land to annual production once it left the reserve at 71%.

"We find that tree practices have yielded the most durable benefits, at least in the short term," said the analysts. More than 77% of CRP land with a tree cover practice remained in trees after leaving the reserve. Tree cover also had the highest reenrollment rate, 47%. The livestock-grazing Plains had the highest rates for keeping land in grass cover.

The 2018 farm law requires annual "general" sign-up for the CRP. It will be followed by a CRP grasslands sign-up, to protect up to 2 million acres of grazing lands. "That will allow farmers and ranchers to restart livestock grazing operations while still receiving rental payment assistance," said Ferd Hoefner of the National Sustainable Agriculture Coalition.

Read More: The new math of weed management

The period covered by the report began with high commodity prices, a lure to bring land into production, and included the effects of the 2014 farm law, which lowered the cap on CRP enrollments to 24 million acres. The 2018 farm law was the first in a decade to expand the reserve, to 27 million acres. Congress periodically adjusts the enrollment limits for the reserve in response to commodity prices and demand for cropland. In its early years, the reserve sometimes looked like an income buttress for an ailing farm sector. More recently, environmental benefits such as wellhead protection and reducing runoff, have been given higher priority.

Previous reports found varying rates of conversion of CRP land to crops once contracts expire. "A common threat in the existing literature is … conversion is positively correlated with commodity prices," said the ERS team.

The report, "The fate of land in expiring Conservation Reserve Program contract, 2013-16," is available here.