NEWS

Farm Service Agency

Public Affairs Staff

1400 Independence Ave SW

Stop 0506, Room 3624-South

Washington, D.C. 20250-0506

March 8, 2007

Question: What is Conservation Reserve Program (CRP)"re-enrollment and extension"

(REX)?

Answer: USDA's Farm Service Agency (FSA) provided holders of CRP contracts set to expire during 2007-2010 the opportunity to re-enroll or extend their contracts. (The contracts are USDA Commodity Credit Corporation (CCC) contracts. FSA administers CRP on behalf of CCC.) FSA allowed for enrolled land to be re-enrolled under new 10- or 15-year contracts, or to have the CCC contracts extended by 2, 3, 4 or 5 years, depending on environmental benefit index (EBI) scores. FSA divided the CCC contracts into quintiles, and offered new 10- or 15-year CCC contracts for those contracts scoring in the highest EBI quintile. FSA offered five-year extensions for CCC contracts scoring in the next highest-scoring quintile. Contracts in the third highest quintile received offers of four-year extensions, and so on. Contracts enrolled under continuous CRP and Conservation Reserve Enhancement Program (CREP) sign-up provisions are eligible to be re-enrolled as contracts expire and are not part of REX.

Question: How did USDA conduct REX?

Answer: FSA conducted REX offers in two parts. The first part was for CCC contracts expiring in 2007 and was held in spring 2006. The second, for 2008-2010 expiring contracts, was held in summer 2006. FSA requested that holders of 2007-expiring CCC contracts make their intentions known by Sept. 30, 2006. It also requested that contract holders of 2008-2010 expirations make their intentions known by Dec. 31, 2006.

Question: How many acres were eligible for REX?

Answer: Eligible acres included 15.7 million of the 16.0 million acres under 2007-expiring CCC contracts, and 12.1 million of the 12.5 million acres under CCC contracts expiring in 2008, 2009 and 2010. FSA did not offer REX for acres enrolled under CRP's continuous and CREP sign-ups. These acres will, in general, be eligible for re-enrollment during the final contract year.

Question: How did contract holders make their intentions known and how are REX approved?

Answer: First, contract holders had to schedule, pay for and pass a compliance review of their CRP land. The fee was between $45 and $500 per CCC contract, depending on the number of acres under contract. Following the review, FSA county committees approved or disapproved REX offers. Additionally, for those CCC contract holders with contracts in the top EBI quintile, FSA required new conservation plans because new 10- to 15-year contracts will be in effect.

Question: What was the compliance fee for and what did a compliance check entail?

Answer: In order to ensure CRP land met the goals and objectives of the program, FSA conducted a compliance review on each CCC contract proposed for REX. Eligible land had to be in full compliance with the contract including the cover requirements and the control of weeds, including noxious weeds, insects and pests. FSA charged producers between $45 and $500 for the compliance review. This covered travel and time to review the site. Most producers paid less than $100.

Question: What are the results of the REX offer for 2007-expiring contracts?

Answer: For contracts expiring in 2007, contract holders paid compliance fees on about 13.9 million acres. As of Jan. 2007, FSA county committees approved REX and began entering the data in CRP automated contract files on 13.1 million acres. This number is still subject to change.

Question: How many acres will expire on Sept. 30, 2007? What will be the net change in enrollment then?

Answer: CCC contracts on 16.0 million acres were originally set to expire on Sept. 30, 2007. Of the 16 million acres, 15.7 million acres were eligible for REX. FSA has approved re-enrollments and extensions for 13.1 million acres. This means an estimated 2.9 million acres in CRP contracts are now set to expire in 2007. The 2.9 million acres is made up of 2.6 million acres in contracts that declined REX and 300,000 acres of continuous sign-up practice that were ineligible. The 2.9 million acres set to expire in 2007 is an estimate, because FSA is still processing the CRP contract data files. The net change in enrollment depends on how much this estimate changes and on other enrollment activity that occurs during the year, including continuous sign-up and CREP enrollment.

Question: What are the results of the REX offer for the 2008-2010 expiring contracts?

Answer: FSA is compiling results of the 2008-2010 expirations. As of January 2007, compliance fees were paid on about 83 percent (10.1 million acres) of the 12.1 million eligible 2008-2010 expiring acres. FSA is still receiving data on approvals.

Question: Did the percentages of acres with paid compliance fees vary by EBI quintile?

Answer: The percentages across EBI quintiles were fairly constant. For 2007-expiring contracts, the percentage of acres with paid compliance fees varied between 86 percent and 93 percent. For 2008-2010 expiring contracts, the percentage of acres with paid compliance fees varied between 82 percent and 84 percent.

Question: Can contract holders change their minds after REX 10- to 15-year re-enrollments have been approved by county committees?

Answer: Lands in the highest EBI quintile were eligible for re-enrollment under new 10- or 15-year contracts. If no payments were made related to the new CCC contracts, then only liquidated damages would need to be paid. Liquidated damages consist of 25 percent of one year's rental payments.

Question: Can contract holders change their minds after county committees approve REX 2- to 5-year contract extensions?

Answer: Lands in the bottom four quintiles with approved contract extensions (two to five years, depending on EBI quintile) are considered still under the original CCC contract and participants would have to repay all payments received since the contract began, plus interest, as well as liquidated damages.