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Conservation and environmental programs play an important
role in agricultural production decisions. In programs
administered by USDA's Natural Resources Conservation
Service (NRCS) and Farm Service Agency (FSA), producers
can receive cost-share payments or rental or other direct
payments in return for using specified environmentally
friendly farming practices or for retiring land from
crop production for 10 or more years.
Most USDA conservation programs are funded through the
Commodity Credit Corporation (CCC). This funding is often
referred to as "mandatory" because annual
appropriations are not needed for CCC funded programs,
although Congress can act to change funding in future
years. The seven programs mentioned below will account
for more than 95 percent of CCC funding for USDA conservation
programs during fiscal years (FY) 2008-12.
2008 Farm Act Key Changes
In May 2008, the Congressional Budget Office (CBO) projected
an overall 17-percent increase in conservation spending
for 2008-12. The May 2008 CBO projections are changes
from the March 2008 CBO baseline—an estimate of
spending that would have occurred if previous policy
(the 2002 Farm Act) had been extended without change.
CCC funding for conservation programs is expected to
increase by $3.95 billion to more than $26.5 billion
for FY 2008-12. A majority of new money is directed toward
"working land" programs,
including the Environmental Quality Incentives Program.
A new program, the Conservation Stewardship Program,
will replace the Conservation Security Program.
Program Overviews
The Conservation Reserve Program
(CRP) offers
annual payments and cost sharing to establish long-term,
resource-conserving cover on environmentally sensitive
land. Under the 2008 Farm Act, the acreage cap is set
to decline from 39.2 million acres to 32 million acres
beginning in FY 2010. In May 2008, CBO estimated that
overall CRP spending for FY 2008-12 will be $10.93 billion,
$821 million below baseline.
The Wetlands Reserve Program (WRP) provides
cost sharing and/or long-term or permanent easements
for restoration of wetlands on agricultural land. Under
the 2008 Farm Act, the acreage cap is increased from
2.275 million acres to 3.041 million acres. As of August
2008, WRP enrollment was just under 2 million acres.
The March 2008 CBO baseline for WRP ($636 million) reflected
the fact that additional spending will be needed to reach
the old WRP cap (2.275 million acres). In May 2008, CBO
estimated that the increase in the acreage cap (from
2.275 million acres to 3.041 million acres) would result
in spending of $1.46 billion for FY 2008-12.
The Environmental Quality Incentives
Program (EQIP) provides technical
and financial assistance to help agricultural
producers and forestry managers with conservation and
environmental improvements. Increased financial assistance
rates are provided for beginning and limited-resource farmers
and ranchers. EQIP is slated to receive the largest
share of new conservation funding under the 2008 Farm
Act—a total of $1.16 billion over baseline—that would
bring EQIP spending to about $7.23 billion for FY 2008-12.
Funding of $280 million over FY 2009-12 is provided
for the Agricultural Water Enhancement Program, a successor
to the Ground and Surface Water Conservation Program.
The Conservation Stewardship Program
(CSP) replaces
the Conservation Security Program. Producers who have
addressed at least one resource concern at the time of
application and agree to address at least one additional
priority resource concern by the end of the contract
can participate. Payments can be based on cost of adopting,
installing, or maintaining conservation activities, income
foregone by the producer, or the expected environmental
gain. The 2008 Farm Act mandates enrollment of 12.77
million acres each year for FY 2009-12 at a national
average rate of $18 per acre. CBO estimated in May 2008
that spending on existing Conservation Security Program
contracts and new Conservation Stewardship Program
contracts will be $3.8 billion for FY 2009-12.
The Wildlife Habitat Incentives
Program (WHIP) provides
cost sharing to landowners and producers to develop and
improve wildlife habitat. Total CCC funding of $425 million
is mandated over FY 2008-12, unchanged from CBO March
2008 baseline spending.
The Farmland Protection Program
(FPP) provides
funds to State, tribal, or local governments and private
organizations to help purchase development rights and
keep productive farmland in agricultural use. Total CCC
funding of $743 million is mandated over FY 2008-12,
$258 million over the March 2008 CBO baseline.
The Grassland Reserve Program (GRP) assists
owners, through long-term rental agreements or easements,
in restoring grassland and conserving virgin grassland
while maintaining the areas for livestock grazing and
hay production. The 2008 Farm Act authorizes an additional
enrollment of 1.22 million acres during FY 2009-12. CCC
funding is authorized, but not explicitly limited. In
May 2008, CBO estimated spending at $299 million for
FY 2009-12.
Only one of the major USDA conservation program—Conservation
Technical Assistance (CTA)—is funded through annual appropriations.
CTA provides technical
assistance to farmers and ranchers who are developing
conservation plans and adopting or installing conservation
practices outside the scope of another USDA conservation
program. CTA funding was $4.1 billion for FY 2002-07.
Economic Implications
CRP acreage to decline. The number of
acres retired from crop production will decline as the
CRP acreage cap declines to 32 million acres, beginning
on October 1, 2009. CRP acreage has already begun declining,
as contracts expire and are not replaced. Over FY 2008-09,
CRP contracts on 5 million acres are set to expire. Without
additional enrollment, CRP acreage would drop to roughly
29 million acres by October 1, 2009. That allows room
within the acreage cap for new CRP contracts, including
through competitive general sign-ups and continuous sign-up
for high priority practices, the Conservation Reserve
Enhancement Program (CREP) and the Farmable Wetlands
Program (FWP). Since 2000, annual continuous sign-up
enrollment has ranged from roughly 254,000 acres (2004)
to more than 539,000 acres (2007). As of April 2008,
roughly 4 million CRP acres have been enrolled through
continuous signup.
Shift toward conservation on working land continues. A
majority of new conservation spending (56 percent) will
flow to working land programs, primarily EQIP and the
new Conservation Stewardship Program, which supersedes
the Conservation Security Program.
These changes extend long term trends of 1) increasing
budgets for USDA conservation programs and 2) greater
emphasis on conservation for working agricultural lands.
Before 2002, an overwhelming majority of conservation
payments to farmers were for land retirement. In the
2002 Farm Act, about 60 percent of new conservation funding
was directed toward working land programs. While CRP
will continue to be the largest USDA conservation program,
overall spending on working land programs is nearing
the level projected for land retirement. If projections
are realized, EQIP and CSP, combined, will be larger
than CRP.
See Other Title II (Conservation) Program Provisions
See all ERS analysis
of program provisions...
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