Agricultural and Food Policy
 Agri Outlook Radio
Number 187
Policy: USDA Will Not Allow the Penalty-Free Release of CRP Land (2:57 minutes)
Audio/Video Script:
Robert Coats, Ph.D.
Extension Economist and Professor
University of Arkansas, Division of Agriculture
USDA
Statement
USDA will not allow the penalty-free release of Conservation Reserve Program land.
USDA just completed a review of whether early release of acres enrolled in
the Conservation Reserve Program (CRP) without penalty to land owners should be
allowed.
USDA has decided not to allow the penalty-free release of CRP land at this
time.
USDA indicated that even with the damage and delays in planting caused by the
floods, this year's corn crop is on track to be the second largest on record
with an anticipated harvest of almost 79 million acres.
USDA points out that the markets have been reacting favorably to the good
growing weather. Cash prices for corn and soybeans are down from their highs.
They point out that this recent easing in prices has benefited the livestock industry.
Total acreage in the program is going to drop without any action by USDA. In
the 2008 Farm Bill, Congress lowered the cap on the total number of acres
allowed in the CRP program from 39.2 million acres to 32 million acres.
As a result, the 34.7 million acres now enrolled in the program will shrink.
Looking forward 1.1 million CRP acres are scheduled to expire on September 30,
2008, and that number jumps to 3.8 million acres on September 30th, 2009 and
then 4.4 million acres on September 30th, 2010.
My read on USDA’s statement is that row crop prices are more likely to show
more price weakness than strength over the next several years, livestock
producers are still expected to receive favorable commodity prices, and large
blocks of land will be available for other uses, if land owners chose to pursue
them.
CRP land owners have the option of taking their acres out of the program
early in exchange for returning all payments they have received plus interest
and a penalty. It is still easier to over produce than under produce in this
country and much of the CRP land is not suitable for row crop production.
This has been Robert Coats Extension Economist University of Arkansas
Division of Agriculture.
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