UNL CropWatch Feb. 15, 2011 USDA Looks at How Rising Commodity Prices May Affect CRP
Feb. 15, 2011
In a period of higher crop prices, if CRP maintains its acreage and the environmental benefits it provides, CRP program payments will need to increase, according to a report released Friday from USDA's Economic Research Service.
This assessment was based on a study that looked at two models and several program scenarios focusing on higher crop prices and the resulting economic effects and including the effects of bioenergy production and possible carbon credits and marketing.
Among their findings the study's authors, Daniel Hellerstin and Scott Malcolm, reported:
"Given the established interest in the program and its longstanding popularity with landowners, if USDA’s policy of using prevailing rental rates were altered, it might be possible to meet acreage goals with moderate increases in payment rates. But this would mean accepting offers providing fewer environmental benefits, as landowners with environmentally sensitive, but increasingly profitable, lands choose to withhold their land from the program.
"Using the unusually high crop prices seen in summer 2008, the model shows a large response by CRP participants. Maintaining the CRP payments at their current level results in fewer acres offered to the program, making it unlikely that the program could reach its goal of 32 million acres. Over the long term, to enroll acreage that would maintain the environmental benefits currently provided by the program would require roughly doubling CRP rental rates."