Conservation Reserve Program:
Status and Current Issues
Tadlock Cowan
Analyst in Natural Resources and Rural Development
September 15, 2010
Congressional Research Service
7-5700
www.crs.gov
RS21613
CRS Report for Congress
P
repared for Members and Committees of Congress
Conservation Reserve Program: Status and Current Issues
Summary
The Conservation Reserve Program (CRP), enacted in 1985, provides payments to farmers to take
highly erodible or environmentally sensitive cropland out of production for 10 years or more. It is
the federal government’s largest private land retirement program. The program is administered by
the Farm Service Agency (FSA) of the U.S. Department of Agriculture (USDA), with technical
assistance provided by USDA’s Natural Resources Conservation Service. The CRP also has
several subprograms, the best-known of which is the Conservation Reserve Enhancement
Program (CREP).
The 2008 farm bill (P.L. 110-246) reauthorized CRP through FY2012 but reduced the maximum
acreage level to 32 million acres, down from the previous cap of 39.2 million acres. Criteria for
haying and grazing on CRP land were amended, and incentives were authorized to assist socially
disadvantaged and beginning farmers in leasing or purchasing land under a CRP contract. A draft
supplemental environmental impact statement (SEIS) on the 2008 farm bill changes to CRP was
completed in February 2010. On May 14, 2010, an interim rule was published in the Federal
Register to implement the Transition Incentives Program. The final SEIS was available for public
comment for a 30-day period beginning June 18, 2010, and ending July 19, 2010. Following the
end of the comment period, and a review of the comments by FSA, a record of decision (ROD)
for the CRP SEIS will be issued.
The national enrollment as of July 2010 stood at 31.3 million acres, a decrease of approximately
3.4 million acres from October 2008 and a decrease of approximately 2.4 million acres from
September 2009. Approximately 4.3 million acres of farmland was added through a general sign-
up (number 39) in summer 2010, nearly 57% of which was acreage under contracts set to expire
September 30, 2010. This was the first general sign-up since 2006. Approximately 85% of total
CRP acreage is currently enrolled under general sign-ups. There was also a continuous enrollment
sign-up during late spring and summer 2009 (number 37) that added 488,000 acres to CRP totals.
Continuous sign-up 38 began in October 2009 and will continue to October 2011.
For FY2010, rental outlays are projected to total $1.9 billion, approximately $250 million less
than for FY2009. This projected total includes funding for rental payments, cost-share payments,
and incentive payments. The average per-acre rental payment for general sign-ups is currently
$44.57, and the average rental rate for CREP totals over $129 per acre. The average rental
payment for all CRP programs is approximately $53 per acre.
Between 2007 and 2010, 27.8 million acres under CRP contracts expired. Contracts for
approximately 24 million (86%) of these acres have been renewed or extended. On September 30,
2009, contracts on approximately 3.9 million acres were set to expire. USDA announced a sign-
up for contract extensions that ran from May 18 to June 30, 2009. Of the expiring 3.9 million
acres, however, only about 1.5 million were offered extension contracts. About 55% of the
eligible expiring acreage was in four states: Colorado, Kansas, Montana, and Texas. As of
December 2009, participants holding contracts on 1.1 million acres originally set to expire
September 30, 2009, had accepted extension offers (73%). Contracts on an additional 4.5 million
acres are set to expire September 30, 2010. Approximately 75% of the FY2010 expiring acreage
has been reenrolled or had its contracts extended.
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Conservation Reserve Program: Status and Current Issues
Contents
CRP General Background ........................................................................................................... 1
Enrolling in CRP......................................................................................................................... 1
General Sign-Up ................................................................................................................... 2
Environmental Benefits Index (EBI) ............................................................................... 2
Continuous Sign-Up (Includes Bobwhite Quail and Non-Floodplain Wetlands) ..................... 2
Conservation Reserve Enhancement Program (CREP)........................................................... 3
Farmable Wetlands Program (FWP) ...................................................................................... 3
Other CRP Programs............................................................................................................. 4
Current Issues ............................................................................................................................. 4
CRP Provisions in the 2008 Farm Bill ................................................................................... 4
Farm Bill Implementation Issues ........................................................................................... 6
Managed Haying and Grazing ............................................................................................... 7
Haying and Grazing for Critical Feed Use (CFU) ............................................................ 7
Expiring CRP Contracts and Reenrollment and Extension Policy........................................... 8
Program Costs and Benefits ........................................................................................................ 9
Rental Rates for CRP Acreage............................................................................................... 9
Contract Termination and Penalty Fees................................................................................ 10
Tax Status of CRP Payments ............................................................................................... 10
Effects of CRP on Local Economies .................................................................................... 10
CRP Environmental Effects................................................................................................. 11
Tables
Table 1. CRP Initiatives and Acreage Enrollment......................................................................... 4
Contacts
Author Contact Information ...................................................................................................... 11
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Conservation Reserve Program: Status and Current Issues
CRP General Background
The Conservation Reserve Program (CRP) is the federal government’s largest land retirement
program for private land. It was first enacted by Congress in 1985 to help control soil erosion,
stabilize land prices, and control excessive agricultural production. Since then, program purposes
have been expanded to include environmental goals. The program is administered by USDA’s
Farm Services Agency (FSA), with technical assistance from USDA’s Natural Resources
Conservation Service (NRCS) and funding from USDA’s Commodity Credit Corporation (CCC).
The FSA makes annual rental payments based on the agriculture rental value of the land, and
provides cost-share assistance for up to 50% of the participant’s costs in establishing various
approved conservation practices. There are also one-time sign-up bonuses and incentives for
socially disadvantaged farmers and ranchers, new and beginning famers and ranchers, and
limited-resource farmers and ranchers. Participants enroll in CRP contracts for 10 to 15 years.
Participants bid to retire land from production for 10-15 years. Contracts are awarded by FSA
based on their assessment of the land’s environmental value using an Environmental Benefits
Index (EBI). If the land is accepted, the landowner may enroll the land, receive annual rental
payments for it, and maintain the land under an approved conservation plan. After a CRP contract
expires, federal payments cease. If the land in question is “highly erodible” (about 75% of the
land enrolled in the CRP meets this definition) and participants decide to return the land to
production, they must manage this land under a NRCS-approved conservation system to be
eligible for some federal farm programs (including commodity payments).
Enrolling in CRP
There are two types of sign-ups for enrolling land in the CRP: general and continuous. As of July
2010, there were 743,449 CRP contracts nationally on 416,121 farms (nearly 19% of all farms)
under all CRP programs. These data compare to 788,118 CRP contracts on 443,615 farms in
September 2007. Contracts under continuous sign-ups now exceed the number of contracts under
general sign-ups (401,117 versus 342,332).1
Land eligible for CRP enrollment must be either (1) cropland that is planted or considered planted
to an agricultural commodity in four of the previous six crop years from 1996 to 2001, or (2)
certain marginal pastureland that is enrolled in the Water Bank Program or suitable for use as a
riparian buffer or for similar water quality purposes. The 2008 farm bill modified the land
eligibility requirements so that alfalfa and other multi-year grasses and legumes are to be
considered agricultural commodities when grown in a rotation practice approved by FSA. The
farm bill also clarified that when alfalfa is grown in an approved rotation practice, it is to be
considered an agricultural commodity and can be used to fulfill the requirement that land be
cropped in four of six previous years in order to be eligible.
1 The five states with the largest number of acres under CRP contract are Colorado, Kansas, Montana, North Dakota,
and Texas. These five states account for about 44% of the total national acreage enrolled.
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General Sign-Up
General sign-ups are specified enrollment periods during which landowners compete nationally to
enroll their land in the CRP. A new general sign-up (number 39) was held in late spring and
summer 2010. This was the first general sign-up since 2006. For this most recent general sign-up,
FSA accepted 4.3 million acres. Over half the acreage enrolled was set to expire on September
30, 2010. Approximately 85% of CRP acreage (26.7 million of 31.3 million acres) is currently
enrolled through general sign-up. Applicants must meet certain eligibility criteria, evaluate their
land according to FSA’s Environmental Benefits Index, and submit bids to FSA for enrollment.
FSA accepts applications that demonstrate the highest environmental benefits.
These general sign-ups are always competitive. For the most recent sign-up, nearly 4.8 million
acres were offered for sign-up, of which 4.3 million were accepted. For the previous general sign-
up (number 33), which ran from March 27 to April 28, 2006, USDA selected 1 million acres of
the 1.4 million acres offered. This enrolled acreage included about 673,000 acres of land located
within conservation priority areas, about 629,000 acres with an erodibility index of eight or
greater (highly erodible), and about 265,000 acres to be restored to rare and declining habitats.
Environmental Benefits Index (EBI)
As the CRP has been expanded to include broader environmental goals, FSA has adjusted the
categories and points awarded under the EBI. For example, FSA announced in June 2003 that, for
the first time, it could award points to projects that have the potential to sequester carbon
(reducing greenhouse gas emissions). Other factors include wildlife habitat benefits from planted
cover crops, water quality benefits from reduced erosion, and whether benefits will endure
beyond the contract period. Offers that included a willingness to accept less than the maximum
rental rate for acreage, as well as offers to reenroll land, may have received additional points. FSA
ranks all applications nationally, and then sets an EBI score cutoff above which applications will
be accepted. For the most recent general sign-up, FSA set a cutoff score of 200 on the EBI.
Continuous Sign-Up (Includes Bobwhite Quail and Non-
Floodplain Wetlands)
Environmentally desirable land devoted to specific conservation practices with high
environmental benefits may be enrolled in the CRP at any time for 10-15 years under continuous
sign-up.2 Offers are automatically accepted (provided the land and producer meet certain
eligibility requirements) and are not subject to competitive bidding. Contracts usually include
additional incentive payments. Within the continuous sign-up program there are some options
tailored to certain conservation needs, such as restoring floodplain wetlands and native hardwood
trees in wetlands. In August 2004, the Administration announced two more initiatives: a 250,000-
acre initiative to restore bobwhite quail habitats in the Midwest and the Southeast, and a 250,000-
acre initiative to restore wetlands located outside floodplains (including Great Plains playa lakes).
The 2008 continuous sign-up (number 36) added 282,000 acres, the continuous sign-up for
FY2009 (number 37) added 277,556 acres as of July 2009, and the FY2010 sign-up (number 38)
2 Specific conservation practices include filter strips, riparian buffers, grass waterways, shelterbelts, field windbreaks,
living snow fences, salt-tolerant vegetation, shallow water areas for wildlife, wetland restoration, and wellhead
protection areas.
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has added 296,615 acres as of July 2010. These sign-ups bring the total acreage under continuous
sign-up contracts to over 4.6 million acres as of July 2010, about 15% of the total 31.3 million
acres CRP acres.3
Conservation Reserve Enhancement Program (CREP)
CREP is a joint federal-state continuous sign-up program. Currently there are 43 agreements in 32
states. CREP targets geographic areas with agriculture-related environmental problems, such as
Maryland’s Chesapeake Bay and Florida’s Everglades. Some states (e.g., New York and Ohio)
have multiple CREPs, each targeting a different area of the state. USDA provides 80% of the
funding, and a non-federal entity (typically the state) contributes the remainder. States may
automatically enroll up to 100,000 acres. Unlike the general sign-up, CREP both encourages
landscape-scale conservation efforts and offers the flexibility to address locally identified needs.
As of July 2010, nearly 1.2 million acres were enrolled in CREP, over 100,000 acres more than in
September 2007.4
Farmable Wetlands Program (FWP)
As authorized under the 2002 farm bill, farmable wetlands—those wetlands that have been
partially drained, or are naturally dry enough to allow crop production in some years, but
otherwise meet the definition of a wetland—may be enrolled in the CRP on a continuous basis.
Up to 100,000 acres may be enrolled from any state (this may be increased to 150,000 acres after
three years). The farm bill reserved one million acres for farmable wetlands enrollment. As of
July 2010, 230,948 acres were enrolled in the programs.
The 2008 farm bill expanded land eligibility for FWP from land that was cropped during at least 3
of the immediately preceding 10 crop years, as well as contiguous buffer acreage to protect the
wetlands, to include:
• land on which constructed wetland is to be developed that will receive flow from
a row-crop agriculture drainage system and is designed to provide nitrogen
removal in addition to other wetland functions;
• land devoted to commercial pond-raised aquaculture in any year during calendar
years 2002-2007;
• intermittently flooded land, provided the land had a cropping history in three
years between 1990 and 2002 and was subject to natural overflow of prairie
wetland; and
• buffer acreage that enhances wildlife benefits. On a single tract of land,
enrollment is now set at a maximum of 40 contiguous wetland acres. “Flooded
farmland” has a 20-acre limit. No commercial use of the land is permitted.
3 This figure excludes 83,690 acres under sign-up 38 that start in FY2011.
4 This figure excludes approximately 44,000 acres under sign-up 38 that start in FY2011.
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Other CRP Programs
Several other CRP initiatives support additional specific conservation practices. These include
acreage in upland bird habitat buffers, bottomland hardwood trees, non-flood plain and playa
wetlands, longleaf pine plantings, the Prairie Pothole duck nesting habitat, and state acres for
wildlife enhancement. In February 2010, Secretary Vilsack announced the expansion of acreage
allocated to three of these programs: state acres for wildlife enhancement was increased by
150,000 acres; upland bird habitat buffers were increased by 100,000 acres; and duck nesting
habitat was increased by 50,000 acres. Table 1 provides acreage data for these programs as of
July 2010 and cumulative acreage totals for each program.
Table 1. CRP Initiatives and Acreage Enrollment
(July 2010)
Cumulative
CRP Initiative and Acreage Goal
Acreage Year-to-Date
Acreagea
Farmable wetland program (up to 1 million acres)
25,014
296,615
Upland bird habitat buffers (350,000 acres)
11,496
228,377
Bottomland hardwood trees (500,000 acres)
6,894
59,152
Non-flood plain and playa wetlands (250,000 acres)
20,368
98,411
Flood-plain wetlands (500,000 acres)
23,200
175,037
Long-leaf pine plantings (250,000 acres)
8,165
86,342
Prairie Pothole duck nesting habitat (150,000 acres)
15,883
111,785
State acres for wildlife enhancement (650,000 acres)
100,965
357,367
Source: Farm Service Agency.
a. Includes acreage under sign-up 38 contracts that begin in FY2011.
Current Issues
CRP Provisions in the 2008 Farm Bill
The 2008 farm bill (P.L. 110-246) reauthorized the CRP with a maximum acreage cap of 32
million acres, down from a cap of 39.2 million acres established in the 2002 farm bill (P.L. 107-
171). The farm bill further directed the Secretary of Agriculture to give priority (where
environmental benefits are equal) in contract bids to producers who reside in the county where
the CRP acreage is located. FY2009 enrollment ended at 33.7 million acres. Following expiration
of 2.8 million acres, FY2010 began with 30.93 million acres under contract. Current total
enrollment is 31.3 million acres, approximately 723,000 acres below the cap.
The 2008 farm bill also amended the pilot program for wetland and buffer acres in CRP. Each
state can enroll up to 100,000 acres, up to a national maximum of 1 million acres. This maximum
may be raised to 200,000 in each state following a review of the program. Eligible lands for the
program include (1) wetlands that have been cropped in three of the immediately preceding 10
crop years; (2) land on which a constructed wetland is to be developed to manage fertilizer
runoff; and (3) land that has been devoted to commercial pond-raised aquaculture.
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The farm bill permits 50% cost-share payments on land used for hardwood trees, windbreaks,
shelterbelts, and wildlife corridors for contracts entered into after November 1990. Contracts
extend from a minimum of two years up to four years. Funding of $100 million also was
authorized to cover cost-sharing for the thinning of trees to improve the management of natural
resources on the land.
The 2008 farm bill also modified the criteria for evaluating CRP contract applications. Evaluation
criteria include the extent to which a CRP contract application would improve soil resources,
water quality, or wildlife habitat. The bill also allowed the Secretary to establish different criteria
in various states or regions that lead to improvements in soil quality or wildlife habitat.
Preference in new CRP contracts will be given to land owners and operators who are residents of
the county or a contiguous county in which the land is located.
Other CRP provisions in the 2008 farm bill included a redefinition of the Chesapeake Bay region
as a priority area without limiting the region to the states of Pennsylvania, Maryland, and
Virginia. While the new program applies to all watersheds draining into the Chesapeake Bay, the
Susquehanna, Shenandoah, Potomac, and Patuxent Rivers get funding priority.
The 2008 farm bill also established incentives to increase the participation of beginning and
socially disadvantaged farmers and ranchers.5 The CRP Transition Option is designed to facilitate
the transition of land to beginning and socially disadvantaged farmers and ranchers for the
purpose of returning the land to production using sustainable grazing or crop production methods.
To encourage this program, CRP contract holders can receive two extra years of rental payments
for leasing or selling their land to a beginning or socially disadvantaged farmer. The National
Organic Certification Cost Share Program can be used in conjunction with the CRP Transition
Option to defray the costs, up to $750 per year, of organic certification for producers and handlers
of organic produce. It authorizes CRP contract modifications to assist these producers in leasing
or purchasing land under a CRP contract from a retired or retiring farm owner or operator. The
provision authorizes $25 million for assistance in making these land transfers.
The CRP Transition Option works as follows:
• One year prior to the termination of a CRP contract, a CRP owner or operator
who is participating in the CRP Transition Option can join with a beginning or
socially disadvantaged farmer or rancher who can begin to make conservation
and land improvements and/or begin the organic certification process on the land
covered by the CRP contract.
• On or near the date that the CRP contract is terminated, the retired or retiring
owner or operator will either sell some or all of the land that was covered by CRP
to the participating beginning or socially disadvantaged farmer or rancher, or
enter into a long-term lease with the farmer/rancher, or lease with an option to
purchase.
• The participating beginning or socially disadvantaged farmer or rancher must
develop and implement a conservation plan on the land that was covered by CRP.
5 Section 2111 of the Food, Conservation, and Energy Act of 2008 amends Section 1235(c)(1)(B) of the Food Security
Act of 1980, codified at 16 U.S.C. § 3835(c)(1)(B), to create the Conservation Reserve Program Transition Incentives
for Beginning and Socially Disadvantaged Farmers and Ranchers.
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• On the date that the participating beginning or socially disadvantaged farmer or
rancher takes possession of the land through ownership or lease, the
farmer/rancher will have the option to enroll in the Conservation Stewardship
Program or the Environmental Quality Incentives Program. The farmer/rancher
will also have the option of re-enrolling portions of the land into the CRP through
the continuous sign-up CRP.
• FSA will continue making payments to the retired or retiring owner or operator
for two additional years after the date that the CRP contract terminates.
Farm Bill Implementation Issues
FSA divided CRP-related changes into two regulations: Part 1, those requiring an environmental
impact statement (EIS), and Part 2, those requiring only an environmental assessment (EA). Both
the EIS and EA discuss potential environmental impacts and alternative courses of action,
although the EA is a more limited analysis. The EIS process can take 18-24 months, or longer in
some cases, while an EA can often be completed within a year or less.
In June 2009, FSA issued a rule implementing all changes that fell under Part 2, the EA-
associated changes.6 These include an assessment of the three new practices under the Farmable
Wetlands Program: (1) eligibility for commercial pond-raised aquaculture; (2) flooded prairie
farmland; and (3) constructed wetlands. Other EA-associated changes are authorization of $50
million cost-share assistance for tree trimming, refining income limits for program eligibility, and
the imposition of the 32 million-acre cap. Each of these changes were included in the Part 2 rule
promulgated in June 2009.
The Part 2 CRP regulation will implement provisions that require an EIS. These provisions
include:
• updating crop history eligibility to include four of the last six years between 2002
and 2007;
• exempting certain CREP and continuous CRP acres from the county enrollment
cap of 25% of cropland;
• implementing the new transition incentives for beginning and socially
disadvantaged farmers and ranchers programs; and
• routine grazing policy on CRP land.
The CRP Transition Option program could be delayed by the EIS process. FSA published the
draft supplemental environmental impact statement (SEIS) in February 2010.7 The final SEIS was
available for public comment for a 30-day period beginning June 18, 2010, and ending July 19,
2010.8 Following the end of the comment period, and a review of the comments by FSA, a record
of decision (ROD) for the CRP SEIS will be issued.
6 The rule may be accessed at http://frwebgate3.access.gpo.gov/cgi-bin/TEXTgate.cgi?WAISdocID=
4468519271+40+1+0&WAISaction=retrieve.
7 The draft SEIS can be accessed at http://www.agri-pulse.com/uploaded/201002CRPEIS.pdf.
8 The final SEIS can be accessed at http://www.fsa.usda.gov/Internet/FSA_File/crpfinalseismaster61010.pdf.
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USDA’s justification for the environmental study is that while the land is leaving the conservation
program, the beginning farmers would be allowed to start working the land a year before the
contract is up. Landowners normally are barred from farming or grazing the land until the
contract expires. The Sustainable Agriculture Coalition and the Center for Rural Affairs each ran
letter campaigns in 2009 urging FSA to implement the program without conducting an EIS. Other
groups wrote to Secretary Vilsack requesting that implementation of the CRP Transition Option
not be delayed by an environmental assessment. Wildlife conservation groups (e.g., the National
Wildlife Federation) supported the decision to prepare the EIS. In comments on the draft SEIS,
the National Grain and Feed Association has requested the FSA to lower the acreage enrolled in
CRP to 24 million acres and to target conservation spending on working farmland (e.g.,
Environmental Quality Incentives Program, Conservation Stewardship Program).
On May 14, 2010, an interim rule was published in the Federal Register to implement the
Transition Incentives Program.9 The rule essentially amends the CRP contract regulations to
provide that retired or retiring farm owners and operators have permission to amend their contract
if it is due to expire within one year to facilitate the transition of the land enrolled in the expiring
CRP contract to a beginning or socially disadvantaged farmer or rancher. Acquiring farmers may
return some or all of the land into production provided they use sustainable grazing or crop
production methods. The 2008 farm bill authorizes $25 million for incentive payments to retired
or retiring owners and operators who sell land or lease it long-term to beginning and socially
disadvantaged farmers and ranchers.
Managed Haying and Grazing
Managed haying and grazing are permitted activities under certain conditions. A disaster
declaration, for example, may permit contract holders to harvest hay or to graze their cattle for
certain periods. Where such activity is permitted, contract payments may be reduced. The 2008
farm bill modifies the managed haying and grazing regulation (Section 2108) to permit routine
grazing to control invasive species under specific conditions and also permits the installation of
wind turbines under certain conditions. Where routine harvesting is permitted, state technical
committees are required to coordinate to ensure appropriate environmental management. When
such activities are permitted, rental payments will be reduced by an amount commensurate with
the economic value of the authorized activity. The farm bill also prescribed grazing for control of
invasive species as a permissible activity. The managed grazing and haying and installation of
wind turbines are assessed in the SEIS.
Haying and Grazing for Critical Feed Use (CFU)
In May 2008, USDA announced that 24 million acres of CRP land could be used in 2008 for a
critical feed use (CFU) program of managed haying and grazing following primary bird nesting
season. This contract modification is restricted to the least environmentally sensitive land and will
limit the scope and frequency of any managed haying and grazing. The National Wildlife
Federation (NWF) and six state NWF chapters sought an injunction against USDA for failure to
conduct an appropriate environmental review of the proposed CFU program. The U.S. District
Court for the Western District of Washington issued a temporary restraining order (TRO). The
9 Federal Register, vol. 75, no. 93, May 14, 2010, at http://frwebgate4.access.gpo.gov/cgi-bin/PDFgate.cgi?
WAISdocID=38153123842+0+2+0&WAISaction=retrieve.
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court then issued a permanent injunction suspending the CFU provision except for those who had
been approved by or had applied to FSA prior to the TRO, or who had invested at least $4,500
toward haying or grazing equipment and preparation prior to the TRO. Where the application was
approved prior to the TRO, haying and grazing had to be completed by November 10, 2008. The
CFU exemption was not authorized for FY2009, and there are no current plans to authorize a
CFU program for FY2010.
Expiring CRP Contracts and Reenrollment and Extension Policy
Approximately 28 million acres under CRP contract will expire between 2007 and 2010.
Contracts covering 5.9 million acres were set to expire in FY2008, and 3.9 million more acres
were set to expire at the end of FY2009. An additional 4.5 million acres will also expire
September 30, 2010. Approximately 85% of the acreage expiring between 2007 and 2010 has
been reenrolled or has had contracts extended as of July 2010, including 44,201 acres approved
for enrollment in FY2011. Of the 15.7 million contract acres that expired September 30, 2007,
13.6 million (86.6%) were approved for extensions or new enrollment contracts. Approximately
4.8 million of the 5.9 million acres that expired in 2008 also have extensions or new contracts
(81.6%). For contracts expiring September 30, 2010, about 75% of the 4.5 million acres has been
reenrolled or had contracts extended.
Contracts were extended or renewed based on the Environmental Benefit Index (EBI) score and
the land’s location within national priority areas.10 FSA ranked individual contracts into one of
five tiers based on the environmental benefits of the original EBI score. Eligible participants
ranking in the first tier (81%-100% of the EBI) could reenroll their land in new 10-year contracts.
Farmers and ranchers in this top tier with wetlands enrolled were eligible for 15-year contracts.
Only acreage under general sign-up contracts is eligible. Eligible participants ranking in the
second tier (61%-80% of the EBI) could extend their contracts for five years. Third-tier
participants (21%-40% of the EBI) could receive three-year extensions. Eligible participants in
the bottom tier could extend their expiring contracts by two years.
USDA announced a sign-up for voluntary extensions between May 18 and June 30, 2009. Of the
expiring 3.9 million acres for FY2009, approximately 100,000 acres were under continuous sign-
up and were reenrolled if the producer wished to do so. However, only about 1.5 million acres
enrolled under the general sign-up were offered contract extensions. Of these, 1.1 million acres
were reenrolled as of December 2009 (73%). Acreage eligible for contract extensions had to score
in the top 30% of the EBI or have an Erodibility Index (EI) of 15 or higher. Participants who were
eligible for contract extensions were notified by letter from their county Farm Service Agency
office. The reduction in contract extensions was necessary to ensure that the total acreage under
contract would conform to the new 32 million-acre limit by the end of FY2009. Contract
extensions ranged from two to five years at the same per-acre payment rate. Colorado, Kansas,
Montana, and Texas had the largest number of eligible acres with a 30% EBI or a ranking of 15
on the EI. These four states accounted for 55% of the total national acres eligible for extension in
FY2009.
10 National Priority Areas named in CRP authorizing legislation are the Chesapeake Bay, Long Island Sound, and the
Great Lakes Region. USDA established two other national priority areas: Prairie Pothole Region in the Northern Great
Plains, and Longleaf Pine Region in the southeast.
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Program Costs and Benefits
Acres enrolled in CREP, continuous enrollments, or the farmable wetlands program are generally
eligible for higher payments than acres enrolled under general sign-ups because of their higher
environmental benefits, location and prevailing rental rates, and additional financial incentives for
participation. However, such contracts involve much smaller acreage on average. CREP payments
average over $129 per acre and $116 for the FWP, versus an average per-acre payment of
approximately $44 for the general sign-up acreage.
FSA estimates approximately $1.7 billion in projected outlays for CRP payments under all
programs in FY2010. This is about $250 million less than for FY2009. This projected total
includes funding for rental payments, cost-share payments, and incentive payments. The
Congressional Budget Office had estimated that CRP contract obligations would cost
approximately $2.4 billion annually through 2017. This was before the reduction in acreage to 32
million acres. NRCS estimated that, prior to 2003, monetized CRP benefits (such as increased
wildlife habitat and small game hunting) averaged about $1.4 billion per year. This figure does
not include non-monetized benefits such as improved groundwater quality and wetland
restoration.
Rental Rates for CRP Acreage
The average rental rate for all CRP land was $53.24 per acre as of July 2010. Rental rates range
from an average of $44 for general sign-up acreage to over $129 for CREP acreage. CRP rental
rates are based on the three-year average of local dry-land cash rental rates. An up-front signing
incentive payment (SIP) of $100 to $150 per acre (depending on contract length) is available for
eligible participants who enroll certain practices. The one-time SIP is made after a contract is
approved and all payment eligibility criteria have been met. A practice incentive payment (PIP)
equal to 40% of the eligible installation costs is also available for eligible participants who enroll
certain practices on their acreage.
Rental rates for CRP contracts became an important issue to some producers when commodity
prices rose in 2008. The producers claimed that CRP rental rates were significantly lower than the
producers could get by renting their land out for production. Many producers pressured USDA for
penalty-free contract terminations. If rental rates are too low, there is some chance that producers
will decline to enroll their land, or, if enrolled, will decline to renew their contracts at expiration.
Putting CRP acreage back into production could have significant environmental effects. Although
land put back into production would have to be managed under an environmental plan to be
eligible for various agricultural assistance programs, there could still be an environmental cost in
terms of increased sediment losses and nitrogen and phosphorus run-off if fragile land were put
back into production.11 The decline in commodity prices from their 2008 highs reduced the
pressures on producers to terminate their contracts. The 2008 farm bill (Section 2110) directs
USDA to conduct an annual survey of per-acre estimates of the average market dry land and
irrigated land cash rental rates and to post these rates on a publicly accessible USDA website.
11 For an examination of the potential environmental costs in Iowa as projected corn prices rose, see Silvia Secchi and
Bruce Babcock, “Impact of High Corn Prices on CRP Acreage,” Iowa Ag Review, Center for Agriculture and Rural
Development, Iowa State University, Spring , 2007, at http://www.card.iastate.edu/iowa_ag_review/spring_07/
article2.aspx.
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Contract Termination and Penalty Fees
High grain prices in the first half of 2008 appeared to make contract terminations attractive to
some producers. Under current law, however, a producer wishing to terminate a contract early
faces a penalty fee of 25% on rental payments paid, plus repayment, with interest, of all the funds
already paid to the producer. This includes any cost-share payments. CRP acreage is also seen in
some quarters as a potential resource for renewable fuel feedstocks.
Tax Status of CRP Payments
CRP rental payments are regarded by the Internal Revenue Service (IRS) as income from the
business of farming. As such, they are subject to self-employment Social Security taxes.
Producers, however, would like to treat CRP payments as rental income not subject to the self-
employment tax of 15.3%. The IRS position was supported by the Sixth Circuit Court in March
2000 in Wuebker v. Commissioner, 205 F.3d897. In December 2006, the IRS issued Notice 2006-
108 reinforcing its position that CRP payments are subject to self-employment taxes. Section
15301 of the 2008 farm bill exempts CRP payments from self-employment taxes for disabled and
retired contract holders after December 31, 2007.12
Effects of CRP on Local Economies
Retiring land in rural, largely agricultural economies could result in fewer farmers and fewer
farming-related jobs in these areas. A USDA report found that, although high CRP enrollment
was associated with some job loss in rural areas between 1986 and 1992—the years the CRP was
first underway—this was generally not the case during the 1990s. However, the report noted that
national trends could mask regional adjustments, and that “local economic adjustments might be
sizeable.”13 Losing existing CRP acreage or halting new enrollments may also have effects on
local economies where hunting and fishing are important economic activities.
By statute, CRP enrollment is capped at 25% of a county’s cropland. According to FSA,
approximately 130 counties have at least 22.5% enrolled, although this can include counties with
very small total acreage of cropland. Of these 130 counties, 80 have at least 25% enrolled. The
farm bill exempts CREP and continuous sign-up acreage from the 25% county cap.
Some groups believe that retiring land from productive agricultural use is detrimental. In
comments on the SEIS noted above, the president of the National Grain and Feed Association
argued that CRP has substantial negative economic impacts on agricultural production and rural
communities:
If U.S. agriculture is to achieve economic growth, which in turn contributes to job creation and
revitalization of rural communities, it is imperative that the CRP be right-sized and reformed. The
idling of productive land resources cuts off the economic multiplier inherent in crop, livestock
and poultry production, thereby costing jobs and suffocating economic vitality in rural
12For more detail on CRP’s tax-related issues, see CRS Report RS22910, The 2008 Farm Bill: Analysis of Tax-Related
Conservation Reserve Program Proposals, by Carol A. Pettit
13 U.S. Department of Agriculture, Economic Research Service Report to Congress. The Conservation Reserve
Program: Economic Implications for Rural America. September 2004.
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communities. Further, it risks compromising the United States’ ability to provide abundant,
affordable and cost-competitive food, animal feed, exports and biofuels.14
CRP Environmental Effects
FSA estimates that, compared with 1982 erosion rates, the CRP has reduced erosion by more than
454 million tons per year on the 34.6 million acres enrolled in the program. Through April 2006,
CRP had also restored 2 million acres of wetlands and 2.5 million acres of buffers. Other
conservation benefits NRCS has documented on these lands include the sequestration of more
than 48 million metric tons of carbon annually; more than 3.2 million acres of wildlife habitat
established; and a reduction in the application of nitrogen (by 681,000 tons) and phosphorus (by
104,000 tons). Also, participants have planted about 2.7 million acres of trees, making it the
largest federal tree-planting program in history.
Author Contact Information
Tadlock Cowan
Analyst in Natural Resources and Rural
Development
tcowan@crs.loc.gov, 7-7600
14 “NGFA Urges USDA to Downsize CRP to Protect Jobs & Growth,” Agri-Pulse, April 13, 2010, at http://www.agri-
pulse.com/20100413H1.asp.
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