Should CRP acres be utilized in wake of Ukrainian War?
Apr 04, 2022
A look at what levers USDA could pull to increase U.S. grain production in wake of potential grain shortfall out of Ukraine.
As the Russia-Ukraine conflict continues, there is growing concern over the implications this war will have on global food security and whether the United States may need to look to the Conservation Reserve Program to increase total grain and oilseed production.
Ukraine provides 12% of the world’s wheat, 15% of the world’s corn, 15% of the world’s barley and 50% of the world’s sunflower oil. Regardless of when the war ends, its impact on global grain trade will reverberate for some time as markets continually assess real and perceived grain supply shortages and re-adjust risk premiums. According to a new report from CoBank’s Knowledge Exchange, the conflict will negatively affect global grain flows for at least two crop years, and likely longer.
Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank, estimates that 25% of Ukraine corn produced for the 2021-22 crop year, slated for export, will be lost or destroyed. In addition, only 50% of the expected Ukraine 2022-23 crop will be planted. Only 50% of Ukraine’s 2021-22 wheat crop will get harvested during summer 2022, and 75% of Ukraine’s expected 2022-23 will be planted in fall 2022, CoBank estimates.
While the situation is manageable and will sort itself out over time as other crop producing regions respond, CoBank’s work points to a significant tightening in available stocks-to-use ratios for both corn and wheat.
Is CRP the answer to world grain shortage?
As USDA examines all available tools to address the looming commodity supply challenge, several agricultural groups are urging Secretary of Agriculture Tom Vilsack to provide flexibility for acres within CRP.
“The United States needs to produce more grain and oilseeds to offset the loss of Ukraine’s grain and sunflowers. Time is of the essence,” according to a letter to Vilsack from ag groups March 23.
The letter signed by the National Grain and Feed Association, American Bakers Association, American Farm Bureau Federation, Agricultural Retailers Association, National Oilseed Processors Association, North American Millers’ Association and North American Export Grain Association, urged CRP flexibility amid the threat of the global food crisis.
According to USDA’s 2017 National Resources Inventory, 26% of general CRP acres were “prime farmland,” which is defined as “land that has the best combination of physical and chemical characteristics for producing food, feed, forage, fiber, and oilseed crops…” The groups urged USDA to provide flexibility to producers to plant crops on prime farmland enrolled in CRP without penalty, whether on an emergency basis or through an early-out of their current CRP contracts.
Typically, if a producer terminates a CRP contract early, the producer must repay CRP payments plus interest. USDA currently can waive repayment requirements if the land is transferred to a beginning farmer or rancher through a sale or lease with an option to buy.
There are currently 22.1 million acres enrolled in CRP and the Farm Service Agency is aiming to reach the 25.5-million-acre cap statutorily set for fiscal year 2022. However, FSA understands producers will make decisions based on market conditions, an FSA spokesperson shares.
In 2021, producers and landowners surpassed the 2021 CRP 4-million-acre goal and instead enrolled 5.3 million acres through CRP signups, including nearly 2.6 million in the grassland signup, nearly 1.9 million acres for the general signup, and 902,000 acres for the continuous signup (as of September 10, 2021). In 2021, FSA introduced higher payment rates, new incentives, and a more targeted focus on CRP’s role in climate change mitigation, but market conditions have changed.
Chad Hart, Iowa State University Extension economist, says the government will need to walk a fine line in not setting a precedent that would jeopardize the environmental and conservation benefits of CRP. “We don’t want to unilaterally take action that would imply that CRP is a glorified set aside program,” Hart warns. “What are the rules within CRP that would allow us to help create some additional land that could be put into play this year.”
In recent years, USDA has allowed for emergency haying and grazing, and Vilsack anticipates that can again be utilized in 2022. Currently, emergency haying and grazing of CRP acres may be authorized to provide relief to livestock producers in areas affected by a severe drought or similar natural disaster. Emergency haying and grazing status is reviewed and authorized each Thursday using the U.S. Drought monitor.
Hart adds that because of the current drought conditions, especially in the Great Plains, if USDA allowed notice early in the season for haying and grazing on CRP acres, it could free up some current hay acreage to move into row-crop production.
“Hay land in production is easier to bring into row crop production than CRP,” Hart explains.
Hart explains that nearly 4 million acres of CRP acres will expire this fall. If the world wheat situation looked like it would be tight, another lever USDA could examine is a one-time early option to work land for fall or late summer planting on expiring CRP contract acres to put into production for winter wheat or shorter season soybeans.
“This land can’t be planted tomorrow. Farmers have to prepare those fields for some kind of production. It’s not something you can do in a day or two,” Hart says. “Even if we turned those lands loose, I don’t know if we could work a lot of that land quick enough to bring it into spring crops.” However, by allowing some adjustments for expiring acres some additional land could be brought into production.
Grasslands CRP enrollment open
USDA is encouraging producers to enroll in the Grassland Conservation Reserve Program starting April 4 through May 13, 2022. Grassland CRP provides a unique opportunity for farmers, ranchers and agricultural landowners to keep land in agricultural production and supplement their income while improving their soils and permanent grass cover. The program had its highest enrollment in history in 2021.
“Grassland CRP is an important working lands conservation tool that offers a win-win to both our country’s producers and the environment by supporting and enabling grazing activities, while at the same time promoting plant and animal biodiversity and stemming rangeland conversion,” says FSA Administrator Zach Ducheneaux.
As Congress begins evaluating the 2023 Farm Bill Sens. John Thune, R-S.D., and Amy Klobuchar, D-Minn., also recently introduced the Conservation Reserve Program Improvement Act. The legislation would bolster CRP by improving access to grazing, providing more enrollment options to producers, and make CRP grazing a more attractive option by providing cost-share for the establishment of grazing infrastructure – including fencing and water distribution – on all CRP practices and contracts if grazing is included in the approved conservation plan.