Groups Seek Corn On CRP Land

Some 30 national and state agribusiness groups have asked the U.S. government to give farmers flexibility to plant corn without penalty on cropland idled through the Conservation Reserve Program (CRP) so there will be enough grain for ethanol producers and livestock feeders.

In a letter to Agriculture Secretary Mike Johanns the groups said USDA should "at minimum" permit withdrawal of land from the CRP "without penalty" to return to crop production.

Furthermore, they said it was “critical” that Johanns announce such a decision “as soon as possible” to allow the market to utilize any additional acres that might become available.

The groups expressed disappointment that the only “flexibility” contained in the administration’s farm bill proposals for the use of CRP land was for the harvesting of biomass. The letter noted the biomass harvest from CRP land would do “absolutely nothing” to relieve the economic pressures driving corn prices higher unless/until cellulosic ethanol becomes technically feasible and cost-competitive with corn-based ethanol.

"Corn availability is not only key to traditional grain and oilseed customers, but also to the viability of a large number of existing ethanol plants, as well as those coming on line or planned," the letter said.

Groups signing the letter included the American Meat Institute, the National Cattlemen's Beef Association, the National Grain and Feed Association, the National Pork Producers Council, the National Chicken Council, the National Turkey Federation, the National Oilseed Processors Association and the North American Millers Association.

Johanns has said he will decide by early summer whether to permit land to leave the reserve early.

USDA projects that 20% of the current 2006 corn crop will be used in making ethanol, rising to more than 26% in 2007-08 even with a sizeable increase in plantings to 86 million acres projected for this spring. USDA projects the average U.S. on-farm price of corn could hit a record $3.50/bu. during 2007-08, up from $3-3.40 in 2006-07.

"There are about two years here that are just a tough adjustment" for livestock, Johanns told the House Agriculture Committee last week.

Virginia Rep. Bob Goodlatte, the Republican leader on the committee, said two or three years of high corn prices "could be all it takes to put people out of business."

Nearly 37 million acres are in the Conservation Reserve. USDA says 27 million acres of that land could be tilled without damage. USDA has estimated that 4 million to 7 million acres of CRP land, primarily in the Midwest, could be suitable for growing corn.

Senate Agriculture Committee Chairman Tom Harkin (D-IA) said that any plans by USDA for early releases from the conservation reserve program (CRP) will have to be made carefully to protect fragile cropland.

Harkin told Agriculture Online that he wants to be consulted by Johanns before USDA releases land from the CRP and that he wants Johanns "to be very careful" about how this is done.

Editor’s note: Richard Brock, The Corn And Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.