No early-out for CRP in 2008
Recently, acting USDA Secretary Chuck Conner reconfirmed that no early-out option for existing Conservation Reserve Program (CRP) contracts is planned for the 2008 crop year. He stated that “CRP is not an acreage reserve program” to be accessed when grain supplies are tight. Conner pointed out that CRP provides valuable conservation and environmental benefits, idling some very fragile acres of crop land. There was some speculation after the Jan. 11 UDSA Supply and Demand Report, which showed very tight grain stocks for the coming year, that USDA may consider opening up some additional CRP acres before the CRP contracts expire, with no penalty, in order to increase crop-production acres for 2008. Many livestock organizations and supporters of renewable energy have encouraged the CRP early-out option for the 2008 growing season in order to help offset the projected tight grain supplies for 2008 and 2009. Even if USDA were to open up more CRP acres for crop production before CRP contracts expire, it was felt that it is too late to open added CRP acres for the 2008 crop year, because many farm operators have already made planting and marketing decisions for the 2008 growing season based on existing crop acreage, grain supplies and grain market conditions. USDA will reevaluate the situation for an early-out CRP option for the 2009 growing season later this year.
Added CRP acres without early-out option
Even without an early-out option for CRP contracts for the 2008 growing season, there could be an increase in crop acres for 2008, resulting from acreage from CRP contracts that expired in 2007, which includes about 2.5 million acres that expired on Sept. 30, 2007. Much of that land will go back into crop production for 2008, unless the land meets the criteria for continuous CRP, which has an ongoing sign-up at Farm Service Agency (FSA) offices, since USDA is not planning a general CRP sign-up for 2008. About 40% of the CRP land that’s eligible to return to crop production in 2008 is in North and South Dakota and Montana. The potential 2.5 million added acres from CRP contracts that expired in 2007 is far less than the potential added acreage that existed. A total of 16.1 million CRP acres expired in 2007. However, about 84% of those acres were reenrolled into CRP for another CRP contact when landowners were given the option to reenroll the expiring CRP acres in 2006. At the time, the cash corn price was $2.50/bu. or less in many areas, and land rental rates were fairly steady. Things have changed considerably in the past 12-18 months, with corn, wheat and soybean prices all near record highs, and many cash-rental rates increasing by 15-25% or more for 2008, compared to a year earlier. Most likely, the CRP reenrollment of acres that expired in 2007 would have been far less with today’s agriculture economy. Look for continued pressure on USDA to open up more CRP contract acres for crop production for the 2009 growing season.
New crop insurance option for 2008
The USDA Risk Management Agency (RMA) has announced a new crop insurance tool available to corn producers in Minnesota, Iowa, Illinois and Indiana for the 2008 growing season. The Biotech Yield Endorsement (BYE) will be available for 2008 non-irrigated corn crop insurance policies in those four states. The BYE endorsement will provide a crop insurance premium discount of approximately 14% to corn producers who plant corn hybrids in 2008 under the marketed trade names of YieldGard Plus, Roundup Ready Corn 2 and YieldGard VT Triple. Corn producers with an APH, RA or CRC crop insurance policy for 2008 can qualify for BYE, provided that a minimum of 75% of the corn acres on a given farm unit are planted to one of the three qualifying corn hybrids. Growers who utilize BYE must still comply with Environmental Protection Agency (EPA) refuge acre requirements for the three biotech corn hybrids. Growers who are interested in BYE for their 2008 corn crop insurance should contact their crop insurance agent for more details.
Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.