USDA Says No to CRP Penalty-Free Early Outs

Large number of acres expiring soon and improved weather behind decision.

Tuesday the U.S. Department of Agriculture said it will not allow penalty-free early outs from the Conservation Reserve Program. Secretary of Agriculture Ed Schafer said improved weather conditions, lower crop prices and scheduled CRP expirations played into the decision.

For weeks, the industry had anticipated an announcement as livestock and industry groups pushed for the release while environmental groups opposed the idea. Schafer explained record high June corn prices have retreated 25% while soybean prices backed off 14%. This year's floods may have had less of an impact than originally feared, Schafer added. Crop progress conditions continue to improve as USDA reported Monday conditions above the 5-year average.

The 2008 Farm Bill also lowers the cap of CRP acres from the current 39.2 million acres to 32 million, Schafer said. The 34.7 million acres now enrolled will have to shrink, he said. On Sept. 30, 2008, 1.1 million acres expire, followed by 3.8 million in 2009 and 4.4 million in 2010 totaling 9.3 million acres set to expire within the next three years. Some of those will be reenrolled, while others will expire and enter into production. Currently there are "no plans at this point in time of doing any new enrollments for CRP acres," Schafer said. Most of the CRP acreage lies in the High Plains with wheat as the main crop. A smaller percentage of acreage is located in the traditional corn and soybean belt, USDA officials said.

Farm Service Agency Deputy Administrator John Johnson said in the past 19 months, producers farming a total of 288,726 acres have accepted the penalty for ending their CRP contracts early. Peak months included April and May with approximately 34,000 and 37,000 acres respectively pulled out.

Source: Feedstuffs

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