More acres, more crops?
Another change flowing from the 1995 U.S. Freedom to Farm bill became a little clearer last week when the United States Department of Agriculture announced how many acres it will accept under the new Conservation Reserve Program.
The new CRP is supposed to focus more on environmentally sensitive land. In the past, some land in the reserve was not particularly in danger of environmental degradation and per acre payments in some cases were attractive enough to convince farmers to put productive land into the program.
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Under the law passed last year, contracts on about 21.2 million acres under the old CRP expire Sept. 30.
Farmers with old CRP contracts could bid to put them back in, but there was no guarantee they’d be accepted.
In all, farmers offered 23.6 million acres for the program, which pays them an average of about $40 (U.S.) an acre to put the land under permanent cover for 10 years.
Of that, 11.7 million acres that were under the old program were picked up again. Also 4.4 million new acres considered highly sensitive were added, bringing the total to 16.1 million.
U.S. agriculture secretary Dan Glickman said most of the rejected land is productive cropland that should be returned to production.
That means an additional six million acres are available for crops this fall. What crops will be seeded on them and what will be the impact on world prices?
It’s too early to say what American farmers will do, but the Canadian Wheat Board isn’t overly concerned.
Although the land coming out of the program is productive it is not highly fertile, so yields will be modest, it noted.
Also the spring wheat northern plains states were successful in getting a large portion of their CRP acres returned to the program. For example, in North Dakota, two million of 2.1 million acres offered by farmers were accepted.
Most of the acres coming out of the program will be land best suited to corn, soybeans and winter wheat.
So although six million acres sounds like a lot, because it is spread over several crops and is generally not high yielding land, the overall effect on production and prices will be far from earth shaking.
In the “are we embarrassed” department: It has been pointed out that we didn’t indicate the Winnipeg oats futures contract is traded in U.S. dollars. We have corrected the table this week.
