Missou Report, Conservation Group Examine Farm Bill Consequences

Changes in the 2012 farm bill may have a negative effect on U.S. crop producers, according to a report prepared by the University of Missouri's FAPRI.

Published on: Jun 6, 2012

The University of Missouri Food and Agricultural Policy Research Institute released a report May 30 examining the potential consequences of the 2012 Farm Bill proposed changes, including the removal of Direct and Countercyclical Payments and Average Crop Revenue Election programs and the reduction of approximately eight million Conservation Reserve Program acres.

Though much has been made of those ACRE and DCP changes, the 2012 farm bill also includes a reduction in the Conservation Reserve Program from 32 million acres to 25 million acres by 2017, which Patrick Westhoff, author of the study and FAPRI director, believes hasn't gotten as much attention as it should.

CRP changes in the 2012 Farm Bill could come with consequences.
CRP changes in the 2012 Farm Bill could come with consequences.

"We aren't talking about radically changing the face of American agriculture, but we estimated as large or larger net price effects on average from those changes as we did from other programs that got so much attention," Westhoff said.

According to the report, the CRP reduction would increase crop production but lower crop prices.

Though current enrollment for CRP is about 30 million acres, the bill would change CRP criteria to allow up to 1.5 million acres of grasslands that might otherwise be enrolled in the grasslands reserve program.

The Izaak Walton League of America, a conservation group with more than 250 chapters nationwide, released a statement June 5th calling for congress to place a higher priority on conservation measures in the farm bill.

Jim Madsen, national president of the IWLA, said the suggestions of the group promote "sustainable, productive and profitable agriculture nationwide."

IWLA outlined three key points in their recommendations to congress:

  • Stewardship Agreements for Crop Insurance: Re-establish the connection between subsidies for federal crop insurance premiums and basic conservation provisions to protect wetlands and sensitive soils.
  • Sodsaver Initiative: Enact a nationwide Sodsaver provision to prohibit federal farm program and crop insurance subsidies for native land converted to crop production.
  • Conservation Investments: Maintain the unique functions of current Farm Bill conservation programs, establish continuing baseline budgets for core conservation functions, and oppose funding cuts for mandatory conservation programs in annual appropriations bills.

Though conservation measures play a key role in the farm bill, the FAPRI report also examined elimination of the DCP and ACRE payments. According to their findings, this elimination would reduce agricultural land values as well as government outlays, but impact would be limited for commodity markets.

Additionally, the proposed introduction of the Agriculture Risk Coverage and the Stacked Income Protection Plan, the report indicates, would cause revenues per acre to fall below benchmark levels.

Though outlays may be smaller in general, especially smaller for rice, peanuts and wheat, the report also indicates that soybean outlays could increase slightly.

"There are much sharper cuts in payments for some commodities than for others," Westhoff said,

Though Westhoff said the changes will be difficult to grow accustomed to, he said the new packages could provide more support when there is a downturn in revenues, however the average level of benefits could be lower than what is currently offered.

Conclusions presented by the report were drawn from comparisons between a baseline that assumes continuation of existing farm policies and possible effects from policy changes. The report was prepared using models maintained by FAPRI.

The FAPRI report also details the provisions of each proposed change and the possible consequences of each. It can be accessed here.