The 2018 farm law allows an additional 3 million acres into the land-idling Conservation Reserve, partly to offset the low market prices that followed the collapse of the commodity boom earlier this decade. Lawmakers may opt for another expansion of the reserve if farmers face mountains of surplus grain and continued low prices, said two University of Illinois economists.
“If the financial situation is difficult enough, rather than increasing payments to the ag sector, I just think it will be irresistible to pull the supply control lever once again,” said economist Scott Irwin during a farmdoc Daily webinar on Tuesday. Fellow economist Todd Hubbs said he believed there would be “a move to have [Conservation Reserve] acres move higher in the next farm bill, or even sooner.”
An additional expansion could push enrollment to around 35 million acres, similar to the levels seen in 2005-08, before the ethanol boom and rising world demand for food sent grain and soybean prices soaring, said Hubbs. At its peak, 36.8 million acres were enrolled in the reserve, which pays landowners an annual rent to idle environmentally fragile land for 10 years or more. Some 21.9 million acres were enrolled at latest count.
The ceiling on enrollment rises to 27 million acres under the 2018 farm bill. Earlier this year, the USDA said it would accept 3.4 million acres into the reserve during a “general” signup, which allows large tracts of land to be offered. Contracts are set to expire on Sept. 30 on 5.4 million acres. There are other ways to enroll land into the reserve, such as an initiative to preserve grasslands. There is also what’s called continuous enrollment — open at all times — for high-priority practices such as installing filter strips along waterways on small areas.
In the short run, diverting cropland into the Conservation Reserve would bolster commodity prices by reducing U.S. production, said Irwin. But in the longer run, it would create an opportunity for U.S. competitors to expand their production in hopes of capturing a larger share of world trade.